A Rhetorical Question To a Common Sense Economist

Allow me to ask you a question, well, a rhetorical one, after I present some essential macroeconomic data, basic stuff at that: 

Your Government has a historical record of budget deficits, more recently at around 4% of the Gross Domestic Product, but at earlier highs of 6-6.5% of GDP.  In the current Financial Year (2018-19), the Government will borrow around Rs 6 lakh crores to fund a deficit of 3.3-3.5% of the GDP.   

Now, here’s the question: what is your opinion of the following plan that your Government might present?

The Government says – let’s suppose – that it wishes to run a long-term project over the next twenty years which has the following characteristics:

- It will cost a minimum of about Rs 1 lakh crores a year (that’s Rs 1,00,000,00,00,000).  Once begun, this investment cannot be stopped without delaying the project and increasing its cost.  This alone will, at current price levels, increase the budget deficit by about 0.5% of GDP every year and contribute to inflation.

- The overall cost therefore would be about Rs 20 lakh crores.

- All of this money will be raised by borrowing, within India and abroad.

- The project has never been done earlier in any part of the World, never tried out at anything close to the scale that the Government is proposing.

- The benefits from this project are entirely in the realm of speculation and subject to a number of assumptions – including one on weather patterns.  None of these assumptions have been put up for scientific review and educated scrutiny.

- There is no peer-reviewed independent project report by a ‘non-interested’ stakeholder that has detailed the net benefits of the project after a cost-benefit study.  

- The employment benefits from the project are, relatively speaking (ie, in comparison to alternatives that could be done with that kind of money), marginal to the point of being irrelevant.  The agricultural unemployment resulting from the displacement as a result of the project is likely to be – there are no reliable estimates here – greater than the employment generated, resulting in significantly higher migration to the cities by both landless and landed (but now ‘de-landed’ agriculture workers)

- It is likely – indeed, probable – that some parts of this giant project will be stalled due to land acquisition issues, local stakeholder protest and intervention by the Judiciary (though such intervention may be years in the future, making the project even riskier)

- Which brings us to the issue of risk management; the project has no public risk management profile or document, nothing that alerts us to possible show-stoppers, unintended consequences or accidents.

This utterly insane white elephant is the loosely termed ‘river-linking project’, which was budgeted in the year 2002 to cost about Rs 5.2 lakh crores.  The project targets thirty rivers in India and seeks to inter-connect them in the hope that floods will be prevented by such connection as waters seek their own level.  

It is an idea that is as foolish as it is quixotic, as unequivocally disastrous as it is costly and as useless as it is destructive.  Everything about this project has ideology sans reality written all over it and yet, over the last two decades, the project has received undue impetus.  

Beyond all of the above – each of which should by itself be enough to halt the progress of the project – is the issue of planetary geoengineering that is being attempted, possibly beyond the scale of the Three Gorges Dam.  Could such effort have unintended – and unpleasant – consequences?   

Indeed, yes.  Take dams, for instance.  Over the last sixty years, the construction of dams in India alone has displaced four million people, arguably the biggest cause for refugees – ecological refugees – after partition.  Despite all attempts at water distribution from these dams, desertification and land degradation is growing as never before, with such geoengineering resulting in other unintended consequences including the decimation of fish habitat and concomitant loss of fishing livelihoods.  

A second example.  In an excellent article titled ‘The Risk of Planetary Geoengineering’, Rahul Matthan writes of a crazy attempt in the 1950s to seed clouds in the US and control the weather called Project Cirrus.  Read this:

“ In their first attempt, they took on a hurricane heading to Jacksonville.  A Project Cirrus plane dropped dry ice along the edge of the squall line and almost instantly, the clouds shed rain over the sea.  This was the result they were anticipating and they hoped that this would cause the storm to change its direction.  

While the storm initially turned away as they hoped, it soon made a dog-leg turn over the Atlantic and headed back to the mainland with renewed vigour.  The resulting Frankenstein’s monster of a storm was more vicious than before, its winds gusting at a hundred miles an hour by the time it made landfall over the Savannah.  It smashed windows, flattened sugarcane fields and caused upwards of $23 million of damage.” 

The consequence of river linking are too frightening to contemplate – and these are the intended ones.  The ecological cost of the project includes the destruction of swathes of forest and vastly increased human activity in protected areas, while the benefit of flood mitigation is, at best, a hope – just how can one predict if this will work? 

The Government of India should be doing quite the opposite of what it proposes – it makes excellent economic sense to protect the river courses as they are, remove encroachments, spend a fraction of the funds that would go into linking rivers to clean them up instead and protect the riparian forests that then mitigate flood impact.  Watershed management and river conservation must be given the most important place in Government policy, for our human capital’s productivity depends on it, more than on anything else.  Is common sense too much to expect?