Shipping ministry gets least allocation in Budget

At every forum, Union minister Nitin Gadkari has been talking about the government's grand plan of Sagarmala - the port-led connectivity and development project - to lower freight costs drastically and making the supply chain efficient. However, the Union Budget has turned out to be a damp squib for the shipping sector.

The minister, who has road transport & highways, shipping and water resources under his portfolio, has always emphasised that waterways is his first preferred mode of transport, followed by railways and roads. However, shipping got the least allocation among the three transport sectors.

The Budget proposal has earmarked Rs 1,881.1 crore, a 6% rise, for the Ministry of Shipping as against the budget estimate of Rs 1,773 crore for 2017-18, which has been revised down to Rs 1,568.2 crore for the ongoing fiscal. In 2016-17, the budget estimate allocated was Rs 1,531 crore.

The Budget presented on February 1 has proposed just Rs 600 crore for Sagarmala, the same as Budget 2017-2018. And as per the revised estimates for this fiscal, Sagarmala's allocation has been brought down to Rs 480 crore, thereby, raising concerns on whether the grand project will ever take off anytime soon.

Industry players are of the view that with such an allocation for the sector, the government is largely dependent on private investments. And unless private sector spends big on shipbuilding and ports, the current outlay is woefully short to achieve the government's ambitious goals.

After the Budget 2018 announcement, Sabyasachi Hajara, former chairman and managing director of Shipping Corporation of India and director at Apeejay Shipping told DNA Money, "Though this government is giving more attention to the shipping sector, on the ground, very little has happened despite traffic at ports showing a healthy increase."

According to him, Sagarmala is more dependent on private investments, but in every sector, private investments aren't great and suffering. Unless the overall economy improves, it will take time for the larger Sagarmala project to sail through.

Among the major components of Sagarmala are port modernisation, new port development, port connectivity enhancement, port-linked industrialisation and coastal community development.

The latest Budget has proposed to allocate Rs 322.6 crore for development of ports as against the revised estimate of Rs 171.5 crore.

Inland waterways, too, hasn't received the much-needed thrust in finance minister Arun Jaitley's proposal with an allocation of Rs 508 crore as grants to Inland Water Transport Authority of India as against the revised estimate of Rs 477.3 crore. Of the Rs 508 crore, Rs 8 crore an is aid to Bangladesh and the balance Rs 500 crore grants to the North-East region.

As per Icra's Budget analysis, "The budgetary allocation (for the shipping sector), however, remains low in comparison to the overall requirement for these projects. In the absence of any major specific announcement for the shipping and ship-building sectors, the impact on the same is expected to be neutral."

Indian ship-building sector, which, too, is reeling under stress, is looking forward to naval orders to remain afloat. Otherwise, there is only Rs 30.5 crore in store in the latest Budget, of which Rs 30 crore is a subsidy to non-central public sector undertakings and private sector shipyards.