With the flood of vehicles growing, the case for imposing some form of cost on private cars crowding city centres is strong

In January, the Ministry of Urban Development floated the idea of a congestion charge on private vehicles that are increasingly choking city centres and imposing a variety of costs on all classes of road users. The Ministry has advised States to identify the most congested parts of cities and get a proper study done prior to adopting a charging system.

The Ministry’s suggestion coincides with the completion of a full decade of congestion charging in London, one of the most prominent examples of such a levy. Although that system has not been able to expand for political reasons, its operation in the original area has reduced traffic volumes and produced net revenues that are reinvested in public transport. Evidently, the case for some form of restraint on private vehicles crowding city centres is strong today. A recent study conducted in 25 cities including Singapore and Stockholm by the International Association of Public Transport (UITP) found that the success of a charging programme depends on the severity of the congestion problem and presence of strong political will.

A charge on private vehicles in selected areas and at particular times of day would be a reasonable response to externalities they create. Choosing to drive one’s own car or other vehicle into a city centre puts pressure on limited road space, contributes to pollution and global warming, and results in reduced mobility for all. The cumulative time spent in traffic is a major economic loss.

Congestion charging schemes therefore levy a premium for the privilege of using a personal car, and the funds thus collected should be ploughed back exclusively into public transport options. This makes them robust, affordable and sustainable. A number of technologies are available to implement a congestion charging system. The challenge is to pick one that reduces transaction costs, and is sealed against revenue leakage.

While the benefits of such a system appear to be obvious, two recent research projects put the claims to empirical analysis and came up with interesting insights on actual and potential social benefits.

Applying mathematical models to traffic patterns, transport economist Charles Komanoff estimated that driving a car into specific congested areas of New York City’s borough of Manhattan on a weekday produces a cost of $160 for everyone else — a negative externality in terms of idling vehicles and lost productivity. He therefore advocates a graded congestion charge on private vehicles and a taxi surcharge based on place and time of day, with a similarly calibrated reduction in urban train fares, and total elimination of fares for buses.

The resulting model is revenue neutral, but one that adds tremendous gains in time saved by everyone. That would do wonders for the economy — potentially, a massive net surplus is generated.

Equally interesting is a piece of research by economist Rafael Lalive of the University of Lausanne and his colleagues, who studied the effects of an increase in railway service frequency on road traffic externalities in Germany. Increase in service frequency results in fewer severe road accidents and less pollution from carbon monoxide, nitrogen monoxide and nitrogen dioxide, among other things, according to the discussion paper published by the Center for Economic Policy Research in February.

Galloping vehicle numbers

Such evidence-based insights point to the need for a relook at urban transport policy in India. In 1975, the number of cars sold in the country was a mere 23,000. But in a single year, 2011-12, the production of passenger vehicles touched 26.18 lakh. Most of these clog urban roads, marginalising pedestrians, cyclists and the disabled. The flood of vehicles has left the traffic police unable to do its job with even a modicum of efficiency and local governments are engaged in a futile race to create more and more road space.

Equally alarming is the impact of the rising tide of “automobility” on imports. The Union Budget for this year takes note of the staggering burden imposed by petroleum imports at $124.5 billion during April-December 2012, more than a third of the total. A steady increase in oil imports merely to keep people mobile is bound to contribute to higher demand-led oil prices and a worsening current account deficit.

A congestion charge is therefore a pragmatic goal to balance traffic asymmetry in the most crowded cities.

Moving to such a system will, of course, be feasible only when adequate investments have been made in public transport infrastructure. Governments are reluctant to incentivise citizens with comfortable bus and rail systems and to charge those who insist on driving (exempting some users to ensure equity). States today baulk at making investments in modern bus and rail systems of scale. Even the six-year-old National Urban Transport Policy, which emphasises the importance of public transport, walking and cycling is treated merely as a discussion document. The policy gear is in reverse mode, and needs to change quickly.


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