India plans new major ports in each of its 9 coastal states. Why? Why not let the private sector, which is very much interested in setting up ports, take care of it?
Central govt. schemes, Ports and waterways September 8th. 2011, 8:52pmFollowing is an excerpt from a report in Business Standard. (Thanks to Abhishek for the pointer.)
The government has envisaged an investment of more than Rs 22,000 crore for setting up nine new major ports in the country over the next five years.
The Ministry of Shipping has asked nine coastal states — West Bengal, Orissa, Andhra Pradesh, Tamil Nadu, Kerala, Karnataka, Goa, Maharashtra and Gujarat — to select sites for setting up a major port each. It is awaiting a response from all nine states.
"We have written to all the nine (maritime) states and have asked them to select site for the major port," a Shipping Ministry official said, adding that construction of each port would cost about Rs 2,500 crore.
The 12 existing major ports are Mumbai, the Jawaharlal Nehru Port Trust, Kolkata (with Haldia), Chennai, Visakhapatanam, Kochi, Paradip, New Mangalore, Marmagao, Ennore, Tuticorin and Kandla.
… Any port with two or more berths with facilities and equipment capable of handling 100,000 tonne per month of cargo from ocean-going ships is categorised as a major port.
The Shipping Ministry plans to create port capacity of around 3,200 million tonne to handle the expected traffic of about 2,500 million tonne by 2020.
… About 90 per cent by volume and 70% by value of the country’s international trade is carried through maritime transport.
For some reason I feel there is a catch somewhere.
To start with with private parties willing to spend their own money in setting up ports, why does the central government needs to spend its tax earnings on this. It should focus on elements for which private funding is lacking.
Other arms of the central government are trying to sell-off equity in public sector units to get money for other developmental things. With that background it does not make sense for India to spend money on things (new ports) that the private sector can do.
Perhaps some of the readers can suggest some perspectives where the above makes sense.
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September 9th, 2011 at 1:53 am
Prof. Baral,
I would like to differ here. The govt. is trying to set up more ports which is good for the economy. Private investment is fine, provided it is deployed properly and expeditiously. In Odisha, we have identified more than 10 sites for the ports in the entire coastline. But how many we could develop with the private investment? Except Dhamra and to some extend Gopalpur with some development we have measurably failed in the last decade or so, inviting the real investor in the sector.
However, if the central govt. is trying to put new ports, it is a good sign. See the condition of the Jagatsingpur district and Kendrapara district. The economic condition of these districts are good, partly due to Paradeep port. One major port in any area shall lead to economic revival of the entire stretch of connection. Secondly, this is also good utilisation of the resources which will generate revenue for the state and create jobs for the people.
Lastly, being govt. project, it may not face any obstacle for the funds, as it will be earmarked primarily.
Specially in the Odisha context its a good step for the state.
Thanks
September 9th, 2011 at 2:23 am
I wish this large investment were earmarked for the development of railway infrastructure in the country. What to do with ports when there is no railway connectivity to ferry goods. The single big idea that the NDA came up with was the revolution in National Highways infrastructure in the country and which became a benchmark in executing successful PPPs in the country. If there is one area that keeps India backward, then it is the absence of proper railway connectivity and incidentally it is the last fort of a Public monopoly which justifies why liberalization is good for the common public. Investing in ports is a misplaced priority looking into the current investments that is forthcoming in this sector.
September 9th, 2011 at 1:50 pm
Private ports in India are free to regulate the pricing criteria. This can lead to a selective exclusion of certain sectors, industries or investment groups as the promoters may have their own stakes invovled. Tatas and other big corporate houses that are developing or are partnering to develop minor ports in India are business conglomerates that have their industry linkages to feed. Adani which is also interested to set up a major port on the east coast in Odisha is another case in point. So, major central government investment in this sector may be crucial for catering evenly to the economics of the hinterlands that thee new sites will cater to. Further, being government backed, acquisations like midless allotment of ports (Odisha opposition has been pretty vocal about this). Besides, ports, national highways and other arterial infrastructure development is a consitutional obligation of the state in India, given our socio-capitalist bent of legal framework. Besides, another aspect that might have significance in the geo-politics of the area is that the GoI is creating a necklace of ports along the coast that it has a direct control over, thereby in a way, makes it easier for it to leverage them in the times of need to protect the national sovereignty.
Abhishek,
Mumbai