LOGISTICALLY SPEAKING. Multimodal transport: Don’t depend solely on private investors, develop better network

Shipping and Road Transport Minister Nitin Gadkari recently said his ministry is working on a new multimodal transport policy. The basic idea, he said, is to have an integrated approach to the development of transport infrastructure.

It is risky to comment on a policy, the details of which are yet to be spelt out. Yet, flagging of some relevant issues could help stakeholders to ponder over and respond. The very purpose of multimodal system – movement of goods by modes such as road, rail, air and water – is to ensure seamless flow of passenger and cargo traffic.

It also enables a single operator to undertake transport of goods by different modes from the origin (sender) to the destination (receiver). There are already laws (under the Multimodal Transportation of Goods Act 1993) governing multi-modal transport of goods, but they mainly cover export-import trade.

What the Ministry appears to do now is to develop a multimodal system for domestic movement of goods and passengers. This would need better coordination among ministries (railways, civil aviation and shipping and road) or agencies involved in development and operation of the different modes of transport. It also needs creation of additional infrastructure wherever necessary to provide adequate connectivity.

The fundamental element in a cost-effective multimodal system is a well-connected network of roads, railway lines, airports and ports.

The country has built up a number of these basic infrastructure projects over the past couple of decades both in the public and private sectors. But they are not inter-connected: sea ports and airports are not adequately linked by rail and roads and rail terminals are not joined by proper roads.

Take for example, coastal shipping. Though it has been proved that water is the most cost-effective and eco-friendly mode of transport, in India, despite having a long coastline of over 7,000 km, the potential of coastal shipping is yet to be exploited.

The Government appears to bridge this gap through a policy initiative, which could help ensure better co-ordination among ministries, Government undertakings and private agencies.

It could also provide incentives to attract service providers in uneconomic routes.

However, the most important thing is the development of physical infrastructure to ensure proper connectivity. Over the past few years, depending on private capital to develop transport infrastructure has become a norm rather than an option after the successful implementation of several PPP and BOT projects.

For the Government with a weak fiscal health, this not only served as a way of developing basic infrastructure but in some cases, an additional source of revenue. There are crucial projects where private capital will not be available.

In such cases, the only option for the Government is to spend. For example, there will not many takers for the proposed Sagar Mala project. The network of ports may not yield much return initially, but it would attract more cargo to coastal shipping and ease the burden on roads.

If the Government is serious about an effective multimodal transport system, it should be prepared to make budgetary allocation of resources for it.

This is not to say private investments should not be allowed. The fact is in projects with low or slow returns, private investments will be hard to come by; if they do, they will either be delayed, or end up in disputes like some of the PPP highways projects.

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