Wednesday, Jan 15, 2003
Wednesday, Jan 15, 2003 |
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Tamil Nadu
By V. Jayanth
All models have been tried in Tamil Nadu, with varying degrees of success. When it is a fully Government-funded project involving no tolls, there are no questions raised and no debate on the returns on the investment. This is the old model and can be repeated only in a limited number of cases. The Government just cannot find the resources to fund so many projects, given its resource crunch and the inelasticity of its revenue generation. The recent trend has been in favour of letting it to the private sector on a Build Operate Own, Build Operate Transfer or Build Operate Own and Transfer basis. The time span varies from seven to 30 years, depending on the size and the investment. The Government, the local body or a Government agency could be a junior partner. These projects involve the collection of a toll from the user to realise the cost. Unfortunately, some recent experiments in toll-related projects have not been too successful. The Coimbatore bypass, undertaken by the Larsen and Toubro, is a classic example. The traffic projections and the users' reluctance to pay a heavy toll have rendered it non-viable. The promoters have been after the Central and State Governments to `compensate' the loss, as it was implemented on the basis of certain guarantees. According to a leading consultant, the sewer project for the Alandur Municipality here is another example of ``mismanagement'' in implementation. The leadership provided by the chairman enabled completion of the project, with people's participation, as every user who wanted a connection, paid the money up-front. ``Unfortunately, politics has come in the way and a good project has not reached fruition'', he explains. The Tirupur project for water supply to hosiery units in the export town and to wayside villages has been worked out on a `user-pays-the-cost' pattern. Since almost 90 per cent of the users are industries, they will be paying higher costs to finance the project, which will cross-subsidise the supply to the villagers enroute. As the export units now buy water in lorries, it may be more dependable and cost-effective to go in for a permanent source. Yet, the project has really not taken off. The concept of a `Special Purpose Vehicle' to take up such projects has come to be accepted. But the need now is to evolve a viable financing pattern. Consultants and project engineers strongly feel that the best method will be to let the local bodies take up these ventures and devolve both political and economic power to them. They insist that the crux of the problem now is that the local bodies have neither the funds nor the powers to implement or sanction big projects. They have to depend on the State Government for both. Despite the Panchayati Raj Act and so-called `devolution' exercise, the local bodies remain ``helpless and without funds''. In the present circumstances, they suggest that the only way forward will be to release the seed money as grant to local bodies and empower them to go ahead. ``It is possible and viable for a municipality or panchayat to float a bond for a financing a specific project. The toll can help recover the investment and the elected representatives also become accountable to the people, who finance the bond'', says a consultant. A financial market analyst says: ``There are not enough instruments in the market today to mobilise the savings. When interest rates are dipping, the people will at least look for security. A Government-backed municipal bond, with 8 to 9 per cent interest, can surely mop up funds for local body projects''. (Concluded)
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