Investments in transport corridors should pay off

09 Feb 2023
Investments in transport corridors should pay off

Opinion: Sanjib Pohit

The viability of long-gestation transport projects hinges on rightly projecting future revenue flows. Big Data can help in this.

The successive Budgets of the NDA government have emphasised on increased investments to upgrade infrastructure. This is a thrust area in Budget 2023 as well. Roads, transport and the Railways continue to remain in focus, with the Railways receiving the highest ever outlay of ₹2.4-lakh crore in FY24, nearly nine times of that in FY14.

Finance Minister Nirmala Sitharaman has allocated ₹75,000 crore for 100 critical infrastructure projects which will improve regional connectivity and boost domestic air links. The Rail Budget outlay will no doubt improve rail connectivity, speed, and passenger traffic.

Among the infrastructure segments, investment in transport corridors (land, water, rail, air) has been the focal theme of the government for successive years. This is in tune with the government’s objective to build an efficient logistics ecosystem to make India a hub of the global value chain.

No doubt, investing in transport corridors is a high-cost exercise with returns coming in only after a long gestation period. This is more so, if the planning of corridors goes off target in respect of future streams of revenue. This is an issue with many of the country’s corridors. The revenue stream from toll seldom matches, or close to, what is specified in the project document. As a result, the government’s or private sector’s resources get locked in for a long duration resulting in shortage of funds to investment in much-needed new corridors .

Road transport
As for greenfield inter-State road transport corridors, hey are either 4/6/8 lanes along the entire stretch, without taking into account the variation in freight demand across the corridors. Surely, it makes sense to vary the carrying capacity of the corridor, depending on the prospective traffic. This needs to be looked into as there’s a clamour for resources from other sectors of the economy as well.

If this be the case, why is not much attention paid to correctly project the future stream of traffic (freight, passenger)? In most project documents, the methodology is not spelt out clearly. If a survey is the tool to make projections, often it is based on a thin sample to cut costs; theoretically sound statistical/survey tools are seldom applied. It is not surprising, therefore, that projections of revenue from transport corridors go awfully off-target.

In developed countries, this probably does not happen as sufficient attention is paid to projecting traffic volume at the planning stage itself. They make use of Big Data to understand existing volume of traffic on a corridor. Some developing countries use Google Traffic data for estimating traffic volume. India apparently does not make use of such data for transport planning.

By contrast, India stands apart. The country generates Big Data (24×7) on freight transport movement — that is, GST/E-way bill — which are not released by the government for planning purpose. These data can provide information and insights on: (a) the busiest trade corridors; (b) the volume of freight traffic from point A to point B; and (c) where more investment on transport corridors are required.

Ideally, the government can anonymise and release this data. This is probably the best data currently available for any inter/intra-State transport corridor planning exercise. To the bidders for transport corridors, the government should make this data available for more accurate demand projections. Also, the data must be made available to independent researchers as this will facilitate in more accurate estimation of logistics cost which policymakers are planning to measure on a regular basis.

The writer is Professor, NCAER. Views are personal.

Published in: The Hindu Business Line, 09 Feb 2023