Rising toll charges: Policy very clear, number of toll plazas can't be increased arbitrarily, Finance Secy tells CNBC-TV18

Finance Secretary Tuhin Kanta Pandey

Amid the concern over existing roads being converted into toll projects which could increase the logistics costs in the country, Finance Secretary Tuhin Kanta Pandey and DIPAM Secretary Arunish Chawla in an exclusive panel discussion at CNBC-TV18's ‘Budget 2025' event said that toll rates do not rise arbitrarily and that regulations mandate a minimum distance between toll plazas.

In the past six years, the toll charges on national highways have increased from 5-7% to 15-20% of journey costs according to estimates which could drive up the logistics expenses and hampering the efforts of reducing the transportation costs in the country.

“Toll rates remain unchanged, and the number of toll plazas cannot be increased arbitrarily. The policy on tolls is very clear—there must be a minimum distance between two toll plazas,” Finance Secretary said at CNBC-TV18's ‘Budget 2025 event. He further added, “Whether the roads remain under NHAI or are transferred to another operator makes no difference. What is essentially being suggested is that NHAI itself should relax the policy by charging lower tolls and possibly increasing the length of roads covered under each toll.”

“If we do not ensure sufficient funding, we risk having poorer infrastructure and inadequate maintenance. We must take a balanced approach to this issue," Finance Secretary said emphasising the point that adequate funding is crucial to maintaining infrastructure in the country.

DIPAM Secretary Arunish Chawla said, “This is a trade-off between a partial equilibrium effect and a general equilibrium effect. In the past, PPP models relied solely on simple BOT (Build-Operate-Transfer) and annuity models. However, over time, we have developed a variety of frameworks that have stabilised the highway sector.”

Chawla added, “The TOT (Toll-Operate-Transfer) model has been highly effective in maintaining highways while also enabling the redeployment of both budgetary and extra-budgetary resources into expanding our road network. This generates significant positive externalities in the long run. If we consider the economy as a whole, logistics costs will ultimately decrease.”