There has been
an alphabet soup of experts lining up to convince us that their alternative to
the status quo is the ideal option-the tramway project. They have convinced us
that the old solution of simply building more roads is unsustainable. They have
provided a strong economic rationale for the tramway project.
But whole
narrative may be having some serious flaws. The first flaw : How high is
the tramway investment multiplier in the short run ? It is not likely to be
high because (1) more than 75% of the inputs will sourced from India; (with
such high leakages we cannot expect a high investment multiplier.) (2) most of
the investment multipliers for urban infrastructure in SIDS tend to be low in
the short term and lower than multipliers in the export or the manufacturing
sector (3) especially in the case of SIDS, such investment tends to have
temporary multipliers because they act more on the demand rather than the
supply side and this leads to important leakages through imports.
The
second flaw: Why should
we be looking for mega projects rather than viable and productive ones? Should we not be examining the financial
viability of a project and its position in the line of priorities ? Even with
the projected operating surplus of the project boosted by significant fare
increases and advertising revenues we cannot ensure its financial viability.
But with the 9.9 billions of grant from India, the project becomes financially viable.
But the question arises, whether an amount of Rs 9.9 billions from the Indian
grant should be used for the tramway project, a financially non viable project.
? This is the key issue. Why should this
amount of grant not be used to support other projects of greater national
importance, including a bus rapid
transit system , precursor to a future tramway à la Singapore?
The third
flaw: It is true that
traffic congestion makes the average commute to and from Port Louis over an
hour each way and costs more than Rs 4 billion a year in lost output. The new
tramway can definitely help to boost productivity by reducing the time lost in
traffic congestion and benefit the economy by reducing the costs of congestion.
But at this crucial juncture in our
economic development, should we be investing so many billions on a decongestion
programme, with its great many unknowns and inherent risks, when the country
has other priorities namely, among others, the need to boost growth and
create productive jobs ? Indeed, there
are urgent priorities now which are more short term and should be tackled
immediately , For e.g. what is happening to our exports sector is very
worrying; we need more resources for diversification, for training , for
industry support , for restructuring , for improving external competitiveness;
equally in Agriculture, Financial
Services , ICT and tourism sectors ; we need to start investing Rs 11.5
billions over ten years in the Ocean Economy and in a massive human capital
formation programme in these sectors
while consolidating the policies for inclusive growth. These policies have the
potential of boosting growth substantially and creating productive jobs.
The last flaw: Thus, it is important to clearly define our priorities. We could
have opted for a cheaper way of tackling road congestion-though
decentralisation, flexible working hours, the Highlands Administrative City, a
dedicated busway which would have paved the way for the tramway at a later
stage, construction of flyovers at specific congestion spots and a more
rigorous traffic management programme . This is what economists call the
opportunity costs of such a huge investment !!! Can we afford it ? - in
our difficult present situation it is more likely to be termed as a “ prestige
project” ?
