When Jeffrey Archer flew down to Bangalore to attend his book launch, being introduced first-hand to Bengaluru traffic on his way from the airport, he jokingly remarked, “A woman walking on the pavement overtook my car eight times and my car overtook her eight times. Two more times and we would have been engaged.” Memes about the time taken to reach Bengaluru city from the airport have been flooding the internet since the meme culture got a grasp of this problem. A good chunk of memes emerge from newspaper headlines which highlight the city’s traffic congestion problem and its subsequent effect on the city’s air quality as well as liveability. It is not just the viral internet memes or celebrities who happen to be talking about the issue. A TomTom report published in 2019 ranked Bangalore as the world’s most traffic congested city, a title which is anything but laudable.
The human cost of road congestion gives a clearer picture on what is at stake and how we see the problem evolving. According to the report, a commuter in Bengaluru spent an additional 243 hours in traffic while driving during peak hours. To put it simply, one could have watched 215 episodes of Game of Thrones. Indeed, the opportunity cost is too high ! But it’s not just people’s time which gets severely affected, it is also their productivity and subsequently the economic output of the city as a whole. According to a study, a commuter loses Rs 52,264 per year directly due to congestion. Bengaluru is India’s IT and Tech hub, a growing metropolitan but unlike other Tech hubs such as London, Singapore or the Silicon Valley, Bengaluru’s air quality index has remained relatively poor. The primary pollutant in Bengaluru’s air is particulate matter i.e. PM10 and PM2.5 which comes mostly from transport and road dust. It has been reported that upto 50% of Bengaluru’s pollution is due to vehicular emissions or phenomena triggered by vehicular movement ( i.e. road dust). While the air pollution in other metropolitans such as Delhi or Mumbai is higher than that of Bengaluru, vehicular emissions do not take up a disproportionate share in the air pollution in those cities. The effect on people’s health due to a deteriorating air quality in Bengaluru led to a total of 12,000 deaths attributed to air pollution during 2019.
Experts have diagnosed a number of factors leading to the congestion crisis in the city including inefficient public transport system, half-baked infrastructure plan, disproportionate population growth and encroached roads. But it has been difficult to bring about solutions in a city which is increasingly moving towards a traffic deadlock. If economics of resource use is applied to this scenario, one could arrive at an inference that the roads in Bengaluru are scarce resources and their demand tremendously outstrips the supply. In 2019, the number of vehicles in Bengaluru crossed 80 lakhs which is 5 times more than what the roads can handle. Unfortunately, the focus of policymakers has been on the vehicles and not the roads. The oft-cited suggestions have been to tax vehicles and make it difficult for people to buy them, eventually leading to decrease in road traffic. Another solution which is offered is to increase and expand roads in the city to accommodate the vehicles however doing so will pave the way for a never ending rat-race. Expanding roads as an answer to traffic congestion may decrease traffic for a brief period but in the long run, it will incentivise more people to buy vehicles and occupy the roads.
Congestion Pricing and the Economics of Incentives
William Vickrey, a Nobel Prize winning economist studied road congestion, its implications and arrived at the conclusion that it was actually the absence of a market or a price system which rendered roads ( especially in metropolitan areas) to be congested. He is quoted to have said in this regard that, “I will begin with the proposition that in no other major area are pricing practices so irrational, so out of date, and so conducive to waste as in urban transportation. Two aspects are particularly deficient: the absence of adequate peak-off differentials and the gross undermining of some modes relative to others. In nearly all operations characterized by peak load problems, at least some attempt is made to differentiate between the rates charged for peak and off-peak service.” Vickrey was alluding to a simple issue, why isn’t the use of roads priced upon their usage by motorists, especially in spaces which suffer severe congestion distress?
It was decades after Vickrey’s analysis that his idea found a home in Singapore. But before we discuss Singapore, it is pertinent to understand the fundamentals of congestion pricing. The idea behind congestion pricing follows the concept of pricing, users i.e. motorists must pay for their usage of roads and when the demand is high or during peak traffic hours, the road prices will fluctuate accordingly. Hence a motorist may end up paying nothing while driving on an empty road but will pay a higher amount of road usage charge during peak hours on a road where congestion is usually more. Pricing the roads in this way does two things : firstly it increases the cost of using the vehicle during peak hours and secondly, it eventually dis-incentivises vehicle use, and diverts users to look for other cost effective ways of travelling such as public transport. Through congestion pricing, the solution is arrived not so much by coercive blanket taxation on vehicles or roads. but rather on the road usage of a motorist vis-a-vis the system of prices. Motorists end up having greater control on their costs and are incentivised to behave accordingly. This framework of using people and incentives in achieving resilient policy solutions is aligned with the terracotta vision of environmentalism wherein restructuring incentives takes precedence over use of coercive force of law to reform human nature. While proponents of the ‘guns and guards’ approach will rally behind fines, taxes and penalties, the terracotta vision seeks to rework incentives in a way that the optimal solution is arrived at through co-operation and not confrontation.
Learning from the Singapore Experience
The system of congestion pricing has been implemented in places such as Singapore and London. In Singapore, the practice of licensing particular roads (Area Licensing Scheme) i.e. creating paper licences for congested roads was a practice prevalent since 1975. Although it was similar to the idea of congestion pricing, it did not fulfil the purpose which is charging users on the actual usage of the road and with regard to the traffic congestion. The licence, which was available in post offices, provision stores and other similar outlets, was not priced in terms of the road congestion but it was rather priced at one value regardless of the peak or non-peak hours.
In 1998, Singapore created the Electronic Pricing System which was the world’s first road congestion pricing system charging users according to their usage as well as based on the congestion on the road. This was achieved by installation of an IU or an In-unit in every vehicle and integrating it with a credit card payment system. Gantries were constructed in various roads, and motorists were automatically charged whenever they crossed them and entered a road where congestion pricing was applicable. The EPS has been a phenomenal success in Singapore however its success should also partly be attributed to Singapore’s focus on ensuring a world-class public transport system which connects the length and breadth of the city. It makes it easier for motorists to give up usage of their private vehicles when not needed and incentivises their behaviour towards the same.
Congestion pricing has also been implemented in Stockholm, among others. All three cities ( Singapore, London and Stockholm) have different ways of collecting and charging on road usage however the overarching principle remains the same. De-congestion of roads is just one of the many benefits coming out of pricing roads. Stockholm experienced a 30% reduction in daily car use. The traffic speeds in Singapore increased by 15 kms per hour. Lesser cars on the roads and more incentives to use public transport also meant better air quality. In all three cities, eCO2 emissions went down by 10-20%. It is pertinent to mention that the air pollution aspect is significant in the case of Bengaluru where vehicular emissions contribute to a disproportionate share in air pollution.
Is it possible to implement congestion pricing in India?
There is always a sense of excitement and enthusiasm in the discussion pertaining to solutions to policy problems in developed parts of the world. However, that enthusiasm quickly turns into pessimism when thinking about the same in India. The unprecedented evolution of technology and markets must infuse some enthusiasm in our ability to confront ( with the best resources) the challenges our country faces. In the words of Matt Ridley, we must not just be optimistic but rather ‘rationally optimistic’ given our experience in achieving significant feats in areas such as Fastag implementation. The Fastag, which was introduced in 2016, is a method of electronic toll collection intended to lower the waiting time, decrease road congestion, and cost required for toll collection on national highways. A Fastag is a device which employs the Radio Frequency Identification technology (RFID) and has an electronic produce code ( EPC) through which every vehicle is uniquely identified. Fastags can be easily recharged using UPI/Amazon and they can be bought from banks such as HDFC, ICICI etc.
While initially met with skepticism, the Fastag today i.e. in a span of around 5 years has become the primary method of toll collection in national highways across the country. All the 631 tolls at national highways are now equipped with Fastag toll collection and around 85% percent of all toll collection is through Fastags. With all the tolls becoming operational, India will become the only country to have a uniform e-toll collection facility. It paves the way for a cashless, transparent and a seamless system across the country. This is just one out of many examples of how given the right set of incentives and push, India can accomplish wonderful feats.
The success of FasTag has important implications for experiments with congestion pricing and it has renewed hope towards the success of the system in India. The management of road pricing and upkeep of infrastructure can be given to private players. The revenue thus generated can also help the Government in funding as well as developing crucial infrastructure for expanding public transport services such as metros and buses. While congestion pricing is an excellent way to address road traffic, it must be coupled with expanding cost-effective and environmentally friendly alternatives. Perhaps, the RFID technology in Fastags can be recalibrated to also collect congestion charges. Doing so will help bring down the costs of implementation since all vehicles are now mandated to have Fastags.
One important observation from the working of electronic pricing in Singapore as well as Fastag in India is that people need to be sensitised, given time and be made aware about the benefits as well as the modalities of these systems. In Singapore, there was public outreach pertaining to the entire process behind electronic pricing. In the case of Fastag in India as well, when it was implemented in 2016, there was a dedicated campaign and promotion towards using Fastag. Many toll plazas had one or two lanes specifically for Fastag users ( when it was not mandatory) and this allowed those in the long queues to know the benefits of it. Another factor is the accessibility and ease of usage. Fastags are available at all major banks as well as on online shopping platforms such as Amazon. It can easily be recharged using digital methods such as UPI. To sum it up, markets and private players played a major role in augmenting Government efforts towards the successful implementation of Fastag and the same can be emulated in the case of congestion pricing. It is time to be rationally optimistic and price the roads!
*Views expressed are personal*
The opinions expressed in this essay are those of the authors. They do not purport to reflect the opinions or views of CCS.