Finance panel recommends congestion tax on busy roads in Bengaluru

Bengaluru: The 5th State Finance Commission has recommended introducing a congestion tax on Bengaluru's Outer Ring Road and other busy corridors, citing the potential to both raise revenue and reduce traffic snarls. In its report on the five corporations in the Greater Bangalore Area, the commission said the five corporations must try innovative methods to boost its own revenue, with congestion pricing emerging as a key proposal. The panel noted that the concept was first implemented in London in 2003. The report says the tax could be implemented using Fastag technology. The commission also suggested imposing charges on "selective types" of vehicles — ones that significantly contribute to congestion. It added that the funds collected through congestion pricing should be reinvested in improving urban mobility such as public transport and road improvements. Besides congestion pricing, the commission proposed green financing through carbon credits as another potential revenue source. "GBA area already has several ‘eligible' initiatives such as its waste-to-value parks and Miyawaki urban forests," the commission said. The report said such initiatives can be registered to earn carbon credits. The panel also asked authorities to study the Indore carbon credit aggregator model as a possible template. "The waste-to-value parks and Miyawaki urban forests can be registered to earn credits," it noted. The commission further recommended that the revenue earned from trading carbon credits be channelled into infrastructure projects such as electric vehicle charging networks and water resilience programmes. At the same time, the report suggested that the Greater Bangalore Area explore raising funds through municipal or green bonds. Recalling that Bengaluru issued India's first municipal bond in 1997 and raised Rs 125 crore for infrastructure, the commission said the city could leverage this legacy to mobilise new resources. "These will promote citizen partnership and involvement in infrastructure projects. It will also diversify the funding sources. The central govt budget also incentivises financing through the issue of municipal bonds with as much as Rs 100 crore as incentive for single bond issuance of more than Rs 1,000 crore by a municipal corporation," the commission recommended. The panel noted that the financial strategies adopted in Greater London were of particular interest, describing them as innovative approaches to strengthening city revenues.