Port capacity plans face Budget squeeze

The shipping ministry may need to pare down its demand for budgetary support proposed in the draft National Maritime Development Policy (NMDP) and analyse the requirement for enhanced capacities at ports.

Stressing the need for fine-tuning the matter, the Planning Commission and the finance ministry have suggested a discussion on the topic by the committee of secretaries before a proposal can be sent to the Cabinet.

The draft policy, which spelt out a 10-year programme for the development of the maritime sector, said 30 per cent extra capacity for ports would be planned. This would lead to more efficiency in terms of ship turnaround time at the ports, it added.

The Planning Commission, however, pointed out that simple augmentation of capacity was not sufficient to improve service quality at ports.

"The ports should instead set international productivity norms," it said in its comments on the draft policy.

The department of economic affairs (DEA) said there was a possible conflict between the objective of developing all 12 major ports and 185 minor ports.

"Even allowing for a 5 per cent growth in the world trade, a 30 per cent excess capacity means development of 16 ports only," it said.

The finance ministry also objected to the high level of budgetary support. The government funding of the approach channels of the major ports in India at the cost of Rs 22,000 crore has not found favour with both the ministries.

The DEA has said such activities have to be funded through internal accruals, as private ports also have to dredge themselves. The government support should come through the viability gap funding with the involvement of the private parties, it added.

The DEA pointed out that more than half of the total Rs 10,000 crore expenditure on the Inland Water Transport and shipbuilding and ship repair was proposed to be funded with the help of budgetary support. The need for such high support has not been explained, especially in the case of ship-building and repairs, which are a commercial activity," it said.

The proposal for developing minor ports with 33 per cent central equity was not required when private parties and state governments were already active in this area, the Plan body said.

The viability gap funding scheme could also be used for making minor ports projects-viable, it said.