Pachauri punctures Government claims on Setu Project.

Special committee on Sethusamudram project punctures Government claims

Read more at: http://indiatoday.intoday.in/story/sethusamudram-project-rajendra-kumar-pachauri-upa/1/251985.html

The UPA government may have rejected the findings of the R. K. Pachauri committee , which studied the controversial Sethusamudram project , but the panel head is resolute on each and every observation made in the report.

Rajendra Kumar Pachauri, the head of the government-appointed eight-member committee, told Mail Today on Wednesday that not only is the present proposed alignment - 4A - of the Sethusamudram Ship Canal Project (SSCP) "economically nonviable", but some of the assumptions (made by the government) about the economic returns from the project are also "over optimistic".

Pachauri made this claim four days after the UPA government submitted an affidavit to the Supreme Court citing the project's "economic, navigational and strategic advantages" as reasons to pursue the controversial project, which cuts through the mythological "Ram Setu", despite the panel's observations.

 

 

 

 

In an exclusive interview to Mail Today , Pachauri defended his team's "purely scientific findings" and wished "luck" to the UPA government if it " still" wanted to proceed with the project.

'Outdated'

The scientist dismissed the government's proposal as outdated.

According to him, the last major project of a similar scale was the "Panama Canal". "That's the only one I can think of, and even that was more than a century ago... In those days, people did not think in ecological, environmental terms, the way we do now. We also have computers, technology, science, stimulation and other stuff that can help us see the larger picture, picture for the future... We should use it now, rely on it," Pachauri said.

Defending his team's findings, he said: " As for our scientific study, our dedicated team did it for a period of over one year, taking into account different factors and circumstances. We considered two parameters in the study - the project's impact on ecology and economy - and no one can find any fault with it whatsoever."

The panel report, a copy of which is with Mail Today, states: "From the foregoing, it can be seen that the project, including the possibility of adopting the alignment 4A, could potentially result in ecological threats that could pose a risk to the ecosystems in the surrounding area and, in particular, to the biosphere reserve." The report punctures holes in some of the key economic claims of the government.

It states that the "benchmark rate of return of 12 per cent isn't met for the range of scenarios examined in the case of alignment 4A". Pachauri said, "We found it economically unviable. Assumptions of the rate of return and other economic parameters were much too 'optimistic'. The return was not even meeting the Planning Commission set 12 per cent rate of return."

The report concludes: "Given the doubts raised by the detailed analysis, it is unlikely that the public interest would be served by pursuing the project on the alignment 4A." Pachauri also warned against other variables such as risk of oil spills, cyclones, tsunamis and other natural threats. "There was a massive cyclone at the very spot in 1964. One has to take into account the impact of such natural phenomena. Besides we also have to keep in mind climate change, its impact on the (rising) sea levels and their relation to the project," he said.

About the breach of the ' Ram Setu', Pachauri said: " The 4A alignment that we surveyed will require cutting through 'that' which is called the part of 'Ram Setu' by some people... but of course, our study has entirely been based on science and has got nothing to do with any religion." He said if the government rejects alignment 4A, it could possibly take years to work out another alignment.

"All the other existing alignments have already been ruled out by the SC and other authorities... In fact, it was the SC that asked the government to get a scientific study done on this alignment, and now that we have found it unviable... finding a new one could take some years," he said.

 

Misery rate of 20% - the achievement of UPA - Prof R. Vaidyanathan

http://prof-vaidyanathan.com/2013/02/27/budget-blues-misery-index-goes-up/

 

Budget blues: Misery Index goes up

February 27, 2013 · by Prof Vaidyanathan · in niticentral.com

The Economic Survey released by the Finance Minister indicates that the misery index has increased.

The economy — GDP at factor cost at constant 2004-05 prices – has grown at five per cent in 2012-13 compared to 6.2 per cent in 2011-12 and it is forecast to grow at 6.1 per cent to 6.7 per cent in the coming year namely 2013-14.

There is a popular method adopted by economists sitting under the tall ceilings of Government buildings in Delhi to adopt what is called 'ceilings method' of forecasting. In this econometric method — If I recall economist Bibek Debroy introduced this term – one stares at the ceiling say for five to 10 minutes and then proclaims the forecast growth rate.

Given the dismal scenario of industry and agriculture growth rate, combined with sluggishness in the service sector this forecast seems to be of 'ceiling method'.

If we consider GDP at constant market prices (at 2004-05 prices) it is expected to be 3.3 per cent only in 2012-13 compared to 6.3 per cent in 2011-12.

One thing is sure that all important parameters of the economy show secular decline in the last five years of the Congress-led UPA Government. One hopes this is not the secular issue this Government wants to achieve.

The survey observes that the manufacturing sector (comprising mining and quarrying, electricity gas and water supply and construction) registered a growth rate of only 3.5 per cent and 3.1 per cent in 2011-12 and 2012-13.

Within this, growth of manufacturing sector is at even lower levels at 2.7 per cent and 1.9 per cent for these two years. Growth in Agriculture was weak at 3.6 per cent and 1.8 per cent. Service sector which was growing at double digits earlier declined to 8.2 per cent in 2011-12 and 6.6 per cent in 2012-13.

This is like a cricket commentator who suggests that the performance of the team was bad due to batting, bowling and fielding

Then the survey gets into rudali mode of explaining the reasons for the woes. Declining savings rate is an area of concern. Given the level of inflation, particularly food inflation, that people manage to save is itself good news. Domestic savings in 2011-12 was 31 per cent and 2012-13 is awaited.

One long rudali is about households investing in gold. Government may treat it as consumption but households consider it as investment. The survey itself points out that the return on gold is 24 per cent between 2007 and 2012 and seven per cent on Nifty and eight per cent on savings deposits. The survey fails to recognise that gold jewellery is a pension/insurance product to a large number of poor women and it is also used as collateral in small business borrowings from 'unorganised credit' markets.

The survey recognises the importance of service sector in terms of share in GDP and growth rate but fails to point out that substantial portion of service sector activities are undertaken by partnership/proprietorship firms (unincorporated enterprises or non-corporate sector).

In many service activities like trade/hotels and restaurants/non-railway transport, etc, the share of non-corporate sector is as high as 70 per cent to 80 per cent. If the credit needs of these sectors are choked due to non-bank regulations and no reforms in regulating them then the growth rate will be impacted.

As far as Government finances are considered, less said the better. Gross tax revenue was budgeted at Rs 10.8 lakh crore for 2012-13. The April-December picture was 63 per cent of budgeted revenue (BE) which is much lower than last five years average of 69 per cent. The tax to GDP ratio has fallen to 9.9 per cent in 2011-12 compared to 11.9 per cent in 2007-08. The survey correctly identifies that raising tax to GDP ratio above 11per cent is critical for sustaining the process of fiscal consolidation. This is home work for the next Government.

The fiscal deficit of the centre is 5.7 per cent of GDP in 2011-12 as per the provisional actual. The Government of India can alone explain the terminologies like provisional actual. But if we add the deficit of State Governments and all public sector undertakings then the actual deficit of the Government system may be nearer to 12-14 per cent.

The survey identifies the weak areas and shortfalls but makes only passing references to leakages in NREGA and other such schemes. Survey should have discussed in more detail the issues associated with 'freebies' like NREGA and the impact of it in generating genuine productive employment. Instead it only points out about money expended and how wages have gone up. But what about generating productive assets?

The survey mentions about inflation which is running more than double digits — the retail one and more particularly the food items. But unfortunately the survey does not provide estimate of corruption percentage in relation to GDP. One can safely surmise it to be 10 per cent on the lower side since every human endeavour is impacted by that. We can call it a womb to tomb – birth certificate to death certificate – issue and so a 10 per cent assumption may be on the conservative side.

This means inflation rate plus bribe rate at 20 per cent which we call the misery rate is the single largest achievement of this UPA 2

Author is Professor at IIMB- views personal