While the Indian Government has been very vocal on its flagship project – ‘Sagarmala’ – the port-led connectivity and development project, the Union Budget has turned out to be non-impressive for the shipping sector.
The Budget proposal has earmarked Rs 1,881.1 crore (USD 292.3 million), a 6% rise, for the Ministry of Shipping as against the budget estimate of Rs 1,773 crore (USD 275.5 million) for 2017-18, which has been revised down to Rs 1,568.2 crore (USD 243.7 million) for the ongoing fiscal. In 2016-17, the budget estimate allocated was Rs 1,531 crore (USD 237.9 million).
The Budget presented on February 1 has proposed just Rs 600 crore (USD 93.2 million) for Sagarmala, the same as Budget 2017-2018. And as per the revised estimates for this fiscal, Sagarmala’s allocation has been brought down to Rs 480 crore (USD 74.6 million), thereby, raising concerns on whether the grand project will ever take off anytime soon.
Industry players are of the view that with such an allocation for the sector, the government is largely dependent on private investments. And unless private sector spends big on shipbuilding and ports, the current outlay is woefully short to achieve the government’s ambitious goals.
Among the major components of Sagarmala are port modernisation, new port development, port connectivity enhancement, port-linked industrialisation and coastal community development.
The latest Budget has proposed to allocate Rs 322.6 crore (USD 50.1 million) for development of ports as against the revised estimate of Rs 171.5 crore (USD 26.7 million).
Inland waterways, too, hasn’t received the much-needed thrust in finance minister Arun Jaitley’s proposal with an allocation of Rs 508 crore (USD 78.9 million) as grants to Inland Water Transport Authority of India as against the revised estimate of Rs 477.3 crore (USD 74.2 million). Of the Rs 508 crore (USD 78.9 million), Rs 8 crore (USD 80 million) an is aid to Bangladesh and the balance Rs 500 crore (USD 77.7 million) grants to the North-East region.
As per Icra’s Budget analysis, “The budgetary allocation (for the shipping sector), however, remains low in comparison to the overall requirement for these projects. In the absence of any major specific announcement for the shipping and ship-building sectors, the impact on the same is expected to be neutral.”
Indian ship-building sector, which, too, is reeling under stress, is looking forward to naval orders to remain afloat. Otherwise, there is only Rs 30.5 crore (USD 4.7 million) in store in the latest Budget, of which a majority is a subsidy to non-central public sector undertakings and private sector shipyards.
Sabyasachi Hajara, former chairman and managing director of Shipping Corporation of India and director at Apeejay Shipping told DNA Money, “Though this government is giving more attention to the shipping sector, on the ground, very little has happened despite traffic at ports showing a healthy increase.”
According to him, Sagarmala is more dependent on private investments, but in every sector, private investments aren’t great and suffering. Unless the overall economy improves, it will take time for the larger Sagarmala project to sail through.
Sea News, February 13