A Saga of Delays and Abandonment: DMIC

A mega project like DMIC conceived a decade ago is still struggling to take off. The ninety billion dollar project expected to be finished by December 2019 is likely to miss the deadline. its turning into a saga of delays and abandonment. There is a lack of political will to tie up the funds and execution of the project as decisions are taken and then withdrawn

Delhi Mumbai Industrial Corridor(DMIC) is a mega infrastructure project conceived a decade ago. The project is worth ninety billion dollars. The project is supposed to cover a length of almost fifteen hundred kilometers between the political capital on India, Delhi and business capital of India Mumbai. The project as envisaged incorporates nine mega industrial zones of about 200-250 square kilometers each, six airports, high speed freight lines, a six lane intersection free expressway connecting Delhi and Mumbai, several industrial estates and clusters with high end infrastructure. The project will pass through six states and the union territory of Delhi. It will also include eight smart cities and two mass rapid transit systems.

The eight investment regions proposed to be developed in Phase I of DMIC. The work on the dedicated freight corridor is expected to be completed by December 2019. Funds have been made available from the Government of India and loans from Japan. The vision for DMIC is to create strong economic base in this band with globally competitive environment and state-of-the-art infrastructure to activate local commerce, enhance foreign investments, real-estate investments and attain sustainable development.

A Tale of Abandonment and Delays

Let’s look at the good news first. A decade after former Prime Minister Manmohan Singh announced this mega project, finally things have started moving in some of the eight investment zones across six states involving the project. Orders have started coming in. Companies like Larsen and Turbo andShapoorjiPallonji have bagged contracts worth thousands of crores. Other companies too have bagged contracts worth hundreds of crores to execute infrastructure facilities, administrative buildings, sewage plants and water treatment facilities among others. In 2016-17, then commerce and industries minister Nirmala Sitharaman had informed parliament that government has given almost five hundred crores to DMIC. In the first two years of the Modi government it was just fifty crores each.

The bad news is: this ambitious project has been moving at a snail’s pace. Land acquisition has remained a big problem for the project with almost all states struggling to acquire land. Detailed Project Reports of many big projects have been approved recently after they were conceived a decade back. Many big power projects along the corridor have been abandoned. DMIC board, in 2016, decided to return to respective states the land for gas power plants abandoned due to their unviability. These thousand megawatt plants were to be set up in Maharashtra, Gujarat and Madhya Pradesh. According to DMICDC, the process of ensuring gas supply was directly being monitored by the Prime Minister’s Office. But in November 2016, the plan was abandoned due to difficulties in procuring gas.  A financial statement was presented before the parliament. It stated: “After the development of projects and allotment of lands for the same the overall output in gas has fallen consequent to which availability of gas became difficult affecting the development of power projects.  DMIC Development Corporation had tried to structure these projects on imported Liquefied Natural Gas (LNG) after blending with domestic gas. On account of non-viability of the project at high prices of imported gas and in the absence of any policy framework regarding fuel pass through, it was extremely difficult to secure a power purchase agreement at those price inputs. In view of these developments the board in its meeting on November 16, 2016, has decided to return the land to the state governments”

 

The land acquisition imbroglio

The project after its inception has been bogged down on the question of land acquisition. If we take the example of Dholera, the ancient port city which the government wants to convert into a smart city, has been struggling to find adequate land since 2009.Though the Gujarat government transferred land in installments, in 2015 Gujarat High Court stayed the land acquisition after local farmers’ body approached the Court. Gujarat government has been able to provide just about one third of the land required by DMIC which is 900 square kilometers. DMIC has its own justification. In its project brochure it says  “Since the entire trunk infrastructure cannot be implemented in one go, a phased approach has been adopted and an activation area of 22.5 sq. Km has been identified which would act as catalyst for further investments and will provide a base for taking up development of further phases. The activation area is envisaged to trigger developmental activities in Dholera Special Investment Region and attract local and global investments. The area shall also help build confidence in the market for attracting anchor tenants thereby paving the way for development of remaining part of Dholera Special Investment Region.”

Rajasthan struggle

Rajasthan too has been struggling on this front. Farmers of Rajasthan agreed to sell their land without protest. It was unlike Gujarat or Maharashtra. The process to acquire the land for Khuskhera-Bhiwadi-Neemrana (KBN) Industrial Smart City started in 2012. But it was only in April 2015 that the government was able to declare compensation of Rs 3000 crore for 1425 hectare. But the government is yet to disburse the money. Farmers have been making frequent trips to Jaipur but to no avail. It seems the government has neither the money nor the will to tie up the funds.

While land acquisition has run into trouble in many states there are other hurdles as well. According to a financial statement laid before parliament even the land parcels which have been acquired are not contiguous and it says “project development activities will be initiated only once the contiguous land is made available by the state government,”. In other investment zones as well things are moving at a snail’s pace. A look at the corridor today shows that it will certainly not meet the target of completion by December 2019. Even if we see momentum picking up on the corridor for some time now it’s almost certain that it’s going to miss the deadline. What is worse is that respective governments have sought to dilute their focus on the project.

The vision must include everyone

While we envision a mega project we must have every stake holder in mind. Be it investors, businessman, landowners or farmers. While we must take their interests into account we must ensure that projects are feasible and implemented on time. There has been a difference between master plans on the table and progress on the ground. Otherwise chicken may come home to roost much earlier than expected. Let’s not remain a nation in waiting eternally.