Decongest roads or boost lucrative vehicular sales: can the government strike a balance? Premium

Every government makes all the right noises to decongest Bengaluru’s roads. But when record-breaking growth in vehicular registrations massively boosts the Transport Department’s tax revenues, will the State be really interested in arresting the growth? Can it really tweak the tax structure to compensate for the shortfall through other sources?

Every government makes all the right noises to decongest Bengaluru’s roads. But when record-breaking growth in vehicular registrations massively boosts the Transport Department’s tax revenues, will the State be really interested in arresting the growth? Can it really tweak the tax structure to compensate for the shortfall through other sources?

First, the facts. Post-pandemic growth in vehicular registrations in the State continues to be robust this year, riding on the 30% year-on-year rise recorded in 2022. As many as 15.3 lakh new vehicles were registered in Karnataka in 2022, a sharp rise from the 11.7 lakh recorded in 2021.

The combined number of transport and non-transport vehicles registered in Bengaluru stood at 1.09 crore till March 31, 2023. This included 73.3 lakh two-wheelers and 22.3 lakh cars. In January, the year-on-year growth for the month showed an increase of nearly 30%. The overall vehicular numbers in the State were in excess of 2.98 crore.

Inevitably, this increase has sparked a consequent rise in the State Transport Department’s tax revenues. The annual collection in 2022 touched a record ₹8,648 crore, a substantial 38% increase from the ₹6,263 crore clocked in 2021. The bulk of this collection was from the city’s Regional Transport Offices in Jayanagar, Kasturinagar, Rajajinagar, Yeshwantpur, and Koramangala.

In the last State Budget, former Chief Minister Basavaraj Bommai announced that the department’s revenue collection was set to reach ₹9,007 crore against a target of ₹8,007 crore fixed for 2022-23. This was 13% higher than the Budget estimate. The revenue collection target for 2023-24 has been fixed at ₹10,500 crore.

The Transport Department’s revenue flows from road tax, new vehicle registration fee, permit fee, driving licence fee, checkpost inspection fee, pending taxes and penalties. In terms of tax inflow, the department is the 4th highest contributor to the State treasury. Only commercial taxes, stamps and registrations and excise earn higher.

A robust decongestion strategy for Bengaluru would mean prioritising multiple public transport modes through focused investment, last-mile connectivity and a deliberate shift away from projects that aid the growth of private, personal vehicles. Will the government be willing to let go of a lucrative revenue-yielding sector for greater public good?