Economy News


Written by Talent KAS

Related Topic in KAS Prelims Syllabus:

Economy [Paper-II]: Infrastructure in Indian Economy, Rural and Urban Insfrastructure, Ports, Roads, Airports, Railways


  • Union Minister for Road Transport and Highways has announced that FASTags will become mandatory for all vehicles, private and commercial, from December 15, 2019. The earlier deadline was December 1.
  • The Minister recently called FASTags (a device to make automatic payments at toll booths), the equivalent of Aadhaar for vehicles, which will allow the government to track their movement across the country.

What is FASTag?

  • It is a prepaid radio-frequency identification-enabled tag that facilitates automatic deduction of toll charges.
  • A FASTag uses Radio Frequency Identification (RFID) technology to make cashless payments through a prepaid account linked to it.
  • The new system will now do away away with a stop-over of vehicles and cash transactions at toll plazas.
  • It is being implemented by the Indian Highways Management Company Limited (IHMCL), a company incorporated by the National Highways Authority of India (NHAI), and the National Payments Corporation of India in coordination with Toll Plaza Concessionaires, tag issuing agencies and banks.
  • Currently, FASTag can be bought from 22 certified banks, through various online platforms, online applications and at select points-of-sale locations.
  • FASTag has a validity of five years.

How FASTag works?

  • The tag is fixed on the windshield of a vehicle, ideally on the glass just behind the rear-view mirror.
  • It is scanned by the tag reader and the toll amount is deducted when the vehicle approaches a toll plaza.
  • The user will get a short message service (SMS) alert on the registered mobile phone about all transactions and the available balance.

Need for FASTag

  • A joint study in 2014-15 by the Transport Corporation of India and the Indian Institute of Management-Calcutta estimated the cost of delay on Indian roads at $6.6 billion per year.
  • The cost of additional fuel consumption due to delays was also put at $14.7 billion per year.
  • To speed up the toll collection process, there is a need to gradually move towards electronic toll collection, which will reduce congestion and queues at toll plazas.


  • FASTags are likely to reduce the nation’s GDP loss by bringing down loss of fuel while waiting at toll plazas.
  • It will plug revenue leakages and reduce the cost of delays and fuel consumption.
  • The tag will help to remove bottlenecks, ensures seamless movement of traffic and saves time.
  • The centralised system provides authentic and real-time data to government agencies for better analysis and policy formulation.
  • It will also reduce air pollution and the use of paper besides cutting the cost of managing toll plazas.
  • The Central government also plans to enable the use of FASTag for a range of other facilities such as fuel payments and parking charges.

[Source: The Hindu, PIB]


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