Economic Analysis of FasTag on Highway Toll Collection

Abstract

Toll revenue is one of the major sources of revenue by which the government supplements its financial capability to execute, maintain and upgrade existing highways. Revenue leakage, underreporting of revenue, and refusal of toll payment is one of the major concerns of the government. These issues must be addressed in order to make highway projects more feasible, less risky, and financially attractive for private investors. To achieve this aim the government has introduced FasTag, an Electronic toll collection system. We studied the financial impact of FasTag on Highway toll collection at Patna-Deedarganj Toll Plaza on Patna-Bakatiyarpur Toll Road. In our analysis, we find that the FasTag collection has significantly lower service time than cash collection and gives an immense potential for an increase in traffic throughput and revenue collection, the default rate on toll payments has dropped very significantly with increased penetration of FasTag. We ran several time-series models for revenue forecasts and found that there was a general trend of increase in revenue and among all the models, PROPHET was the most accurate. © 2023, The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd.