Congestion pricing requires a motorist to pay for using busy roads. Congestion pricing incentivises drivers to redirect their vehicles to non-congested routes. This lowers road system demand, and increases capacity. When levied on ICE vehicles while exempting EVs, congestion pricing disincentivises the ownership and use of the polluting vehicles. It captures the true cost of mobility which is not just the cost of owning and using a motorised vehicle but also includes the cost incurred due to air pollution, accidents (expected to increase due to additional road travel), and productivity loss (cost due to delays) on the drivers.

Although it has not been employed in emerging economies even though they face road traffic challenges similar to developed countries, congestion pricing has been implemented in cities like Singapore, London, Milan, Stockholm and Hong Kong. New York and Delhi too are expected to implement a congestion fee on ICE vehicles soon. A systematic analysis of the intents and outcomes of congestion pricing in the aforementioned cities helps identify ways in which India can implement congestion pricing equitably.

  • Adopt well-defined objectives: Improving air quality and public health was a key objective of congestion pricing for the cities that were studied. Therefore, as and when congestion pricing is adopted in India, its objectives must be clearly defined, and success indicators must be pre-determined.
  • Avoid duplication of taxes: Many road users such as commercial vehicle owners and users pay for using the road at various stages of buying and using the vehicle. Hence, additional congestion pricing may not be justified.
  • Ensure vertical equity: Congestion pricing must be sensitive to the token amount paid by different road user groups to access roads, i.e. Road Access Amount. This amount includes vehicle downpayment, fuel cost, Road Transport Office (RTO) costs and insurance. A private car user and motorcycle user pays INR 210 and INR 53 a day, respectively, as Road Access Amount. Private vehicle owners pay several lakh rupees upfront for the lifetime of the vehicle as Road Access Amount. A user of public transit and intermediate public transport pays a Road Access Amount of up to INR 10 and INR 89 a day, respectively. The high upfront costs involved in private vehicle ownership can be associated with the individual’s ability to pay. Therefore, congestion pricing cannot be levied uniformly across all user groups.
  • Ensure horizontal equity: Congestion pricing must be used to incentivise the uptake of favourable modes such as EVs, public transit and intermediate public transport, with deliberation and not by accident. Theoretically, all the vehicles present on the road must pay a congestion fee. However, the pricing must be sensitive to the ability to pay. Levying the tax lopsidedly might inadvertently incentivise private vehicle ownership, leading to an increase in traffic congestion and deterioration of air quality.
  • Disincentivise ‘low occupancy’ and incentivise ‘high occupancy’: Levying a fee on vehicles with low-occupancy and incentivising high occupancy, by introducing high-occupancy road traffic lanes, has proven to be effective in many parts of the world.
  • Carefully identify exemptions: Certain kinds of vehicles such as emergency vehicles, public transit, and intermediate public transport have been exempt from congestion pricing in various cities based on humanitarian grounds and incentivising purposefully. Wherever cities identify clean air as an objective, electric vehicles and non- motorised transport could be exempted from the scheme to encourage the shift towards cleaner fuels. Furthermore, vehicles carrying persons with disabilities should also be exempted from the scheme to ensure absolute equity.
  • Adopt transparent and robust redistribution strategy: Transparency in redistribution of the collected congestion fee often has implications on public trust on the government. Whether the collected fee would be redirected to general public welfare or to mobility development in general should be disclosed at the outset.
  • Adopt variable pricing: Given the gap in parity in ability to pay within a category of vehicle owners like 4 wheelers and 2 wheelers, a variable congestion pricing model could be implemented. For example, cars could be taxed higher as compared to bikes. Additionally, the fares should be calculated in such a way that they encourage achieving full occupancy. For instance, if a car with the capacity to seat four people meets its full capacity, a discounted congestion pricing could be applied.
  • Achieve public acceptance and engagement: To minimise the violation rates, it is imperative to gain public acceptance before piloting a scheme. The pricing strategy should be easy to understand and shared with the public. Ideally, a trial run should be conducted before enforcing the pricing scheme.

Overall, congestion pricing when implemented equitably, can promote shared and electric mobility, and achieve the desired behavioural change outcomes expected from inhabitants of sustainable, resilient cities. As India looks to implement a congestion fee on ICE vehicles, we will do well to keep in mind the lessons from leading cities around the world, allowing us to avoid some of the mistakes they made along the way.