Spending Rs 1300 lakh to generate a job! Why Silverline project is not a good idea for Kerala
An avoidable controversy is now raging in Kerala when it is going through a harrowing experience in taming the spread of the pandemic. It is due to the unilateral decision of the state government to construct, on its own, a separate railway system based on Standard Gauge by borrowing money, technology and the operating system from a Japanese lending organisation. A group of scholars wrote an open letter to the chief minister (Economic and Political Weekly, 29 January 2022) questioning the wrong developmental priority, the unilateral nature of decision-making and the haste in external borrowing, not to speak of the social and environmental consequences. Given the relevance of similar huge projects to other states, it is important that people outside Kerala should also know about this project, especially the crucial facts and fears surrounding the controversy.
Kerala’s efforts in restoring the environmental damage caused by the two great floods is still going at a snail’s pace. There is hardly any reporting of the progress made. As for developing Kerala’s well-connected transport system (by road, rail and air), there exists several cost-effective alternatives including strengthening the existing railway system as well as the once-vibrant, but currently dilapidated, inland water transport. The proposed SilverLine is tantamount to erecting a new standalone Kerala Railway System without the advantage of interoperability with the Indian railways.
Has the state government got so much public finance capacity to indulge in such huge projects? The answer is a clear no. Kerala is one of the few states with a consistent record of both revenue and fiscal deficits for the last 38 years. From the mid-1970s to mid-1980s, the state government collected a revenue of Rs 12.4 for every Rs 100 of state income, which declined steadily to just Rs 8.7 by 2020. That works out to around Rs 30,000 crores. If the annual remittance is added to the state domestic income, the loss would be more than Rs 33,000 crores. But the alacrity with which the state government goes for public borrowing is bewildering, including through an off-budget mechanism that will break the back of the public finance in future. No serious effort is seen to be made to strengthen the tax collection system.
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The capital cost of the proposed project, as per the DPR prepared by a foreign consultancy agency, is Rs 65,000 crores, equal to 50% of the government’s total budget expenditure in 2019-20. The NITI Aayog, after a preliminary verification, had reportedly conveyed to Kerala that the cost will not be less than Rs 1.26 lakh crore, i.e. equal to the total expenditure in 2019-20. No explanation for this huge gap has so far been given by the government. Further, the state’s record in cost and time overruns in public project construction is mind-blowing. My studies revealed that the average cost overrun in the best-case scenario of electricity projects was 3.8 times the original estimate and in the worst-case scenario of irrigation projects, it is a whopping 25 times! Going by the former, the capital cost of Silverline will end up at Rs 2.47 lakh crore as per the DPR and at Rs 4.79 lakh crore as per NITI Aayog. Given the estimated 5,000 new jobs that the SilverLine is expected to create, the capital-labour ratio of this project works out to Rs 1,300 lakh to generate a job as against Rs 40 lakh to generate a job in the existing public sector enterprises. What it means is that if the KRail investment is diverted to projects with the capital-labour ratio of public sector units, the employment generation would be 1.63 lakh jobs or 32.5 times that of SilverLine. If the NITI Aayog figure of capital cost is taken, it will be 3.26 lakh jobs.
What about time overrun? “Don’t take the past experience, we are changing”, that is the refrain from the supporters. If we then take the ‘Sreedharan Standard’ in executing the Delhi Metro Rail (construction at the rate of 14.3 km per year) it will take 37 years to complete this 530 km long Silverline. However, if one takes the Kochi Metro Rail standard, which was also led by Sreedharan, it will take 127 years, given its record of 4.17 km of construction per year.
The economic internal rate of return at 24% for SilverLine is found to be worked out by underestimating costs and over-estimating benefits. Two examples: no precise costing for railway stations and no costing of the loss of output from lands taken over for the tracks and other construction works plus the buffer zone. Monetising anticipated decline in pollution from road vehicles is included in the benefits but the prospect of change over to electric vehicles in the future is ignored. But the most glaring overestimation is in estimating a daily ridership of 80 thousand passengers whereas the Mumbai-Ahmedabad High Speed Rail project estimate is 36 thousand! The methodology deployed for the sample survey of travellers is simply not transparent, except a mention that it was less than a mere 400 persons. The feeling among experts is that the state government and its agency, KRail, have been taken for a ride by the consultancy. Why the government didn’t subject the feasibility report and the DPR to an independent vetting and why this foreign private consultancy was preferred over well-known Indian agencies are all open questions.
On the environmental consequences, the less said is better. Many experts including the well-known urban planner K T Ravindran and geoscientist C P Rajendran have already gone on record stating the likely creation of new floodable areas as well as water clogging along the embankments and the new regions for granite mining—all leading to severe environmental degradation. The carbon emission arising from the use of massive quantities of steel, cement and other high energy material is another dimension. On all these issues, the DPR has preferred to maintain a palpable silence.
There is intense opposition in villages and towns through which the SilverLine will ply. When state officials go there for land marking, the opposition is often physical and heartbreaking when women from households come out and loudly lament the loss of their ancestral homes, neighbourhood and their very existential identity. Police contingents accompany the survey team and force the implanting of marking stones. One should not be surprised if this goes out of hand and becomes an avoidable state-society conflict.
The people’s science movement led by the Kerala Sastra Sahitya Parishad along with a host of other people’s collectives and green movements have placed themselves firmly against this highly interventionist project on social, economic and environmental grounds. This is the movements’ second biggest challenge after the Save Silent Valley Campaign started in the late 1970s that evolved into a national and international campaign.
K P Kannan
Development economist and former director of Centre for Development Studies, Thiruvananthapuram
(kannankp123@gmail.com)