Almost
anywhere else in the world, the notion of a toll road
implies the construction of an altogether new road,
which does not replace or supplant an existing road,
but adds to it. It is meant to provide an alternative
-faster and better - means of travel, only for those
who are willing to pay for it. So those who already
reside or work along an existing road are not directly
affected in terms of higher costs of transport. Similarly,
shops, establishments and residence that come up on
the new toll road then do so out of choice, and aware
of both the advantages and costs of being on the toll
road.
But
in some parts of India, such as in Tamil Nadu, the model
seems to be a very different one. The existing road
has simply been taken over and made into a toll road,
albeit with better paving (though still no street lighting
to speak of). In this process of conversion, there was
no attempt to ask those whose homes and places of work
are situated on the road, whether they would prefer
a toll road, or to give them any choice in the matter.
And of course, once the decision was made, there was
no attempt at any sort of compensation for those whose
daily costs of transportation have increased dramatically
as a result, or those whose livelihood has been affected
by the increased costs faced by customers in reaching
their establishments.
This remarkable insensitivity to the needs and concerns
of local people in a large infrastructure project is
typical of the way in which the development agenda is
being set today in the country as a whole. The building
of physical and social infrastructure assets has been
one of the chief casualties of this.
At a national level, infrastructure investment over
the past decade and more has been abysmally low. Central
government spending on infrastructure investment in
real terms has been less than half of the level of the
decade earlier, and even lower in per capita terms.
State governments, which could have taken up the slack,
have been starved of resources for any sort of development,
and now face very hard budget constraints.
Two principles now seem to govern the government’s attitude
towards infrastructure provision in general. The first
is that private investment is preferable to public investment
(for which there is apparently ''no money''). The second
is that people should pay for the services they receive,
and even implicit subsidies should be cut.
There are of course major problems with both of these
perceptions. Nevertheless, for the sake of argument,
let us accept them as they are. Consider the second
proposition. Even if we agree that people should pay
for the services they receive, there are two generally
accepted ways of dealing with this. The first is to
make society as a whole pay through taxation. This is
the standard way in which public infrastructure was
financed throughout the course of the previous century.
It makes a lot of sense to adopt this method when there
are externalities involved, which means that there are
positive (or negative) effects of investment that cannot
be retained (or compensated for) by the private investor.
The presence of such externalities typically makes the
provision of the infrastructure by private investors
less than that which is socially desired. Much infrastructure
is characterised by (often large) externalities and
''public good'' features, which means that it is impossible
to exclude people from consuming it. Street lighting
is indeed the classic textbook case of a public good,
since you cannot prevent someone who has not paid for
it from benefiting from it. This is why street lighting
and a whole range of similar services have traditionally
been the domain of public expenditure financed though
taxation.
The other way of financing such expenditure is to make
the user pay. This is the philosophy that is most dominant
today, and it governs attitudes to almost all infrastructure
provision, even in those areas that are characterised
by high externalities. This approach has many pitfalls:
the problems and costs of enforcement (or making sure
that all who use the service pay); and the even more
important issue of exclusion, whereby the poor effectively
get denied access to basic public services when they
are highly priced. This is very clear in the case of
health services and even electricity provision in states
like Orissa.
The problem is that to be really socially useful, governments
at both central and state level have to move out of
the paradigm of trying to recoup costs by charging users
for what are essentially public goods. This is why the
second approach has been so dangerous in a country like
India, because it has led to systematic under-provisioning
of basic infrastructure and public services. Not only
are the poor excluded, but there are other economically
socially undesirable outcomes, and loss of potential
development. So governments have to get back to spending
more on these important areas, to generate any social
benefits.
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