Union Budget 2022-23: Specific budgetary allocations needed for digitisation of port sector
Indian Union Budget 2022: Union finance minister Nirmala Sitharaman. Image courtesy CNBC-TV18
The Government had been focusing on improving the Port infrastructure under programs like ‘Sagarmala’, which was approved in 2015. Around 574 projects have been identified to be implemented between 2015-2035, with an estimated cost of Rs. 6.01 lakh crore, covering areas like port modernization, port connectivity, port-led industrialization, and coastal community development.
More recently, the government has come out with Maritime Vision 2030, which envisages aggressive targets to be achieved by the sector by 2030. Some of which include the development of three mega ports of greater than 300 MTPA cargo handling capacity, increasing trans-shipment cargo share from 25 percent to 75 percent, increasing share of cargo handled at major ports by PPP operators to >85 percent, and improvement in port efficiency measures.
Due to the COVID-19 pandemic, the implementation of various projects has witnessed delays and the implementation/completion in the last two years has been slow.
Further, in the last two Budgets, the announcement was made about the potential corporatisation of at least one major port along with a listing on the stock market and about seven projects worth more than Rs 2000 crore to be offered by the major ports on Public-Private Partnership. However, not much development has subsequently happened on these fronts.
Nonetheless, on the policy front, there was traction, which included operationalization of Major Port Authorities Act 2021 in November 2021, revised model concession agreement for PPP projects, and revised tariff guidelines for PPP projects announced in Dec 2021, which allows market-based tariffs.
In Budget 2022, the following measures/updates if announced should aid the port sector in achieving the planned objectives:
- The projects under Sagarmala are mainly envisaged to be funded through PPP. In the past, budgetary allocations have been modest. To expedite the project implementation, any increase in budgetary allocations for the projects should be positive
- Specific budgetary allocations for digitalization of port sector (including those already planned under Sagarmala)
- Allocations for inland waterways and schemes to encourage coastal shipping
- Update/Budgetary allocations for Mega Port Projects under MIV 2030
- Any update on corporatisation of a Major Port and listing of the same initially announced in the Budget 2019-20
- Any update on PPP projects at Major Ports, announced in the Budget 2020-21
- Scheme/incentives to attract transshipment vessels
The budgetary measures will complement the favorable policy measures undertaken by the government in recent years and will help in achieving the broader goal of growth in domestic manufacturing and exports.
The Port sector is a critical infrastructure segment, which plays a crucial role in the country’s economic growth by ensuring better connectivity for global trade and helping in moderating the logistics cost.
The author is Assistant Vice President & Sector Head – Corporate Ratings, ICRA Limited. Views are personal.
Read all the Latest News, Trending News, Cricket News, Bollywood News,
India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.
