The Hindu Business Line : Sagar Mala project note

THE forthcoming general elections has cut short the Shipping Ministry's plan to secure Cabinet approval to levy a maritime development cess on overseas as well as coastal cargo to part-fund the Rs 1,00,000-crore Sagar Mala project for the maritime sector.

Following objections raised by the Department of Expenditure, the Ministry has spiked the cess proposal from the Cabinet note for the Sagar Mala project, Government sources said.

It had proposed a maritime development cess of Rs 50 per tonne on overseas cargo and Rs 20 per tonne on coastal cargo to part-fund the ambitious project, encompassing development of ports, shipping, inland water transport, coastal shipping, ship-building and maritime training. However, in its comments on the Cabinet note for the Sagar Mala project, the Expenditure Department had expressed reservations against imposing a cess on overseas and coastal cargo in haste without properly discussing the issue with all the stakeholders.

The Department feels that the proposal to levy a maritime development cess has been mooted without studying its impact on trade and economy. In fact, the Finance Minister, Mr Jaswant Singh, had expressed apprehensions on the cess plan when the Shipping Minister, Mr Shatrughan Sinha, made a presentation to him on the Sagar Mala project.

The Expenditure Department is also understood to have put its foot down on other proposals, including a separate Rs 500-crore corpus to develop coastal shipping and inland water transport sectors, and declare the approach channels of Government-owned major ports as National Sea Waterways to be maintained by the Central Government on the lines of the National Highways. Even the announcement on introducing tonnage tax is expected to come when the full Budget is unveiled after the elections.

"In view of the position taken by the Expenditure Department, the Shipping Ministry is taking a highly watered down version of the Sagar Mala project to the Cabinet for its in-principle approval," the sources said.

The Shipping Ministry will now seek an "in-principle" approval from the Cabinet before February 6 on the rough outline of the Sagar Mala project without any specifics. This will give enough time for the Ministry to discuss the issues threadbare with all the stakeholders. "Once the elections are over and a new Government is in place, the Ministry can revive the cess plan as well as other proposals for the consideration of the Cabinet," the sources said.

Since Cabinet meetings to consider major policy and project proposals would be impossible once the Vajpayee Government becomes a caretaker Government after the Lok Sabha is dissolved on February 6, the Shipping Ministry has decided to push its plan to secure an "in-principle" nod from the Cabinet for the Sagar Mala project. This will be another feather in Vajpayee's cap that which can be tom-tommed as an achievement of the NDA Government, the sources said.

Given this backdrop, the Shipping Ministry has circulated the draft Cabinet note only to a limited number of ministries and departments, which include the Ministries of Finance, Commerce and Industry and the Planning Commission, for their comments. These agencies were asked to offer their comments in the space of a few days.

While the Ministry of Commerce and Industry and the Planning Commission have largely supported the proposal, the Expenditure Department was of the view that the proposals required extensive deliberations to know the impact of the cess plan on trade and economy.