SSCP-Nation Betrayed

via Press Release by Shri Subramaniam Swamy published on September 19, 2007

Another fraud in the Setusamudram Canal Project (SSCP) is the claim of the Chief Minister that it will promote economic development. As a former cinema script writer he does not understand ‘abc’ of economics. Instead by his utterances on Rama Setu he qualifies to be a neo-Taliban vandal.



The benefits and costs of SSCP is based on faulty calculations and cooked up data. A closer look using the analysis of Dr.Jacob John [published in Economic and Political Weekly, July 21, 2007], suggests that the entire economic cost-benefit analysis made up by the Union Shipping Ministry and presented in a Detailed Project Report [DPR] to the Union Cabinet for approval of the project, is bogus and aimed at misleading the nation about the financial viability of the project.


This fraud appears deliberate, and hence T.R.Baalu and his officers are culpable and liable to be prosecuted under criminal law. For example, it is claimed in the DPR that since presently cargo and passenger ships have to go around the island of Sri Lanka to reach Tuticorin from Chennai or vice versa hence if SSCP is implemented, then the present sailing time, would be reduced up to 36 hours because of a shorter distance along the canal in the Palk Strait. Cost saving is thereby estimated of nearly Rs.1000 crores annually. This calculation is bogus because it is estimated on the basis of savings in time and fuel made by ships going from Tuticorin to Chennai and applied to all ships from whatever destination in the Indian Ocean states to all ports in the east coast of India. Thus, while it is true that a single journey between Chennai and Tuticorin would save about 30 hours because of the project, the journey between Kanyakumari and Kolkata would save only 18 hours. Ships from Africa e.g., Mauritius , would save just 4 hours. The reason for this is that while ships can travel at 12 knots per hour on open seas, these ships will have to go slower than 8 knots through the SSCP channel. Hence to apply the 36 hour saving uniformly to all ships in the calculation is fraudulent. Moreover, the channel will not permit ships with tonnage exceeding 35,000 DWT, and hence the SSCP will not service larger ships. Yet the DPR projects that the number of ships using the channel will shoot up from the present 350 ships going around Sri Lanka to 8500 without any basis. On the contrary despite the publicity that the project will be completed by November 2008, no foreign shipping company has yet signed up to use the SSCP channel.


The cost of the projected has been grossly underestimated, and revenue claimed has been grossly over estimated. Moreover, the dredging costs have been exaggerated. While other costs have been calculated using an interest rate of 8 percent Indian rupee loans and 4 percent for US dollar loans. However, since 2005 when the DPR was cleared by the Cabinet, the prime lending rate in US has climbed to 8 percent and in India to 13 percent. This completely alters the internal rate of return of the project and lowers it to 2% even if the other numbers are correct. A proper cost accounting shows that the rate of return on this project is minus 3 percent on investment.



Because of the bogus calculations in the DPR due to overestimation of the revenues and underestimation of the costs the project is economically unviable. It is in fact much cheaper for the nation to put the Rs.2427 crores plus funds saved in future cost over-runs into a fixed deposit account in a bank, and pay shipping companies a subsidy out of the interest accruals, for using the Tuticorin Port, than build the SSCP channel and financially bleed annually in it’s upkeep in dredging.


In any case, economically viable or not, Rama Setu cannot be destructed to implement the SSCP. This is precisely the stand taken right from Ramaswami Mudaliar Committee in 1956 to K.T.Thomas, retired Judge of the Supreme Court.



If the project is however to be implemented for other reasons, then it be achieved by digging through the 15 kilometer mainland stretch between Pamban and Dhanushkodi, adjacent to the Rama Setu thereby leaving hoary Setu intact. This accommodative approach of seeking of an alternative was followed by the
Delhi Metro when it’s underground route digging came too close to the Qutub Minar, as also in the Tipu Sultan’s palace in the Bangalore Metro Construction. The dredging costs through land will be much lower than under the sea, cutting through the Rama Setu.



The Rama Setu is a living miracle, and therefore the Government of India ought to approach the UNESCO to get it declared as the 28th World Heritage Site. The Tamilnadu Government should also develop the area with the essential infrastructure so that pilgrims can come from far and wide, and thereby promote local Rameshwaram area development.

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