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Rocks in sea

Rocks in sea
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First Published: Wed, Sep 26 2007. 12 21 AM IST

Updated: Wed, Sep 26 2007. 12 21 AM IST
Scattered rocks in shallow sea, a religious fable, an ambitious minister and riotous crowds.?Sounds like a promo of a Bollywood potboiler. Sadly for India, it’s not reel life, but a continuation of bad policymaking and insouciant politicians stealing a march over scientific and economic opinion.
The Sethusamudram project has all these elements. The project to dredge sand across the so-called Adam’s Bridge in the Gulf of Mannar region, was meant to shorten the time taken by ships to circumnavigate India by a day. While the costs have galloped, doubts about benefits from the project remain unanswered (as Mint reported in a story on Tuesday and in the past weeks.)
One major reason for the project getting grounded has been the deliberate attempt to keep project details and rationale opaque. This has had serious consequences: from making the project financially difficult to a politically unviable one. There is a sequential chain in which events have unfolded from this wilful lack of transparency. The blame for it can be laid on the doorstep of one individual, shipping minister T.R. Baalu.
To begin with, the project-implementing agency, the Sethusamudram Corp. Ltd, ignored scientific opinion on the consequences of dredging Adam’s Bridge. This is the major part of the project. Environmental engineers, ecologists and geologists alike have voiced concern over the project. Issues such as increased likelihood of damage to coastal communities in case of a tsunami, one that the bridge did a lot to dissipate the last time, have never been addressed.
Crucially, there is no clarity about benefits from the project versus the costs incurred. These costs include the Rs2,400 crore estimated initially (that have now shot up to Rs4,000 crore). To begin with, the project’s viability was under a question mark. If the channel reduces the time travelled by ships, it’s only small ships that can cross the channel. Ships above 30,000 tonnage cannot traverse the channel, forget the big ships of the 150,000 tonnage that would have made a difference.
These advantages would have been more in the nature of externalities reaped by all, while the project costs are concentrated in one entity. This was sufficient to push up borrowing costs because of risks perceived by lenders. Given the political storm later, such an outlook on their part was, perhaps, wise.
By the time these doubts were raised, the Union government had transformed the nature of the project. From being an infrastructure project, it had become a “prestige” project. The affidavit controversy in the Supreme Court was a pointer in that direction. The vehement reaction of the Dravida Munnetra Kazhagam, Baalu’s party, confirmed the point.
If there is a lesson in the Sethusamudram fiasco, it is the urgent need for clear-sighted policies on large projects. Such clarity in policy is a public good in itself. This is because as mentioned above, all such projects have externalities built into them. This can be done by appropriate tariffs and subsidies. For example, in the present case, such an approach could have led to better apportionment of costs and benefits. Instead, this lack of clarity made it possible for one minister (who, by the way, is the shipping minister for India and not Tamil Nadu alone) to turn a project into a personal campaign and destroy it in the bargain.
The first step to make clear and transparent policies on public projects is to make sure that ministers cannot change them on whim. That might be difficult, but unless it is done, concepts such as project costs and viability have no meaning. In the age of structured financing, our political structure has become a bottleneck, instead of things being the other way round.
Did the government mishandle the Sethusamudram project? Write to us at views@livemint.com
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First Published: Wed, Sep 26 2007. 12 21 AM IST