The Union Budget 2020-21 has given very low priority for the Sagarmala Project. Only Rs.297 crore is allocated for this infrastructural development scheme. This comes in the backdrop of very low allocations for the maritime sector in general out of the Rs.1 lakh crore allocation for the infrastructure sector – most of which is to be tunnelled into the National Infrastructure Pipeline. This is significant as India has an advantage with regards to its long coastline and its position in the Indian Ocean, which could be utilized to its full potential with the sustainable development of its coastal areas. Additionally, Sagarmala program needs an overhaul to make it more sustainable and inclusive so that the local fishing communities are not harmed.
What is Sagarmala Program?
- The Sagarmala program is a flagship initiative of the Shipping Ministry to utilize the 7,500km long coastline and its strategic location in the Indian Ocean.
- The name ‘Sagarmala’ is from Hindi words ‘Sagar’ meaning ocean and ‘mala’ meaning ‘garland’.
- It is a port-led development program that seeks to improve infrastructure development leading to better competitiveness in logistics, increasing industrialization and job creation and subsequently the development of the overall coastal economy.
- It was first introduced in 2003 but failed to take root. It was reintroduced in 2014.
What are the objectives of the project?
- To build world-class port capacity in terms of quality and quantity.
- Improving turnaround time to less than 2 days.
- Improve the condition of coastal communities by skilling the communities, developing fisheries and marine tourism.
- The project seeks to reduce logistics cost through infrastructure investment and development. This would promote domestic trade and EXIM trade by:
- Optimizing the modal mix (a mix of different transport modes) to bring down the cost of domestic cargo
- Locating upcoming industrial capacities near the coast to reduce logistics cost for transporting bulk commodities.
- Developing discrete manufacturing clusters in proximity to ports to stimulate competitiveness in the export sector. This would also help with the ‘Make in India’ initiative.
- Optimizing time and cost of EXIM container transport.
What are the components of the program?
There are 4 components in this project:
- Port modernization: by capacity augmentation and improving the efficiency of existing ports, development of new ports.
- Port connectivity: development of logistics parks, inland water transport, coastal shipping, upgradation of road and rail routes and developing new road and rail connectivity.
- Port-led industrialization: through setting up of industrial clusters, coastal employment zones (CEZ), maritime clusters, smart industrial port cities and port-based special economic zones (SEZ).
- Coastal community development: by development of fishing harbours and fish processing units, coastal tourism projects and skill development of the community.
- Coastal shipping and inland waterways transport: an environmentally friendly transportation mode for cargo movement.
How is the program being implemented?
- The program was designed to be implemented along the lines of cooperative federalism with the provision for platforms for coordination among the authorities from the centre, state and local level.
- The projects are mainly implemented on a Public-Private Partnership (PPP) model.
Institutional Framework of the Program:
The National Sagarmala Apex Committee:
- It is chaired by the Union Minister of Shipping.
- It also comprises of Cabinet Ministers from other ministries with stakes in the program and the Chief Ministers or Ports’ Ministers of the maritime states.
- Its functions include:
- Guiding the overall policy and implementation
- Approving the National Perspective Plan
- Coordinating at the high level
- Reviewing planning and implementation
Sagarmala Coordination and Steering Committee
- It is chaired by the Cabinet Secretary.
- It also comprises of stakeholder ministries’ Secretaries and the maritime states’ Chief Secretaries.
- Its functions include:
- Coordinating among the ministries and the state governments
- Reviewing the implementation of projects, detailed master plans and the National Perspective Plan
- Considering the funding aspect of the projects
- Examining the funding options for these projects
State Sagarmala Committee
- These are chaired by the respective state’s CM or the Minister of Ports.
- Its functions are:
- Coordinating and facilitating the projects at the state level
- Taking up matters as decided in the National Committee
Sagarmala Development Company
- Sagarmala Development Company (SDC), which was set up under the Companies Act, 2013, comes under the administrative control of the Ministry of Shipping.
- It provides equity support to the project Special Purpose Vehicles (SPVs) and funding support for the residual projects under the Sagarmala Programme.
- The SDC would identify port-led development projects and assist project SPVs in project development and structuring activities, bidding out projects for private sector participation, putting suitable risk management measures in place for strategic projects, cutting across multiple states/regions and obtaining requisite approvals and clearances
Why is port-led development crucial?
- The ‘port-led’ development concept is key to the programme.
- Such a development focuses on ‘logistics-intensive industries’ i.e. industries in which transportation accounts for a high portion of the overall costs or timely logistics is vital for its success.
- Ports have a vital role in India’s economic progress with 95% of the merchandise trade by volume occurring through these seaports.
- Several ports like the Jawaharlal Nehru Port Trust, Hazira Port etc. have developed into specialized centres of economic activity and growth.
- Though India has an advantageously long coastline with strategically placed ports, many of these struggle due to infrastructural and operational inefficiencies. Eg: while the global average in turnaround time (a key indicator of port efficiency that gives the time interval between the arrival and departure of a vessel) is 1 to 2 days, major ports in India still have a TAT of more than 2 days.
- A major impediment to smooth cargo movement in India is last-mile connectivity. A huge portion of Indian freight (87%) use road and rail routes for goods’ transport. During the transport of these goods to the port, they face ‘idle time’ mainly due to the limited road and rail links between the centres of production and consumption.
- Of India’s modal split (share of different transportation modes in the modal mix), waterways account for a mere 6% despite its various attractions like being safer, cleaner and cheaper. Its effect on the economy can be seen by considering its modal share in countries like China (47%), Japan (34%) and USA (12.4%).
- Use of waterways for transporting industrial commodities like steel, coal, iron ore and cement can rake in significant savings for the centre. These savings can be used by the centre for the much needed developmental activities near the coasts.
- The increased logistics cost translates into a higher cost of goods and services transported using it. Eg: 90% of coal is transported through railways and the resulting increase in logistics cost affects the manufacturing firms and the competitiveness of the exporters.
- Locating industrial centres at closer proximity to ports would be advantageous as seen from the case of China’s ‘Port-led Policy’- locating major industrial zones in its coastal region. The result is that despite negligible cost on a per ton kilometre basis (between India and China), China has a lower container exporting cost than India.
What is the current status of the programme?
- Out of the 574 projects, under the 4 components of the program, to be implemented between 2015 and 2035, 121 projects have been completed while 200 more are at different stages of implementation.
- The master plan for all 12 major ports has been finalized. These plans include 92 port capacity expansion projects, which are expected to add 712 million tonnes per annum capacity over the next 2 decades.
- 2 major ports are to be set up anew at Vadhavan in Maharashtra and Paradip in Odisha.
- 7 out of the 16 proposed fishing harbours have been completed. These include Talai and Chettuva in Kerala, Virakwada (Maharashtra), Poompuhar (Tamil Nadu), Amadalli and Malpe (Karnataka), Chinnamuttom (Tamil Nadu).
- In 2019, the program focused on improving the efficiency with which the ports handle liquid cargo like naphtha, petroleum products, crude oil etc.
- The centre is to launch a Port Communications Systems App for greater coordination among the stakeholders for the program’s implementation.
- The Sagarmala projects are being considered for integration with the Bharatmala Pariyojana (the road network project).
- The centre has been using budgetary allocations mainly for small projects like development of fishing harbours and training. For the larger projects, the centre is depending on private investments.
- The 2020-21 Union Budget reduced the allocations for the project, only Rs.297 crore out of the Rs.1 lakh crore allocation for infrastructure. In 2019, the allocation was Rs.550 crore when the actual investment requirement was Rs.4 lakh crore.
- The budget covered the corporatization of a major seaport and its market listing, completion of Jal Vikas Marg on NW-I and the Dhubri-Sadiya inland waterway.
What are the challenges?
- According to an ICRA study, the program is being impeded due to lack of timely investment mobilization and budgetary support.
- Another challenge is the creation of an environment favourable for businesses and tangible incentives to attract the private sector.
- There has been resistance from the fishing communities and environmental activists in certain areas. The Karnataka High Court recently stayed the work on Karwar Port following protests by the local fishermen.
- At the end of 2018, the centre diluted the Coastal Regulation Zone Notification- a move that is favourable to the Sagarmala Program but highly dangerous for the fragile coastal ecosystem.
- This is because Sagarmala, along with Bharatmala, were declared as ‘strategic projects’– i.e. exempt from the provisions of CRZ. This implies that land can be reclaimed from ecologically sensitive CRZ-I zones and roads can be built here.
- Apart from this, there have been instances of Sagarmala projects triggering accelerated coastal erosion and increased pollution from the industrial clusters.
- Port expansions involve massive dredging into the sea that destroys vast stretches of fertile fishing grounds and destabilises jetties.
- Over the years, there is reduced parking space for small artisanal boats, curtailed access to fishing harbours and unpredictable fishing catch. This is significantly affecting the fishing communities, who are already suffering due to the impacts of living next to mineral handling facilities and groundwater exhaustion.
- There has been less than the ideal allocation for the coastal community development pillar of the project.
- There is also suspicion among the fishing community that this ambitious programme would lead to displacement and would adversely affect their fishing trade.
- Fishermen are of the view that the programme has been designed to privatise sea and to uproot fishermen from their hamlets.
- The COVID-19 crisis has greatly affected the trade projects that form the basis for the Sagarmala program. This has led to the need for fresh blueprints (Maritime Vision 2030).
What is the way forward?
- The government needs to set up a dedicated ‘Maritime Development Fund’– as the sector requires long-term and stable financing.
- There is a need for the management of wastes entering the coastal areas from large river systems.
- These not only affect the coastal community and maritime ecosystems but also pose a huge threat to the human food chain.
- According to recent studies, the reduction of plastic inputs from the catchment areas of top polluting rivers can drastically reduce the waste outflow into the ocean. It is imperative for Sagarmala project, which includes riverine infrastructure development, to integrate existing environmental programmes like Swachh Bharat and the National Mission for Clean Ganga (NMCG).
- India needs to identify partners (both foreign and domestic), who can help in making Sagarmala more sustainable and inclusive.
- There is a need for increased funding for the welfare of the local fishing communities. Their traditional livelihoods must be safeguarded while promoting communities’ growth and development.
- There must be increased modernisation with emphasis on sustainability.
Though coastal development is vital for economic development, it should not be at the cost of thousands of livelihoods of the marginalised communities and degradation of the environment. Therefore, necessary reforms and funding must be provided to make the project more inclusive and environment-friendly.
Practice question for mains:
Critically examine the issues faced by Sagarmala Program. What are the measures that can be taken to make use of its potential? (250 words)