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FASTag: A revolution for toll tax and Indian Highways

As of December 1, 2021, the road network in India was around 63,71,847 km, making it the second largest road network after the USA.


Sentinel Digital DeskBy : Sentinel Digital Desk

  |  22 Sep 2022 3:14 AM GMT

Siddharth Roy


As of December 1, 2021, the road network in India was around 63,71,847 km, making it the second largest road network after the USA. In the past, the Silk Road played an important role in spreading Buddhism in Asia. Even when it comes to the administration of Chandra Gupta Maurya or Ashoka, there is mention of the development of their road infrastructure. May it be cultural exchange or trade, roads have always played a very important role. Good road infrastructure is a prerequisite for strong economic growth and development. In the 2022-23 Budget, Rs 1,99,107.71 has been allocated to the Ministry of Road Transport and Highways for road infrastructure development.

Even though the road networks in India are on the rise, there has been a prolonged issue of traffic congestion on the toll booth plazas that caused distress amongst the commuters. Eventually, Fastag was devised by Nitin Gadkari with help from Nandan Nilekani as a digital solution to the toll tax collection burden and associated congestion on the highways.

Road density in India is around 1.94 compared to 0.71 in the USA. As of July 2022, India has 2600 km of the expressway and more than 1.5 lakh km of National Highways. But still, there was the persisting problem of toll booth plaza congestions and delays due to heavy traffic. According to a report published in the Economic Times, the delays at toll plazas caused Rs 87,000 crore losses to the Indian economy in 2012. According to another report published in the Economic Times, India is facing around $21.3 billion loss due to poor road conditions and toll booth congestion. Out of these losses, a $6.6-billion loss is only due to additional fuel consumption caused by these delays.

Due to the high share of oil imports in the overall imports, the delay at toll plazas had impacts even on the Balance of trade and Forex reserves. Another issue that marred the revenue collection was corruption regarding the collection of toll plaza tax which went into the pockets of several employees posted there. This in the long run leads to huge revenue losses for the government which indirectly affects the maintenance of the roads. Out of 62 lakh kilometre road network in India, National Highways have only 2% share which is too less as around 40% traffic traverses it. And to properly fund the road infrastructure maintenance and construction, the toll plazas need to be time efficient and also the revenue collection should be transparent. And to solve this issue Fastags came into being.

Fastag is an electronic toll collection system operated by the National Highway Authority of India. FASTag uses RFID technology to automate the toll tax deduction from the savings account of the commuters. Fastag started as a pilot project in 2014 although its base was formed in 2010. In February 2010, the Ministry of Road Transport & Highways set up a committee under the chairmanship of Nanda Nilekani to ascertain the irregularities in the toll plazas. And 5 months later it was suggested that Radio Frequency Identification (RFID) be used in the toll plazas to collect taxes. Not only can RFID technology be used to alleviate toll plaza congestion, but it can also be used to reduce traffic congestion by making them more time efficient. On the basis of the committee's report, RFID Fastags were used in a pilot project on the Golden Quadrilateral National Highway i.e. between Ahmedabad to Mumbai and later on between Bangalore to Chennai. By April 2016, nearly 70% of toll plazas were equipped with FASTags. On 19 October 2019 the Union Government said that from 1 December 2019, the Fashtag will be mandatory in all National Highway toll booth plazas. But due to Covid, this policy couldn't be implemented efficiently. But later on, to implement the FASTags flawlessly, the National Electronic Toll Collection (NET) programme was strengthened. So what started as a pilot project, the Fastags eventually changed the face of toll plaza revenue collections. The figure for daily collection of toll tax has increased to Rs 143 crore after the Fastags implementation.

FASTag has played a significant role in reducing the congestion at the toll plazas. For a developing country like India, toll plaza traffic congestion and its related revenue losses can cause a big problem for the Indian economy. According to Economic Survey 2019-20, 85% of passenger traffic and more than 60% of freight traffic is transported through roadways. And so to keep up the Indian highway traffic transport system efficiency, the toll booth plazas need to be effective and efficient as well. So now due to Fastags, the vehicles don't need to stop for long intervals at toll booths nor do they need to pay cash which can be misused by the toll tax collector. Due to the automatic registration of vehicles by the FASTag, the surveillance of vehicles has also become easier. In a report published in Financial Express in April 2022, the highway toll collections done through FASTag in the year 2021-2022, have increased by 63% i.e. more than 38.000 crores as compared to last year. This high toll tax collection will contribute to the construction and maintenance of these roads and highways leading to better traffic movement efficiency. Technologies like FASTag help the transport sector in multifarious ways by increasing revenue efficiency and indirectly leading to the growth of the Indian economy.

According to an estimate, 4.8% of the GDP comes from road transport. But only the construction of roads for proper connectivity isn't the only thing but its proper maintenance is very important. And this maintenance is done by the toll tax collection at toll booth plazas. In a recent interview, to revamp the toll tax collection, the Transport Minister has assured to come up with a new GPS-based closed tolling system. Minister Nitin Gadkari has expressed the possibility that FASTag and Toll plazas will be replaced with this GPS-based technology and Automated Number Plate Recognition (ANPR)-based in the next six months. Toll collection will be done through satellite communication based on Al so that toll plaza-free highways can be established in future. Moreover, according to guidelines issued by the NHAI in May 2021, the toll plazas at National Highways have to make sure that no vehicle remains stationary for more than 10 seconds. Looking at the initiatives taken by our Transport Minister and the Central Government, India isn't far from being recognized as a road infrastructure superpower like that Singapore, Switzerland and Netherlands.

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