Decoding the Economics of Ganga Waterway (National Waterways-1) | SANDRP

by: / Vertical: Vidhi Aid / Published: June 11, 2019

The Government of India has undertaken the ambitious project of plying cargo ships from Haldia to Prayagraj on the river Ganga, also known as National Waterways-1 (NW-1).

The justification for promoting waterways on such a massive scale as stated in National Waterways Bill, 2015 when introduced is as follows:

  • …inland water transport is recognised as fuel efficient, cost effective and environment friendly mode of transport, especially for bulk goods, hazardous goods and over dimensional cargos. It also reduces time, cost of transportation of goods and cargos, as well as congestion and accidents on highways.

As per the Government of India’s Press Release dated 21 July 2016, the cost of transportation of goods by rail was estimated at about Rs. 1.36 per ton kilometre, by waterways at Rs. 1.06 per ton kilometres and by road at Rs. 2.50 per ton kilometre. At first glance, the waterway appears to be far more economical.

Mode Freight ( Rs/TKm ) Taxes Total Rs / TKm
 Railways 1.36 3.71% 1.41
 Highways 2.50 3.09% 2.58
 IWT 1.06 Nil 1.06

Estimating Direct Costs

However, the rail and road routes more or less follow a straightened line.  In contrast, rivers like Ganga in plains do not flow in a straight line. The Ganga meanders and that is why the actual distance of the Ganga River from Prayagraj to Haldia comes to about 1600 kilometres as compared to 955 km via railway and 884 km via road.

Mode Total distance (km) Total Cost before tax (calculated) Total Cost including tax (calculated)
 Railways

(via Howrah)

955 1299 1346
 NH-19 884 2210 2280
 NW-1 1620 1717 1717

Now this means that even though the cost per ton kilometre of transportation via waterway is cheaper, in order to transport goods from Prayagraj to Haldia, ships will have to cover an extra 665 km and 736 km than rail and road respectively. The table demonstrates that the cost of transportation by National Waterways-1 is certainly not cheaper than rail. Also, waterways are the slowest mode of transport, which will further increase the opportunity cost.

Therefore, looking at the economics of waterway only from the standpoint of per ton kilometres cost of transportation is incorrect. At the end of the day what matters is whether the cost of transport from Prayagraj to Haldia is cheaper via waterway or not? In fact, the actual cost of transport on NW1 may be higher because of large investments that need to made by the Inland Waterways Authority and other agencies in making multi modal transport terminals like at Varanasi, Badh and Haldia. For full fledged commercially feasible waterways, there will be requirement of other infrastructure as well to support the ships such as riverside jetties, ports, handling sites, godowns, barge repairing & service stations, parking, fueling stations etc.

As per IWAI, to facilitate movement of 1000 to 2000 DWT cargo vessels, the navigational channel should have at least 45-meter width and 3-meter depth.  Cost will further increase as not only there will be investment in capital dredging, but periodic maintenance dredging will be also required on river bed.

Let’s not forget that the goods transported via waterways will still require railways or road transportation for door-to-door delivery from ports, the cost of which and the associated infrastructure requirements are not even factored in yet. National Waterways-1 and other waterways cannot be commercially functional in isolation unless it is linked with other waterways and other transportation modes for which projects like Sagarmala are proposed which is bound to create a mass environmental disaster by altering the river ecosystems in the country. As per the  Integrated National Transportation Waterway Grid Study undertaken by IWAI in 2014, an indicative investment of Rs. 22763 crore (public) and Rs. 65,599 (private) is required to develop infrastructure such as fairway, terminals, ports, road and rail connectivity. In 2016, 106 additional rivers were declared as new National Waterways (NW-6-NW111)without even considering whether they are economically  feasible and ecologically sustainable.

If the interest and depreciation cost of these investments, increased length and dredging are added onto the waterway than the economics of the waterway would become even more adverse and the cost of transportation per ton kilometres may exceed much more than our existing transportation like road and rail. This fact is substantiated in the 2014 study Integrated National Waterways Transportation Grid Study (Stage 1 of Phase II) by RITES, the relevant excerpt of which is reproduced here:

  • IWT is the cost effective mode of transport and offers least vehicle operating cost/ charges as compared to Rail and Road. The level of advantage offered by IWT is much higher when compared with road than that of rail, but corresponding advantage goes adverse when terminal costs involved in the case of IWT also forms cost of comparison

Adverse Impacts on Environment

The environmental impacts of the waterway particularly the ‘Gangetic Dolphin’, the national aquatic animal cannot be ignored. It is a blind animal and navigates by sound using echolocation. It also catches its prey by using sound waves generated from the prey movements. Movement of large ships will create a huge sound impact in the water channel and will make it particularly difficult for the dolphins to survive in the river.

The impacts are not just limited to disturbance created due to noise. Activities like dredging which are bound to take place on a massive scale will cause tremendous destruction to other aquatic flora and fauna. Riverbed is the place where large number of aquatic animals such as fish and turtles lay their eggs. Therefore continuous dredging of shallow area will disturb the aquatic habitat of these animals. Also by dredging the river to convert it into a mere water channel of 45 meters wide and 3 meters deep will remove shallow areas which are necessary for the egg laying and other activities of aquatic animals.

The National Waterways-1 also overlaps with the high biodiversity value zones of River Ganga assessed by the Wildlife Institute of India in its 2018 report Ganga River: State of Biodiversity at a glance. A Turtle Sanctuary in Varanasi is also being denotified to make way for the National Waterways-1.  It is particularly interesting to know that the National Waterways-97, also termed as Sunderban waterways includes 14 different rivers in the highly fragile ecosystem of Sunderban which is also an UNESCO World Heritage Site, a habitat of precious wildlife, the future of which is already endangered due to salt water intrusion, loss of islands due to reduced sediment delivery because of dams upstream, climate change and several other anthropogenic pressures. 

The National Waterways in the present scenario appears to be clearly unfeasible and will not benefit the national economy. It will in fact significantly harm the economy. The associated environmental and social damage due to alteration of the river and development of infrastructures will also add up to the economic disadvantage, the monetary cost of which is yet to be assessed.  All this at a cost of a debt of US$ 375 million (approx. Rs. 2683 Crores) from the World Bank.

Originally Published – https://sandrp.in/2019/02/08/decoding-the-economics-of-ganga-waterway-national-waterways-1/


About Debadityo Sinha:

Debadityo is a Senior Resident Fellow in Vidhi Aid. At Vidhi, he is working on air pollution regulations and environmental clearance process in India. He graduated in 2009 with a B.Sc. (Hons.) in Zoology from the University of Delhi, and thereafter in 2012, completed M.Sc. (Tech.) in Environmental Science and Technology from Banaras Hindu University. Before joining Vidhi, Debadityo has worked with the Legal Initiative for Forest and Environment as Program Officer and has also done independent projects on environment and wildlife protection in collaboration with WWF-India and Environment Equity and Justice Partnership. He is founder and trustee of Vindhyan Ecology and Natural History Foundation, Board Member of EKOenergy network and is a recipient of Duleep Matthai Nature Conservation Fellowship.