This is Mayawati?s way of bridging the viability gap.
Despite its inability to provide a 40% viability gap funding (VGF), usually associated with building expressways which take long to generate returns for investors, the Uttar Pradesh government has managed to pull ahead and attract private money for one such project.
The 167-km long Yamuna Expressway is being built thanks to an innovative financing model. The idea is simple: Allow the investor to use part of the land acquired for the expressway for lucrative real estate business. ?Basically, the entire land required for the project would be acquired and the amount of land available for real estate development would be a bid variable,? said state industries commissioner Anoop Mishra.
?The Government of India either follows the toll model or the annuity model where the VGF is effectively fixed at 40%. We tried out a third model; so far, apart from the protests in Aligarh, it has worked out fine,? he says.
According to information secretary Vijay Shankar Pandey, the creative thinking stemmed from the government?s decision to take a certain way on social sector projects. ?The honourable chief minister Mayawati launched the Mukhyamantri Mahamaya Arthik Madad Yojana in 2008, which is basically a Rs 300 subsidy to all BPL families in state and central lists. Her directive has been that as a welfare measure, we need to be liberal in those whom we include. The bill for the programme is around Rs 4,000 crore. So, for roads and other things, money had to be found through more creative means,? he said.
The Aligarh fracas was quickly resolved through a reworked compensation package, though it delayed the inauguration from March to July 2011. However, the limited success of the scheme encouraged the government to launch go ahead with a more ambitious 1,047-km long Ganga Expressway project from Greater Noida to Ballia and an Upper Ganga Canal Expressway which would connect Greater Noida to Purkazi. ?Bids for the latter would be invited in the next three months and the entire land to be acquired for this is barely 1,750-2,000 hectares,? said Mishra.
Not everyone, though, is convinced of the projects, especially those who lost the Yamuna bid. ?The Jaypee group has managed to become the biggest real estate company in the state because of its proximity to this regime,? says Congress leader Akhilesh Pratap Singh. ?I refuse to believe that state funds are at such a low point that we cannot afford a few good roads,? he added.
Some Ganga Expressway bidders, including the GMR group, Unitech and DLF are contemplating legal action. Even the most enthusiastic bureaucrat admits that the Ganga Expressway would be a difficult proposition compared to the Yamuna Expressway. ?The sheer scale of the project is out of proportion and cuts through the Ganga doab, one of the most fertile plains in India. This will be a tough one,? said a government official. The state though feels it can wait. At least, it says it can afford to.