Shipping ministry wants to use road funds for inland waterways

Transportation via inland waterways is cost-effective and more environment-friendly than rail or road transportation

The shipping ministry is looking to divert part of the funds from the Central Road Fund (CRF) kitty - meant for development and maintenance of roads and railway overbridges - to develop inland waterways. An announcement to this effect is likely in the Union Budget 2016-17, according to sources.

Talks are on at a fairly advanced stage and since this fund (CRF) has been created with a specific intention, with deployment also defined, an amendment has to be made first and then approved by the Cabinet," a shipping ministry source close to the development told Business Standard. The source, however, did not say when the amendment would be placed before the Cabinet for approval.

Read our full coverage on Union Budget 2016

The Union Budget for 2016-17 is to be presented on February 29. CRF is a non-lapsable fund created under the Central Road Fund Act, 2000 out of a cess imposed by the Union government on consumption of petrol and high-speed diesel.

The funds are used to develop and maintain national highways, state roads and railway under/overbridges. The fund accumulated Rs 40,000 crore (Rs 4,000 billion) between 2012 and 2014.

Transportation via inland waterways is cost-effective and more environment-friendly than rail or road transportation. However, the sector has failed to attract policymakers in the past mainly because of the constant requirement of dredging expense due to heavy silting and seasonal draught.

"Currently, the issue is that the private sector is arguing they cannot see any great returns from the investment they would make towards this sector. The shipping ministry, therefore, needs that initial amount from the kitty for investment to demonstrate that things can change in this sector if funds are infused. Only then can the private sector be invited to invest in those projects," the source added.

India is estimated to have about 14,500 km of navigable inland waterways according to the Inland Waterways Authority of India. According to industry officials, approval from the Cabinet regarding usage of funds for inland waterways should not be an issue as it would amount to usage of funds for national waterways rather than national highways.

"Since the usage of funds would be for national waterways, the two divisions (national highways and national waterways) are at par and hence, access to funds can be approved by the Cabinet without much hassle," said S Hajara, former chairman of state-owned Shipping Corporation of India.

In the year ended March 31, 2015, the Inland Waterways Authority of India received grants worth Rs 41 crore (Rs 410 million) - of which it spent only Rs 8.06 crore (Rs 81 million). Between FY10 and FY14, cargo movement for national waterways 1, 2 and 3 in Goa and Mumbai region almost halved, indicating the poor state of affairs.

Read our full coverage on Union Budget 2016

Image used for representation purpose only.

Photograph: Gary Cameron/Reuters