Mint Explainer | Why Niti Aayog recommends congestion pricing to discourage excess usage of private vehicles

Congestion pricing is a strategy to charge vehicle drivers a fee to enter high-traffic urban areas during peak hours. Developed economies including Singapore, the US and the UK have implemented this method of urban tolling to reduce traffic jams.

Mint explains the rationale behind this move in the backdrop of private vehicles accounting for more than half of India’s road-based passenger movement.

What did the Niti Aayog study say?

The study examined the current state of India’s transport – road, rail and water-based transport – along with existing policies aimed at decarbonisation. Based on this, it mapped what the sector would look like in 2050 and 2070 in a business-as-usual scenario and in a scenario where India works aggressively to reduce greenhouse gas emissions (net zero scenario).

It said private vehicles accounted for 53% of India’s road-based movement in 2025 and public transport made up 47%. Based on the modelling, the share of public vehicles could rise to 50% in a business-as-usual scenario, and even 60% in a net-zero scenario where the country adopts stronger policies to reduce greenhouse gas emissions.

It suggested that India disincentivizes excess usage of personal vehicles by implementing congestion pricing, high parking fees, and ownership taxes in urban centres.

What is congestion pricing?

Congestion pricing is akin to urban tolling. The government identifies locations choked by traffic jams and imposes a levy on drivers who want to enter these places during peak hours.

How has congestion pricing worked overseas?

Some developed economies have already adopted congestion pricing or some form of this toll.

In 1975, Singapore started charging vehicles a fee for entering a 2 square mile central business area during the morning commute period. Vehicles entering the priced zone along any of its 28 entry points were required to display a pre-purchased daily or monthly licence, according to a study of this method by the US Department of Transportation in the early 2000s. Notably, vehicles carrying more than four people were exempted from this, the study said.

Over time, the rates were increased and electronic means of verifying and collecting tolls were used and it did make an impact.

“Overall, the Singapore congestion pricing projects have been effective in reducing congestion and vehicle emissions and are generally not believed to have significantly and disproportionately negatively impacted lower income populations,” said the US Department of Transportation.

A similar approach in London, Stockholm, and a few cities in the US such as Atlanta and Oregon also yielded improvements in air quality and a reduction in noise pollution, along with a drop in traffic congestion.

Can congestion pricing be implemented in India?

Domain experts said implementing congestion pricing in India would be a challenge, but not impossible.

S Velmurugan, chief scientist and head of the traffic engineering and safety division at the Central Road Research Institute, said methods like congestion pricing can potentially work in India, too, but with a few riders.

He said India first needs to build robust public transport before disincentivizing private vehicles.

“Initiatives such as congestion pricing also need to be implemented at the city level first, instead of a nationwide rollout. The infrastructure needed for this is already there to some degree with FASTag, which is used for highway tolling,” he said.

Velmurugan stressed that tracking two-wheelers could potentially be a challenge. India’s vehicle fleet is dominated by two-wheelers. Private vehicle ownership stood at 197 per 1,000 people in 2023 (167 two-wheelers, 30 cars), according to Niti Aayog.

Some Indian metros have studied and considered congestion pricing to ease their traffic burdens but have not implemented them.