Hope floats for India
June 12, 2016
With the economy getting increasingly integrated and globalised, and infrastructure development being a key area, inland waterways will become critical to trade and growth. The recent National Waterways Act which has 111 inland rivers and channels as national waterways, up from six is a promising step in that direction
Historically, societies have always been located near water sources, largely because water enables efficient transport. At various stages in the history of economic growth, waterways have helped create economic wealth. During the colonial period, at the recorded peak in 1877, as many as 180,000 country cargo boats were registered at Kolkata, 124,000 at Hooghly and 62,000 at Patna. The fleet strength today is not even worth mentioning, which for information’s sake is probably about 500.
Around the 1940s, private sector passenger and cargo services were available up to Agra, and river services up River Ganga extended as far as Garhmukteshwar. Despite extension of the Assam-Bengal Railway from Lumding to Guwahati in 1901, in the Assam valley, 98 per cent of the weight of the trade was carried by river. Post-Independence, the importance of inland waterways in the stream of development thinking and process has remained much neglected in India.
But that might all change. Passed by Parliament and notified in March 2016, the National Waterways Act, 2016, has 111 inland rivers and channels as national waterways, up from the earlier figure of six. The Inland Waterways Authority of India (IWAI), established in 1986 through an Act of Parliament, is charged with undertaking feasibility studies for the designated national waterways before any development is operationalised.
Compared to other means of transport, inland waterways are the least capital-intensive. And with relatively low infrastructure costs, it is best suited to carry over-dimensional cargo (ODC). Despite such advantages, waterways trade constitutes less than 4 per cent of the total inland cargo movement in India. The percentage is significantly higher in other countries like China (47 per cent), Europe (40 per cent), Japan and Korea (44 per cent) and even Bangladesh (35 per cent).
China, in particular, considers inland port infrastructure critical to its global trade growth and has set ambitious targets to improve the waterways. The Yangtze River is being planned as an economic super-zone, or what is referred to as the Golden Waterway. The initiative calls for strengthening shipping capacity along the Yangtze by expanding roadway and railway networks, and building large-scale logistics centres. This is part of the Chinese Government’s ‘Go West’ policy from the East China Sea to Sichuan in the West. In the US, waterways have been developed and integrated as an efficient transportation system with more than 17,500 km of commercial navigation channels in about 48 States, A major factor in the waterways superiority of the US is the advances in ship building, material and engine design.
Valuing the waterways
“Nature had provided India with great navigable rivers which had been the high roads of trade from ancient times. And the system of canals, fed by these rivers, would have suited the requirements of the people for cheaper if slower transit, and would have at the same time increased production, ensured harvests and averted famines,” wrote Romesh Dutt, the eminent historian. He went on to describe how narrow commercial considerations prevented state’s involvement in river navigation, while road and rail enjoyed continuous state support during the British rule.
With a coastline of 7,500 km and with 14,500 km of potentially navigable waterways, India’s waterways development has been a sad case of out of sight, out of mind. In addition, there are about 116 rivers that can provide 35,000 km of navigable stretches. By overlooking these natural waterways, the logistics cost in India today runs very high at about 18 per cent. Comparatively in China it is 8-10 per cent and 10-12 per cent in most European countries. Inland waterways transport is cost-effective compared to rail and road. Calculations suggest that it costs Rs1.5 a km to carry the cargo from road, while the same stands at Rs1 from rail whereas through waterways it reduces to only 25 paise/km.
And in an age of environmentally sound approaches, trade on waterways leave a small carbon footprint. Estimates suggest that one horse power can carry 4,000 kg load in water, but only 150 kg by road and 500 kg by rail. One litre of fuel can move 105 tonne/km by inland waterways, but only 85 tonne/km by rail and 24 tonne/km by road.
Given the anticipated GDP growth of 8 per cent, the freight traffic is likely to reach 5,490 billion tonne km in 2020. There is thus a great potential to increase cargo movement on the waterways. The NDA Government’s emphasis on infrastructure development is bound to give a boost to inland navigation. Union Minister Nitin Gadkari is upbeat about setting targets and achieving them, and in this year’s budgetary allocation, Rs800 crore have been provided for development of waterways. A constant flow of funds, however, is required. Keeping this in mind, Gadkari is confident about raising another Rs800 crore through issuing tax-free bonds and is equally keen to explore multilateral funds, public-private partnership and market borrowing. The ports are expected to have profit of Rs6,000 crore this financial year, which will gradually increase. Besides, ports have fixed deposits worth Rs8,000 crore, which together can add to the cost of developing waterways.
Galvanising the neighbourhood
There has been considerable debate among the civil society, Government and regulatory authorities, and subject experts on the potential benefits and negative socio-environmental impacts of large-scale development and use of the 111 designated national waterways. The availability of limited data, information and research has further complicated the issue. What is of further concern, not forming part of the mainstream discourse, is the inability of the decision-makers and key influencers to use this opportunity to enhance regional cooperation on international rivers such as the Ganga, Brahmaputra and Indus.
On the contrary, on the IWAI website, the answer to question no 39 under the FAQ section of the Jal Marg Vikas project gives a strong indication of the bureaucracy’s reluctance to think out of the box and continue along the past models of river cooperation which have focused primarily on sharing water. Probably with the changing dynamics of current relationships with China and Nepal and with the current Government’s receptiveness to river management, it is indeed a good time to engage with these neighbouring Governments on the benefits of water transport, more so with Bangladesh.
The NDA Government has been a major driver and party to the Bangladesh-Bhutan-India-Nepal (BBIN) Motor Vehicles Agreement that came into effect in November 2015 and covers passenger, personal and cargo vehicles. The agreement enables vehicles of these countries to enter each other’s territory and also does away with transshipment of goods from one country’s truck to another at the border, a time-consuming and costly process. The agreement will result in considerable savings and increased convenience in trade and travel among these four countries of South Asia.
Similarly, regional connectivity is being enhanced in South Asia through transmission and trade of power. While Bhutan is a major supplier of hydropower to India, it also imports electricity during lean flow season when its rivers do not have adequate water to produce enough power. Currently, Nepal is a net importer of power from India as is Bangladesh. However, the scenario with Nepal may reverse in the near future if it is able to develop its hydropower potential at a quicker pace.
Expanding the ambitious national plan to include trade to and through Bangladesh is the best first augmentation that could perhaps happen. Combing services of National Waterways-1 and NW-2 and NW-6 (through Bangladesh) will open up greater economic benefit to the North-Eastern States (which suffer from huge logistics cost of essential supplies), a cornerstone of the current Government’s policies.
More important is to think about the potential cargo movement that remains untapped and is expected to rise sharply. Currently, Bangladesh sources less than 10 per cent of import from India, and sends less than 1 per cent of exports — an obvious situation that will rapidly change for the better.
Bangladesh has recently taken a decision to dredge its rivers, and it will be advantageous for India to extend dredging services to Bangladesh. India plans to improve the night navigation services on NW-1 and NW-2, and there is no reason that such systems and technologies, such as the river navigation information system that India has installed on NW-1, should not be offered to Bangladesh as a goodwill. Surely, not a burden considering India is investing Rs400 crore or more in the first phase of augmentation of NW-1 alone.
India might also take advantage of the proposal for two ‘Indian SEZs’ in Bangladesh, and construct cargo terminals (which are in shortage in Bangladesh) in these places, so as to facilitate bilateral trade. Bangladesh should be persuaded to allow Indian vessels to load/unload at all designated ports of call, a courtesy that India offers to Bangladeshi vessels, and adopt improved vessel standards, as India is now mandating under the new draft law on inland and coastal shipping.
Out-of-box-thinking
A quick perusal of the list of 111 national waterways shows immense opportunities for transboundary and regional cooperation, as has been the case in the areas of motor vehicles and power. If the claim to a cheaper form of transport through waterways can be realised on the rivers in India, why not extend this benefit to trade with neighbouring countries?
This could result in substantial savings for the importers — countries such as Bangladesh and Nepal. If the claims of reduced greenhouse gas (GHG) emissions turn into reality, it could enable India to take the leadership role in South Asia in meeting the global climate change mitigation-related challenges.
After all, the European Union was able to achieve its target of reduction GHG emissions in the transport sector through increased use of short sea shipping technique on its waterways. Given the fairly nascent stage of inland water transport in India (and also South Asia), innovations could be pursued in developing energy efficient shipping options that also emit reduced GHGs (such as those running on natural gas).
The large-scale development of the solar power sector in India has not only spurred innovations in reduced solar power production costs, but also innovative technologies and production techniques globally.
The inland water transport could also make a strong case for pursuing environmental flows in rivers such that the requirements of adequate depth and width of the navigation channel are maintained. The lower riparians, such as Bangladesh and Pakistan, would welcome such measures from India.
Also, the inland water transport framework and development provides an opportunity to re-imagine river basin cooperation in South Asia. From mere division of waters, as in the case of Indus Waters Treaty and Ganges Treaty signed by India with Pakistan and Bangladesh respectively, the discourse could shift to adding more value from the rivers and then sharing the benefits.
Export of agricultural produce from Punjab, Haryana and Western Uttar Pradesh and import of energy goods could receive a boost by reduced transport prices through the Indus and Ganga river systems. Already, both Bangladesh and Pakistan are moving very strongly towards utilisation of inland waterways for ferrying passengers and goods.
The planning and work on several national waterways on the shared/transboundary rivers could be coordinated among these countries to leverage maximum benefits to the people and economy. Transport costs of goods imported into Nepal would be reduced significantly if Indian and Nepalese authorities begin cooperation on extending the channels under the national waterway 58 on River Kosi, national waterway 37 on River Gandak, and others on the rivers being shared with Nepal.
Another unique feature of inland waterways is the ability to strengthen the negotiation power of the lower riparians by their ability of regulate access — such as those related to ship size, navigation time period, environmental regulations — for the upper riparian.
As India seeks to partner with the neighbours on river water cooperation, which includes a framework on inland water transport, it may find itself more equal to the lower riparians and lose some negotiating power as an upper riparian. But it need not take a non-engagement approach, as the resulting benefits — social, environmental, economic and political — that could be shared with the neighbours will outstrip all fears and perceived losses.
The article was originally published in The Pioneer
