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Q. Verdict on DND toll tax: Comment on recent verdict by Allahabad High Court on toll tax collection at Delhi- Noida expressway.
Oct 29, 2016 Related to : GS Paper- 3

Ans :

Introduction-

DND is a flyway that connects Delhi on the west bank of the Yamuna with Noida and East Delhi. Recently Allahabad High Court has directed the Noida Toll Bridge Co (NTBCL) to stop collecting toll, or user fee, from vehicles using the DND expressway.

Reasons given by court-

  • The user fee which is being levied is not supported by the legal provisions relied upon by the Concessionaire (Noida Toll Bridge Company), Infrastructure Leaning and Financial Services (promoter and developer of the project) and the Noida Authority.
  • The right to levy and collect user fee from the commuters as conferred upon the Concessionaire under the concession agreement suffers from excessive delegation and is contrary to the Act.

Issues-

The contract with private developer NTBCL was awarded without competition, guaranteed a 20% return on investment for 30 years, stipulated that tolls would go up in line with inflation and added shortfalls in this regard to the project cost on which returns are guaranteed.

Analysis-

  • The recent judgement of Allahabad High Court have again shown that public-private-partnership (PPP) projects in India are inherently risky and to be avoided by investors.
  • It has also raised issues of one-sided contracts that bestow undue benefits on the project developer would be terminated or renegotiated, sooner or later.
  • Actually the company has to be compensated with land for development, but the agreement of shortfall of guaranteed return.
  • The above concession agreement executed between various government and private parties is a poor example of PPP in infrastructure.
  • The company has reportedly realised the construction cost of the flyway several times over. But with unjust and unfair method of calculating the total project cost, it has been collecting toll.
  • In this direction, thought the court direction is welcome, but there is need to revisit the methods of agreements.

Suggestions-

  • In a present scenario, the PPP projects needs intelligence and proper contracting. 
  • India needs active involvement of private players in infrastructure development, hence there interest must also protected while finalising as well as while terminating their contract.

Conclusion-

The recent judgement of Allahabad high court has thrown lights on the way of PPP contacts can be done in India. The arbitrary and illogical methods must be abandoned, and should not levy unnecessary charges on consumers. In this direction Allahabad high court judgment is much needed to improve the methods of contracting in India.

 


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