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QUANTIFICATION OF BENEFITS FROM TRANSPORT AND TRADE FACILITATION IN SOUTH ASIA 77<br />
consider improvements along NH35, which the government<br />
is considering and, additionally, improvements<br />
at the border points. The remedies suggested are:<br />
• Upgradation of the Barasat-Bangaon national<br />
highway (NH35) with two-lane facilities and<br />
provision of illumination. It is currently a very poor<br />
motorable single lane road of 60 km length. Civil<br />
works includes widening and improving road<br />
geometry and drainage, environmental and road<br />
safety considerations, and provision of graded<br />
railway crossings.<br />
• Upgrading the Naobhanga Bridge, 3 km short of<br />
Petrapole. The bridge is currently in extremely bad<br />
shape. Improvement work will include reconstruction<br />
of the bridge along realigned sections<br />
• Building of 5 railway overbridges on the railway<br />
crossings en route the export road to Petrapole<br />
• Construction of two gates at the Petrapole border;<br />
one each for import and export cargo and making<br />
the area two-lane by demolishing trees and small<br />
sheds which are creating obstacles<br />
• Creation of truck terminal and warehousing<br />
facilities on 16 acres of land at Petrapole procured<br />
by CWC and provision of rest-stop facilities<br />
• Building cross-border trade and customs facilities<br />
including building, lighting, sheds, parking bays,<br />
and other infrastructure need to be constructed.<br />
The facility will also require communication and<br />
customs systems and administrative systems<br />
Projections have been carried out for the project<br />
area and are presented in Table 9.5.<br />
Table 9.5 Project Cost Estimates<br />
Kolkata–Bangaon<br />
$ million<br />
Civil works, equipment, and bridges 90<br />
Land acquisition and resettlement activities 10<br />
Consulting services 2<br />
Design and construction 3<br />
Work at Petrapole 11<br />
Upgradation of warehousing facilities 9<br />
Total 125<br />
The traditional view holds that highways facilitate<br />
intercity travel and transport of goods. However, largescale<br />
investment in road infrastructure is an effective<br />
and viable policy measure for poverty alleviation. In<br />
this section, we quantify two types of benefits emerging<br />
from the project: increased trade and local employment<br />
benefits.<br />
Increased Trade: India’s share in the total imports of<br />
Bangladesh grew from 3.6% in 1980, to 9.37% in<br />
1995, and in 11.1% in 2000. However, India’s share<br />
of imports from Bangladesh remained less than 1%<br />
between 1990 and 2000. The rate of growth of India’s<br />
exports per annum over the years has been increasing<br />
at a very high rate since 2000; the rate of growth of<br />
exports per annum has been over 20% and the rate of<br />
growth of imports has been 20–40%. More efficient<br />
movement of trucks and shipments will result in<br />
increased trade. Assuming a 6% growth in GDP over<br />
time (pessimistic scenario), we forecast trends in imports<br />
and exports for the period 2008–30 (Table 9.6). 10<br />
Table 9.6 Indo-Bangladesh Projected Trade Balance<br />
(US $ million)<br />
Year Exports Imports Trade balance<br />
2008 2,596.06 199.70 2,396.36<br />
2010 3,482.70 269.29 3,213.41<br />
2015 7,259.69 199.32 7,202.92<br />
2020 13,661.85 568.60 6,691.09<br />
2025 15,132.84 1,200.60 13,932.23<br />
2030 65,754.41 5,352.83 60,401.57<br />
We make a conservative estimate regarding the<br />
with-project scenario for our analysis. We assume that<br />
benefits from growth in trade due to the project will<br />
accrue after the project is completed, i.e. only after five<br />
years. We assume a conservative scenario whereby with<br />
the project there is only further 2% increase in exports<br />
and 4% increase in imports, i.e. imports will grow at a<br />
higher rate since we expect with SAFTA, it will be easier<br />
for Bangladesh to export to India. Thus, there is an<br />
Fig 9.3 Trade Balance with and without Project Scenarios<br />
10<br />
For the function log GDP = a + b log X, we obtain b = 2.76 with R = 0.96; SE = 1.33; t-stat = 16.76 for log GDP = a + b log<br />
M, we obtain b = 1.74 with R = 0.76; SE = 2.55; t-stat = 5.52 which we use to make forecasts over a 25 year period.