Can mandatory FASTag increase Toll Revenue Collection in 2021-22?
Sai Krishna Muthyanolla
April 6, 2021
The overall user fee collection at toll plazas on national highways increased by around 1.8 times in the last eight years with the growth rate falling in the last two years. Will 2021-22 see the overall growth in user fee collections at toll plazas cross 25% on account of mandatory FASTag?
Effective from 14 February 2021, the Ministry of Road Transport & Highways (MoRTH) has made FASTag compulsory on all national highways. In other words, all the lanes in toll plazas have been declared ‘FASTag lanes’. Further, as per the statement issued by MoRTH, any vehicle not fitted with FASTag or vehicle without valid, functional FASTag entering into the FASTag lane shall be liable to pay a fee equivalent to two times the fee applicable to that category of vehicle.
This is a continuation of the efforts by the government to make FASTag compulsory in order to make user fee payments at toll plazas through digital mode, thereby reducing waiting times and providing seamless passage through fee plazas.
Recently on 17 March 2021, MoRTH’s official Twitter handle of FASTag tweeted that the number of FASTag users has crossed 3 crores.
We are proud to announce that FASTag has achieved a user base of 3  crore!#FASTag #NHAIFASTag #IHMCL #DrivewithFASTag@MORTHIndia @MORTHRoadSafety @NHAI_Official @nhidcl @NPCI_NPCI @FASTag_NETC pic.twitter.com/e2MYdYUwBT
That is an addition of 15.3 lakhs in the first 17 days of March 2021. As per the information provided by the National Payments Corporation of India (NPCI), the total number of FASTag users at the end of February 2021 was around 2.84 crores.
After a fall during the lockdown, number of new FASTag users has increased consistently
In February 2021, when the government made FASTag mandatory, the total number of new FASTag users was 35.25 lakhs. It is more than 1.5 times the number of new users reported in January 2021. While the spike in the number of new FASTag users can be attributed to the government mandate, it is in continuation of a recent trend in the last few months of consistent increase in new FASTag users every month.
Since May 2020, there has been a gradual increase in the monthly new users.  The higher number recorded in February 2021 is incidentally not the highest addition in a month though. In December 2019, a total of 37.64 lakh new FASTag users were added to the system. It ought to be noted that December 2019 also happens to be the month when the government first announced that FASTag would be mandatory at all toll plazas. However, new FASTag subscribers fell in the ensuing months, coinciding with the period of lockdown. As highlighted earlier, there has been a gradual increase since May 2020.
The trends indicate that there is a higher increase in the new FASTag users when there is a government regulation mandating the use. It is to be seen if there would be a fall in the numbers in ensuing months similar to the trend observed earlier. Since new vehicles are anyway fitted with FASTag, it remains to be seen how many of the more than 1.5 crore odd old vehicles which are yet to be fitted with FASTag come into the system and when.
With the exception of Lockdown period, consistent increase in revenue collected through FASTag
While the trends in new FASTag users per month fluctuated over the period of time, there has been a consistent increase in the volume of FASTag transactions and the revenue collected barring the lockdown period.
The spike in the number of new FASTag users during December 2019 did result in a corresponding increase in the revenue collected. The monthly revenue through FASTag in December 2019 was Rs. 1256.84 crores while it was Rs. 773 crores in the earlier month. The monthly growth was maintained in the ensuing months until the beginning of lockdown induced by COVID-19. During this period, the highest revenue through FASTag was in February 2020 with Rs. 1841 crores.
Post the lockdown, this number was crossed in September 2020 and the monthly revenue during every month since then has been higher than during the pre-lockdown period.
The increase in FASTag users may not correlate directly with the increase in FASTag revenues since the revenue collected through the FASTag is a recurring thing and is dependent on the usage of the highways through the toll plazas and other factors. On the other hand, new users could be a result of the purchase of new vehicles, fitting FASTag in old vehicles when they travel on national highways.  The varying trends in the addition of new users and the volume of transactions highlight this.
The toll revenue growth is not necessarily due to FASTag as yet
In a tweet on 26 February 2021, the National Highways Authority of India (NHAI) has stated that the revenue collected through FASTag on 25 February was a record high of Rs.103.94 crores.
With total no. of  transactions crossing 64.5 lakh on 25th Feb, the per day toll collection through FASTag reached a record high of Rs 103.94 Crores. #NHAI #FASTagZarooriHai #FASTag #FASTagStats pic.twitter.com/BEPMDGT1zy
The FASTag revenues over the past few months are being ascribed by various sources on social media platforms as FASTag being the contributor for increased revenue in Toll collection.  As per the information available with NPCI, the total revenue generated through FASTag during the financial year 2020-21 (until Feb’21) is Rs. 19675.48 crores. This is nearly 1.75 times the revenue collected through FASTag during 2019-20. The trends of the previous years indicate an increase in the revenue collected through FASTag in nearly the same proportion.
While the growth of revenue through FASTag is appreciable, it ought to be seen in the light of the growth of Toll revenue over the years.  As per the updates provided in Lok Sabha, the total toll revenue collected in 2012-13 was Rs. 9514.13 crores. In the ensuing year, it increased by around 23% to Rs.11,729.27 crores. Year on year the growth rate was around the same proportion with the exception of 2016-17.
As per an update provided by MoRTH in Rajya Sabha, the total Toll revenue collected in 2017-18 was Rs. 22820.58 crores.  The total revenue collection in 2018-19 was Rs. 24,396 crores, while that of 2019-20 was Rs. 26,851 crores i.e. around a 10% increase compared to 2018-19.  It ought to be noted that since the end of November 2016, this total Toll revenue is inclusive of the revenue collected from FASTag. The higher growth rate seen in toll collection through FASTag does not translate to the same growth rate in the overall toll collection. This could imply that the growth in revenue through FASTag could be because of those commuters who earlier used cash and have now shifted to FASTag and not necessarily increased collections due to FASTag.
Addressing existing concerns can help in facilitating seamless commute as envisaged through implementation of FASTag
Based on the available information, it is observed that FASTag has not had a major impact on the overall growth of toll revenue in the country. In fact, the growth rate has slowed down in the recent two financial years (2018-19 & 2019-20), while the revenue through the FAST tag has increased 1.5 times, reiterating that the increase is more due to conversion from cash to FASTag. It has to be noted that various other factors contribute towards an increased toll collection like – better highways, facilities at toll plazas, better connectivity, etc. The yearly/periodic hike in toll charges also contributes towards increased collections and hence such hikes have also to be considered while comparing annual growth in overall collections.
In fact, an update from NHAI states that there has been a fall in toll revenue per KM. However, highways and such projects are built for the longer term and there is scope for increased revenue in the future as more places are connected.
While FASTag might not necessarily have contributed to increased revenue as yet, it does aid in smoother commute, which is a key aspect of introducing FASTag. Responding to a question in Lok Sabha, the government took cognizance of issues with the implementation of FASTag and updated on the measures to address the same.
Since 2021-22 would be the first full year when FASTag is mandatory, it remains to be seen if the overall toll collections increase at the same rate as previous years or would register a greater increase because of the introduction of FASTag.
Featured Image: Toll Revenue Collection