Saturday, August 22, 2015

Modi's "special" Rs 1.25 lakh package for Bihar is part of ongoing projects, has no separate budgetary provision

By Our Representative
Facts have come to light suggesting that there are no separate provisions in the Central budget in the “special mega package” for Rs 1.25 lakh announced by Prime Minister Narendra Modi for the “development” of Bihar, and the funds that he has said he “allocated” are actually mainly on-going infrastructure projects, which will take 10 years to complete. In fact, a senior finance ministry official has been quoted as saying that the Rs.1.25 lakh crore package, announced ahead of the Bihar elections due soon, is “part of ongoing development programmes.” 
Announced at an official function in Arrah, Bihar, on August 18 for a national highways project, which alone will cost Rs 54,713 crore for the highways, which includes 2,775 kilometres of highways and construction of bridges across the Kosi, Sone and Ganga rivers, another big chunk of funds has been allotted for the expansion of Barauni Refinery and a petrol-diesel pipeline from Raxaul to Nepal, and a few other already continuing projects.
In fact, observers say, similar announcements were made in Gujarat, where Modi declared in mid-2000s a Rs 15,000 crore Sagarkhedu project for improving livelihood of the people living in the 1,600-long state coastline, and another Rs 10,000 crore Vanbandhu project for the development of the eastern tribal belt, where 14 per cent of the state’s most backward population lives. 
He faced criticism for failing to spend funds he had announced, as no special budgetary provision was made for these projects. Even today, the two projects are largely on paper, even though the Gujarat government claims they have been "completed".
Keen commentators observe, the numbers look “very big and bombastic”, but actually it is nothing but “the art of packaging” involving dishing out big figures. Under Narendra Modi, packaging of development programmes is more art than science, perhaps an abstract art whose deconstruction is open to subjective interpretations.
Already, facts have come to light suggesting that the national highway projects (about 2,775 km), includes building four lanes as well as bridges across rivers, costing more than Rs 54,000 crore was to be actually built on a public-private partnership basis. The National Highway Authority of India (NHAI) should have invited tenders from private parties to do the project under a public private partnership (PPP) arrangement. But, say knowledgeable sources, the private companies “withdrew” from executing fresh national highway projects due to stressed balance sheets.
Hence the decision on the part of the NHAI, which operates under the Ministry of Roads and Surface Transport, to directly implement the project. As one source notes, even if the economy picks up in next couple of years or so, and the private sector “decides” to return to execute the highways projects, the Government of India cannot now say that it will hand over the project under the public private partnership (PPP). Hence, this has turned into a special financial package for Bihar!
Same is the case with the Indian Oil Corporation (IOC), which has been considering to expand the capacity of its refinery in Barauni, Bihar. The refinery’s capacity is proposed to be expanded from 6 million tonnes to 15 million tonnes. RS Butola, ex-chairman and Managing Director of the Indian Oil Corporation (OIC) , has been quoted as saying that the idea of Barauni refinery expansion would have proved to be a very costly affair.
After all, it would require transporting crude oil to Bihar from the Haldia port in West Bengal. “Private refineries run by Reliance Industries and Essar in Jamnagar on the north Saurashtra coast in Gujarat would have huge advantage over an expanded Barauni”, the source points out, adding, hence the IOC was “exploring” the possibility of setting up a new refinery off the Gujarat or Maharashtra Coast to be able to better compete with RIL and Essar. The expansion would have meant Rs 13,000 crore, a cost which the Government of India will bear.

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