Monday, October 1, 2012

A new role for the Highways Authority of India

When the National Highway Authority of India (NHAI) was formed, India was still reeling from the ravages of colonial rule that had impoverished her, and left her with scarce resources and scant infrastructure. Thus, the then role of the NHAI was to deploy a portion India’s revenue collected by the Central Government to create roads for ushering in prosperity, connectivity and development. At a time when no individual possessed the wherewithal to invest in the infrastructure needs of the nation, the NHAI did what it could to meet its mandate.

The NHAI first created single lane highways, that very slowly evolved into double lane ones and right up until even the late Nineties, India hardly boasted of a decent highway, even by SAARC standards. The roads were created to connect every village and town, and as was the thinking back then, actually meandered around and passed through virtually each and every habitation before reaching its destination. Journeys were long, uncomfortable and perilous.

Fast forward to today. India has several corporate entities that can invest the humongous sums of money that is required for the development of the Highway infrastructure, and many of them have invested and built thousands of kilometers of four and six lane highways of very high quality, that run in the shortest distance between the main destinations, and towns along the way are served by connecting roads, rather than the highway itself meandering out of alignment. (In another article I had commented on the lawlessness that exists in these highways, but that is different story altogether). Thus, what one increasing sees nowadays, is that the NHAI need not be required to spend scarce national resources in the creation of highways, as private enterprise is more than willing and also well able to do this, and have delivered infrastructure of higher quality than what the NHAI was able to do for over 50 years. Perhaps, it is time for the NHAI to morph itself into a different kind of entity playing a slightly different kind of role.

The NHAI can concentrate on the creation of Highways in regions of the country where private enterprise is unwilling or unable to do so, like politically sensitive and security challenged areas. The rest of the Highway building should be entrusted to private enterprise, and the NHAI should play the role of an Administrator of the Highways, rather than the creator of them. My understanding of the role is elaborated below:

Consider this. I recently drove from Bangalore to Chennai, a journey of about 340 kilometers. During this very short journey, I had to stop, get into somewhat long queues of vehicles, and pay small sums of money at no less than 7 toll collection booths, each transaction consuming close to 5-8 minutes to complete. This added a needless 40 to 50 minutes to my journey time, and also contributed to unnecessary irritation and tension, as the toll collectors were generally uncaring about the contemporary requirement of journeys having to be safe, fast and tension free experiences. I do understand also that each stretch of the highway was built by a different investor and thus, each of them was legitimately entitled to revenues generated from the road users. What I am against however - is permitting each of them to repeatedly impede my progress by collecting small sums in payment, delaying me by insisting on exact change and other such inanities.

This is where a new role of the NHAI can be considered. The primary mandate of the NHAI shall remain as the creation and maintenance of Indian Highways, but, instead of directly getting out there and constructing them; I sincerely believe they should rather concentrate on the following:
  •       Contracting out the creation of Highways to the private sector wherever possible, and directly involve itself in the creation of only very critical or financially non-remunerative highways which are required in the national interest.
  •       Defining a contemporary Highway Driving Code and the setting up of a Highway Patrol to very strictly implement the same. This will include clearly defining which vehicles are permitted to use the Highway (banning those very slow moving 3-wheelers, and mini transport vehicles for a start), and for those that are permitted, which lane they are eligible to use, etc. Code of Conduct during an accident, etc.
  •       And finally, the main focus of this article - Collecting the Toll from the road users on behalf of the investors, and depending on how many vehicles use a particular stretch of road, set up a mechanism for making a payment to the concerned investor. Permit me to briefly explain the concept below.

I am not discussing about the existing Smart TAG or On Board Transponder Units. These are used by daily users of the Highways, and is an excellent solution for such users. While the investment in the infrastructure required is really quite high for the TAG system, I’m sure they have been found to be justified over some usage parameters, considering their popularity all over the world. My discussion is centered on improving the road usage experience of occasional Highway users, who have to today, stop and pay cash. My suggestion is that the whole process be made cashless at the Toll Booths. What if all occasional Highway users can buy a NHAI Pre-charged card, for a particular sum, let’s say Rs. 500.00, which can be made available at every store or shop that sells Mobile Telephony Recharge cards. Highway users should then be able to just insert the card into a slot and retrieve it after a few seconds of processing time, and then drive away, saving many precious minutes. Each time that the card is inserted, the following transactions can occur – deduction of the current Toll amount, updating of the Balance in the Card, capture of any other data from the card and also the display of Currency Balance information on the LED screens. In my reckoning, most of the required infrastructure already exists at every Toll Booth, and minimal additional equipment will be required to accept the payment made with the proposed NHAI Cards. If on occasion, the charge in the card is insufficient, the road user should have the option to revert to cash payment mode. If this method of payment is implemented, I’m certain that a large majority of the road users, particularly those who are not technology challenged will gladly adopt this.

The benefits of such a system of pre-collection are manifold. The road users will have a faster, more efficient and less stressful journey, while the NHAI will be the main beneficiary as it would be able to collect a very large sum of money upfront, and will be required to consolidate a weekly or monthly payment settlement to the investors based on the actual usage which will always be lesser than the face value collected for the card. Since the revenue collected is always larger than the payout, the NHAI will also develop a large and attractive financial float, which can be used for funding its highway expansion, technology upgrades, etc. Even the investors will stand to gain much by adopting this system of toll collection as their highway usage efficiency will dramatically increase, the safety of the road users will be hightened and they will also see the reduction of security concerns involved on the collection and handling of large sums of cash at remote locations. They will also be able to minimize the quantum of manpower required to man a toll plaza while increasing the efficiency of the transaction which will drastically increase their Nett Earnings per vehicle. The main benefit to all will be the minimization of leakage, which could occur due to underreporting of traffic by the Booth Collectors, collection of incorrect toll, and other such issues.

Some user friendly features in the Online Interactive Portal that will be necessary to manage customers will be very helpful, like perhaps getting a downloadable Statement of Account on a particular date, which will be useful for people who need to claim reimbursement of expenses. Also, one should be able to recharge the card using the portal by linking up with payment gateways of Credit Cards or Internet Banking. Unused currency in a card should also be refundable by direct Credit into ones’ Bank Account, etc. Needless to say, a portal such as this, which has the ability to garner literally millions of eyeballs, should also lend itself to lucrative advertisement opportunities. The possibilities are endless and very exciting! Soon, we may see one such card being used for many other transactions like Metro Rides, Bus Rides, Purchase of Fuel, and Payment of Fines for infractions caught by the Highway Patrol, etc., as the only issue would be to track the usage of the card and ensure that the correct entity receives the required amount as payment.

I wish and pray that the Management of NHAI will agree that my bullish enthusiasm for such as Card Based Payment system is well-placed and will start thinking along these lines and usher in a very early implementation. I will look forward to the day this happens.

Additional Reading:

Multiple Toll Collection receipts for a short 340 Km journey.


  1. I fully endorse and agree with your suggestion. Only flaw is our own behaviour........ The Delhi gurgaon toll gate near ambience mall is a microcosm of our behaviour at toll gates.......nothing works.....tag lanes are full of people wanting to pay cash, cash-only lanes challenge the booth operators by passengers who carry a tag......all 32 lanes are jam packed with 5-7 minute (if you are lucky) wait period to reach the toll gate.......the booth operators frantically try to clear the vehicles as fast as humanly possible.....then we have government / PSU employees wanting a waiver from the fee and choosing to block the toll and arguing with the booth operator......all these road users are educated white collar workers enroute to Delhi or to their air conditioned offices in udyog vihar and dlf....
    We need to change our attitude and accept that being related to or by being someone (this is the individual's own definition of self importance) we cannot get a waiver of taxes and fees.
    Either by faulty design or by sheer volumes we are unable to tackle these issues.
    We have begun the process of including private players into road construction and maintenance ....we need to learn from the lessons of such implementation, indianise it and then take it forward.

    1. Hi Usha,

      Thank you for your post. Yes, you have hit the nail on the head!

      We do have a problem following rules or procedures, so why try? Let us make all lanes and all booths accept Tag / Cash / Smart Card. This exclusive lane concept is very European and will not work here for many more years, it seems. Of course, the investment in each booth will no doubt go up as a result of multi-mode payment acceptance requirements and as a consequence, push up the toll rates, but I suppose we deserve it, don't we?