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Sunday, February 5, 2012

National Highways or racing tracks for the rich?

Last week, I drove all the way from Chennai to Kanyakumari,a distance of around 800 kilometers. I was on NH 45 till Madurai, and then NH 7 from Madurai to Kanyakumari. The highways were fantastic, and almost deserted. The high toll had driven the traffic off these newly built roads, onto the State Highways. The tolls were around between 40 to around 70 rupees, and an average of around 1 rupee per kilometer. So for my 1600 kilometers from Chennai to Kanyakumari and back, I must have spent around 1,700 rupees in tolls, enough to deter most of the people in Tamil Nadu, who would not be able to spend that much.
It was a pity to see the road, smooth, four laned, with a central divider strip planted with flowering bushes, so deserted.
The state highways were like they always were, narrow, with two lanes, huge potholes, and deadly traffic.
I and my father had a week-long debate on whether the government was correct in confining the newly built National Highways to the well-off, as we drove down and came up from Kanyakumari.
My Master's Degree in Public Policy had equipped with some tools to analyse this situation, but they failed in the face of my father's simple statement that it was morally wrong to keep the masses off such roads.
The theory says that roads are public goods, and that the State should step in provide such goods when any private person or entity finds it too expensive to provide the good, since the benefits, or "externalities" of public goods are such that a huge number of people are benefited.
In other words, by having great roads, the benefits, ranging from cheaper fuel consumption, to lower transport charges, easier access to schools and hospitals, are so high that it should be paid for by the State, since a private individual would find it difficult to collect the charges for such goods.
But here was a situation in which a clearly public good had been given to the private sector, who had provided the good, but at such high prices that there were very little benefits, or benefits only to a very few well-off people. In other words, fuel consumption would be high because most of the traffic stuck to the state highways, or access and duration of travel would continue be as painful, as most of the people would continue on the old roads...
The argument, that the State was forced to ask private companies to build these "build-operate-transfer" highways, because it did not have funds, is debatable: the private companies, too, raised funds from banks and the capital market, and there was no reason why National Highways Authority of India could not have raised the funds.
I finally had to agree with my father: it was crony capitalism at its worst. The roads were being operated by shady companies who had bribed politicians, or were actually front companies for politicians, and they were asked to toll people and build these roads (the politician took his cut and outsourced it to the actual contractor) in preference to NHAI itself collecting the tolls and building the roads, because such "sweetheart" deals are what are the bread-and-butter of India's political class today.
So the multi-billion rupee highways are now basically racing tracks for the rich, where they tear down at 150 kmph on their Toyota Fortuners and Hyundai Accents....