Rebooting India: Realizing a Billion Aspirations (19 page)

The electronic toll payment system, in its broad outlines, is quite similar to the telecom prepaid model. The three main components of such a toll network are the distribution of tags, the registering of users and the actual transactions themselves. Given that the tags are low-cost and easy to transport, it is possible to imagine a large retail ecosystem where they are available for sale. Petrol pumps and service stations are frequently visited by vehicle owners, and it makes the most sense to stock tags in these locations, alongside the fizzy drinks, packaged snacks and cans of motor oil; ultimately, tags would be available for sale at most retail stores.

The next step is the creation of recharge points, where funds can be loaded onto the tag. Just as mobile phone users can top up their
prepaid accounts anywhere from a swanky mobile showroom to a corner stall, so also tag owners should have a multitude of options to top up their accounts. Eventually, tag recharge should also be possible online, using the kind of universal electronic payment system we have discussed in an earlier chapter.

Today, top-ups can already be done at toll plazas. Ravi Palekar tells us that truck fleet owners have been quick to embrace the electronic toll system for the convenience it offers. They no longer have to issue cash to their drivers and can easily recharge every vehicle’s balance from the comfort of their office, while drivers save time and fuel by avoiding the wait to pay tolls in cash.

How would such a toll collection platform be managed? The committee that studied this problem recommended the creation of a Central Electronic Toll Collection System (CES) that would link all the players in the system—the seller issuing the radio tag, the user loading funds to their prepaid tag, the toll plaza operator managing their concessionaire account—while also providing reports to the government. The CES would manage the accounts of all the stakeholders and at the same time handle a number of other processes, such as the tag issue and recharge system and processing of transactions. Toll plazas are already being upgraded to use tag readers and are being connected to the CES network.

For electronic toll collection to make sense, it must be fast-paced—a vehicle cannot spend minutes idling in a toll plaza while the toll transaction is processed online. To make the process as quick as possible, every toll plaza should be linked to the central system via the internet. A vehicle’s tag should be scanned, the balance on the account checked, and the appropriate amount debited in the few seconds it takes for a vehicle to move through the plaza; all these transactions must be recorded in the CES. Palekar explains, ‘In reality, connectivity is a challenge since toll plazas are often in remote areas. The toll plazas actually synchronize with the central platform every half an hour, uploading a list of all vehicles that passed and the toll to be charged, and downloading a blacklist of offenders. As connectivity improves, these transactions can happen instantaneously and online.’

The success of this entire system depends upon reliability and convenience. The concessionaire who operates the toll plaza is responsible for maintaining the equipment that scans the vehicles as they pass. The reliability of payment processing, from easy recharge to toll payments, is equally important. Banks will handle the financial aspect of toll collection; in order to encourage competition and build robust payment systems, it is essential that multiple banks be allowed to participate. As of now, ICICI and Axis Bank are the two participants, and more can be added as the toll system grows.

IMHCL’s tag design accounts for the fact that more banks are expected to join the system. Each tag has a number, the first two digits of which are reserved for identifying the bank that issued the tag. Thus, if a vehicle owner got a tag from Axis Bank, when he passes through a toll plaza, the reader will note the first two digits, identify the issuer and then send the transaction to Axis Bank to be processed. The bank will check the balance on that tag and deduct the amount from the tag holder’s account.

There are, of course, possibilities for potential fraud. Even in a situation where all vehicles need to carry an appropriate tag, people might still try to game the system. For instance, a car or truck owner might tag their vehicle with a motorcycle sticker so that they have to pay a lower fee. People may also try to just zoom past the toll plaza without paying. Systems are being put in place to ensure that these types of fraud are eliminated. Toll plazas are equipped with cameras that can read licence plates and record offenders as they speed by; this is also a backup in case the tag reader malfunctions. The entire electronic toll collection process has been designed to make it easy and quick to pay, while making evasion difficult and punishable by law. Such a strong monitoring system with the appropriate legal backing serves as a deterrent for potential evaders.

The central government has decided to officially launch the Electronic Toll Collection (ETC) network nationwide. A hundred
and sixty out of 340 toll plazas have already been linked to the ETC system. Pilot projects have been carried out on the highway between Mumbai and Ahmedabad, and the ETC system has been installed in fifty-five toll plazas along the Delhi–Mumbai route, making it a seamless ride without any stops along the way. The Mumbai– Chennai highway is next on the anvil for seamless connectivity. In addition, the government has declared that all future highway projects must have a provision for ETC lanes.
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Based on a study conducted by the Indian Institute of Management, Calcutta, and the Transport Corporation of India,
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the ETC system could save the economy an estimated Rs 870 billion annually in productivity that is lost at toll plazas.

Coming back to earth, the two participating banks, ICICI and Axis Bank, are part of the official electronic toll programme slated to operate along the Delhi–Mumbai highway.
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Chanda Kochhar, managing director and CEO of ICICI Bank, was quoted as saying, ‘ETC substantially enhances convenience for users, and we believe it will play a very important role in contributing to the growth of cashless payments in India.’

IMHCL is the organization tasked with establishing and maintaining a national electronic toll collection network, and its structure is similar to that of the GSTN which we discussed in the previous chapter. It has been designed as a collaboration between the NHAI, the private concessionaires who are tasked with toll booth operation, and financial institutions who handle the payments process. This design, in Ravi Palekar’s words, ‘bring[s] in the best of both worlds—good practices from the private sector and regulatory control and oversight from the government’. The NHAI holds 25 per cent of the company, financial institutions hold 25 per cent, and the remainder is held by concessionaires. In this way, the government retains strategic control without getting bogged down in the minutiae of operation and maintenance. These are the same thoughts that guided the establishment of the GSTN, and it is heartening to see the cross-pollination of these ideas in other domains.

Once every vehicle carries a radio tag linked to a payment account, we now have a national network that can be used for many things other than just toll payments. As Palekar puts it, ‘The tag becomes a unique identifier for the vehicle, and can be used for many applications beyond toll alone. It works as an automated vehicle identification system, and the ETC is just one application of that.’ A prepaid toll system that works across banks and spans the entire nation can be used for other types of transportation-related payments. This could include paying for local tolls in states and cities, parking charges, fines for traffic violations, road and vehicle tax, and any other transaction requiring payment from the user.

Another extension of the ETC system can be towards reducing traffic snarls by levying a congestion tax. In such cities as London and Singapore, users are charged a fee for operating a vehicle in some areas during peak hour, helping to reduce the traffic burden.
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The best we have managed in India so far is to ban commercial vehicles from entering urban areas during certain hours. In Mumbai, for example, trucks are not allowed to ply inside the city during the day, and can only enter at nightfall; however, this system doesn’t extend to all major cities in the country. Being stuck in a typical peak-hour Bengaluru traffic jam, surrounded by vehicles ranging from sputtering scooters to ramshackle trucks groaning under the weight of rocks or sand destined for construction sites, is sufficient to convince us of the value of a congestion tax in making everyday travel a less nightmarish experience. Transceivers mounted at the appropriate locations—the city limits or the borders of the business district—can be used to scan the radio tags of vehicles entering the area, and users would then be charged a congestion fee electronically. Alternatively, if the decongestion approach involves banning the entry of vehicles except during a specified time period, the RFID system could be used to flag offenders and levy fines.

Today, vehicles have to stop at state borders to hand over their manifests and undergo inspection, which wastes time and lowers
transport efficiency. Truck delays at checkpoints cost the economy an estimated Rs 9 billion to 23 billion in lost operating hours. A perverse economy has sprung up in which truck operators pay bribes to officials to avoid paying taxes on their goods, or fines for overloading their vehicles. A World Bank study estimates that these ‘facilitation payments’ can run anywhere from Rs 9 billion to 72 billion. The net result is that the state loses money due to it in the form of tax. Officials overlook violations of traffic safety laws, and this contributes to even larger economic and social losses from accidents that could otherwise have been prevented. The annual economic loss from road accidents is estimated to be in excess of Rs 550 billion, and the majority of these accidents involve trucks.
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With the ability to identify and track vehicles through an online system, the electronic toll platform could be used to create digital manifests for goods transport. A user, say a trucking company, would voluntarily sign up to register the tags of all their vehicles on an electronic manifest system. Every time a vehicle is dispatched, the company would create a manifest of the goods being carried, especially relevant in interstate transport where there are restrictions on the goods that can be moved across state borders.

With an electronic manifest system, the details of a vehicle’s cargo would be available automatically as the vehicle passes through a transceiver-equipped inspection station, speeding up the process considerably. A similar system could also be used for vehicles entering city limits, as well as lending itself to the computation of octroi or other state- or city-level taxes on transport. An electronic manifest system would help decongest state borders and remove one more obstacle in the path to making road transport in the country efficient, effective and hassle-free. Even more importantly, automating the tax computation process would eliminate incentives for corruption, resulting in a significant increase in revenues and a gradual improvement in road safety standards as well.

Ravi Palekar explains to us, ‘If you integrate the RFID and taxation systems together, every time you read a tag at a check post, you can get the vehicle’s entire history—its origin, destination, what goods
it’s carrying, whether the operators have paid tax or not—in a format that’s easily available to the state.’ A separate steering committee is working on integrating the radio tag into the state border check-post system, and he says, ‘A team will shortly be visiting Ahmedabad to consult with the Gujarat government about taking the RFID-border check-post linkage forward.’

Once the government develops ‘electronic toll as a platform’, not only will various government applications that we discussed above be possible, but also, start-ups will come up with all sorts of innovative ideas once they have a method to identify a vehicle and the ability to debit and credit its wallet in the cloud. This will necessarily bring up the issue of privacy, but it is worth pointing out that it is straightforward in today’s world to electronically read a car’s licence plate as it passes by, and companies such as Ola and Uber already have significant amounts of information about our movements. This is yet another case where the potential benefits of technology have to be balanced with privacy and data protection. The government has an important role to play in defining the balanced rules of the game.

In the previous chapter, we discussed the implementation of the GST as one step towards unifying India’s market. As the accompanying diagram explains, removing transportation roadblocks through the implementation of an electronic toll collection system would help to build a true common market, where goods could be freely transported all across the country. Vehicles would not need to halt at any checkpoints along the way, since the list of goods they are carrying as well as the tax that applies to them can be calculated and billed automatically.