The Hindu Business Line : Use road users' money to enhance safety

Investment in road infrastructure in India is massive. It is upwards of $40 billion and, from a socio-economic point of view, this is a very desirable investment, says Mr Amrit Pandurangi, leader Infrastructure Practice, PricewaterhouseCoopers.

"Road-users around the country are contributing — directly and indirectly — substantial amounts towards these investments.

Fuel cess, vehicle taxes, road tolls, and so on, are all adding up to significant amounts."

But the current debate, says Mr Pandurangi, is about service charges for toll collection service or on tolling business income itself. Or, in short, should we tax road users more?

"If the Government is serious about making our logistics more competitive, there is no merit in adding new taxes," he says.

"Tolls are collected to recover heavy capital investments, and operation and maintenance (O&M) costs (which form a small portion now). There is no logic at all in charging service tax on the capital investment portion of tolls," reasons Mr Pandurangi.

"Even though operating and maintaining the roads can be treated as a service, it would indeed be unfortunate if service tax is levied on that, as it is common knowledge that as a country we don't spend enough on O&M and any add-on charges may actually disincentivise spending on O&M itself."

As if to affirm the worst of your fears, "there is enough evidence to show that all the money collected from road users does not go back to development of the roads sector."

If the Government is not willing to reduce taxing the road users, let them at least put the road users' money back into the sector in those areas where it benefits the society the most, argues Mr Pandurangi.

"While there are many priority areas within road sector where money is desperately required, I would suggest that money is put into issues of road safety (where India has very poor record) which can be given substantially more committed funding," he proposes.

D. Murali