People's Democracy(Weekly Organ of the Communist Party of India (Marxist)
September 19, 2004
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.
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.
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.
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.
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
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.
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.
problem is that to be really socially useful, governments at both central and
state levels 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 (the user pays) 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.