evaluation study for large revenue generation projects

Intercontinental Consultants

and Technocrats Pvt. Ltd.A-8, Green Park, New Delhi - 110 016, India

Evaluation Study for the Scheme of Assistance

for Large Revenue Generating Projects

October, 2008

Final Report

Market Research Division

Ministry of Tourism

Government of India

ACKNOWLEDGEMENTS

Intercontinental Consultants and Technocrats Pvt. Ltd. would like to thank the Ministry of Tourism for giving us an opportunity to undertake this prestigious project of evaluating the scheme ‘Assistance for Large Revenue Generating Projects (LRGP)’.

We would also like to acknowledge the support, guidance and inputs provided by the Market Research and Planning Divisions of the Ministry of Tourism for the successful completion of the study. In particular, we would like to thank Shri S. Banerjee, Secretary; Ms. Leela Nandan, Joint Secretary; Sanjay Kothari, Additional Director General; Dr. R.N. Pandey, Additional Director General; Mr. Devesh Chaturvedi, Director; Mr. A.K. Gupta, Joint Director General; Mr. K.K. Nath, Deputy Director; Mr. K. N. Thakur, Assistant Director General, Mr. Satish Sethuraman, Assistant Director General; Mr, Sharad Singh, Assistant Director General; Mr. A. S. Saxena, Assistant Director and other officers and staff of the Ministry of Tourism for their invaluable inputs.

The State/Union Territory Governments were also very helpful in providing the requisite inputs and assistance to the consultants for the completion of the study. The Secretary/Commissioner and/or Director of Tourism of State Governments; Managing Director of State Tourism Development Corporations and State Industrial Development Corporations and other officers and staff of these organizations extended considerable support and assistance to the project team. In particular, the contributions made by the State Governments of Andhra Pradesh, Assam, Chandigarh, Gujarat, Haryana, Karnataka, Kerala, Maharashtra, Orissa, Punjab, Rajasthan, Tamil Nadu, Uttarkhand, and West Bengal by way of material inputs and/or constructive discussions with the consultants need a special mention.

We are also thankful to industry associations like Federation of Hotels and Restaurants Association of India (FHRAI), Hotel Association of India (HAI), Travel Agents Association of India (TAAI), Indian Association of Tour Operators (IATO), Association of Domestic Tour Operators of India (ADTOI), Adventure Tour Operators Association, Confederation of Indian Industry (CII), Federation of Chambers of Commerce and Industry (FICCI), Associated Chambers of Commerce and Industry of India (ASSOCHAM), and individual members of these associations. who have been contacted for their views and suggestions on the scheme.

Above all, we would like to place on record the unstinted support and assistance provided by the promoters of LRGPs, by way of detailed information and arranging site visits.

* * * * * *

CONTENTS

SL. NO. DESCRIPTION PAGE

NOS. 1. INTRODUCTION 1-1 to 1-8 1 Prelude 1-1 2 The Scheme 1-1 2.1 Objectives of the scheme 1-1 2.2 Quantum of Assistance 1-1 2.3 Scope and Eligibility 1-2 2.4 Priorities and Conditionalities 1-2 2.5 Mode of Assistance 1-2 2.6 Monitoring and Evaluation 1-3 3 The Study Objectives 1-3 4 The Parameters of Evaluation 1-3 4.1 Spread and Depth of Projects 1-3 4.2 Popularity of the Scheme 1-4 4.3 Non-Conversion of Feasibility Studies 1-4 4.4 Hurdles in Project Implementation 1-4 4.5 Performance of Completed Projects 1-4 5 Approach and Methodology 1-4 5.1 Documentation of Project Details 1-5 5.2 Questionnaire Survey 1-5 5.2.1 Popularity Survey 1-5 5.2.2 Study of Regional Variations 1-5 5.2.3 Assessment of Non-Conversion of Feasibility

Studies 1-6

5.2.4

Assessment of Hurdles in the Implementation and Performance of Selected Projects

1-6

5.3 Field Visits 1-7 6 Tabulation and Analysis 1-7 7 Integration and Report Writing 1-7 8 Lay out of the Report 1-8

2. THE SCHEME DURING TENTH PLAN 2-1 to 2-7 1 Plan Allocations 2-1 2 Projects Assisted 2-1 2.1 Year – Wise Progress 2-1 2.2 State – Wise Distribution 2-2 2.3 Types of Projects 2-3

(i)


NOS. 3 Conversion of Feasibility Studies into Investment

Projects 2-3

4 Popularity of the Scheme 2-4 5 Private Sector Participation 2-5 6 Regional Variations 2-6 7 Hurdles in the Implementation of Projects 2-6

3. EVALUATION OF SELECTED PROJECTS 3-1 to 3-20 1 Introduction 3-1

2 Taramati Baradari Cultural Complex 3-1 2.1 The Project and its Location 3-1

2.2 Project Justification 3-2

2.3 Planned Facilities 3-2

2.4 Project Cost and Financing 3-3

2.5 Project History and Implementation 3-3

2.6 Performance 3-3

2.7 Review 3-4

3 Coorg Golf Links Golf Project 3-5

3.1 The Project and its Location 3-5




3.5 Performance 3-7

3.6 Review 3-7

4 Lulu International Convention Centre 3-8






4.6 Performance 3-9

4.7 Review 3-9

5 Convention Centre at Surajkund 3-11




5.4 Project Cost 3-12


(ii)


NOS. 5.6 Review 3-12

6 Development of Marina at Bolghatty Island 3-13




6.4 Project Cost 3-14

6.5 History and Progress of Implementation 3-14

6.6 Review 3-14

7 Integrated Development of Golf Course and Country Club

3-15






7.6 Review 3-16

8 Karnataka Luxury Tourist Train 3-17



8.3 Planned Facilities and Itinerary 3-17



8.6 Review 3-18

9 Bannerghatta Biological Park 3-19






9.6 Review 3-20

4 INTEGRATED REVIEW AND RECOMMENDATIONS 4-1 to 4-11 1 Scope of the Scheme 4-1 2 Coverage of the Scheme 4-2 2.1 Golf Courses 4-2 2.2 Convention Centres 4-3 2.3 Tourist Trains 4-4 2.4 Transport Infrastructure and Services 4-4

(iii)


NOS. 2.5 Health and Rejuvenation Facilities 4-4 3 Catalysing Investments 4-4 4 Improving Techno – Managerial Efficiencies 4-6 5 Projects Promoted by Government Agencies 4-7 6 Public – Private Partnership 4-8 5 EXECUTIVE SUMMARY 5-1 to 5-5 1 The Study 5-1

2 Major Findings 5-1

3 Recommendations 5-3

APPENDICES

Appendix – I Scheme of Assistance for Large Revenue Generating Projects

i-iii

Appendix – II Questionnaire – I iv

Appendix – III Questionnaire – II v-vi

Appendix – IV Questionnaire – III vii

Appendix – V Questionnaire – IV viii-x

Appendix – VI Scheme for Public Private Partnership in Infrastructure

xi-xv

(iv)

INTRODUCTION 1

Evaluation Study for the Scheme of ‘Assistance for Large Revenue Generating Projects’

Final Report

I. INTRODUCTION

1. The Prelude Intercontinental Consultants and Technocrats Pvt. Ltd. (ICT) has been

commissioned by the Ministry of Tourism, Government of India for evaluating the performance of the scheme ‘Assistance for Large Revenue Generating Projects (LRGPs)’ in relation to its stated objectives and to provide specific recommendations to bring about improvements/modifications in the scheme. The assignment also envisaged evaluation of specific ‘LRGPs’ sanctioned during Tenth Plan period.

2. The Scheme The scheme of “Assistance for Large Revenue Generating Projects” has been

launched by the Ministry of Tourism during the Tenth Plan to bridge infrastructural gaps in tourism by catalyzing private and corporate investments. The guidelines of the scheme are at Appendix – I. The brief details of the scheme are given below:

2.1 Objectives of the Scheme The specific objectives of the scheme are:

i. Catalyzing investments by private and corporate and institutional sectors for the development of tourism infrastructure requiring large amount of resources; and

ii. Improving techno-managerial efficiencies in the construction and management of large revenue generating tourism infrastructure projects.

2.2 Quantum of Assistance Private and Corporate Sectors as well as Central and State Public Sector Undertakings are encouraged to invest in tourism infrastructure by extending financial assistance by way of subsidy both for the preparation of Feasibility Reports and Detailed Project Reports (DPRs) and for the implementation of investment projects. The quantum of assistance in each case is as given below:

i. Preparation of DPRs

Fifty percent of the actual cost subject to a maximum of Rs. 25 lakhs per project.

ii. The Investment Project

The amount of subsidy will be normally determined through a competitive bidding process with a cap of Rs. 50 crores, subject to a maximum of 25% of the total project cost or 50% of equity contribution of the private promoter, whichever is lower.

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2.3 Scope and Eligibility Projects satisfying the following conditions only are eligible for assistance under the scheme:

i. The project by itself should be a tourist attraction, or used by tourists; and, ii. The facility generates revenue through a fee or user charge.

In general projects like tourist trains, cruise vessels, cruise terminals, convention centres, golf courses, etc. would be eligible for assistance. Hotels and restaurants either on a stand-alone basis or as an integral part of some other projects, transport vehicles, sports facilities like stadiums, etc. will not be eligible for assistance under the Scheme.

2.4 Priorities and Conditionalities Priorities and conditions for providing assistance under the scheme are the

following:

i. Priority will be given to projects promoted by private sector and those with public-private sector partnerships. In the absence of projects with private sector participation, those promoted by Central and State Public Sector Undertakings and government agencies will be considered;

ii. The minimum equity slab of private promoter has to be 51% wherever private sector participation is envisaged;

iii. The eligibility for assistance/subsidy will be ascertained on the basis of feasibility study / DPR at the stage of consideration;

iv. A Special Purpose Vehicle (SPV) has to be set up by the implementing partners in case a private party is promoting the project;

v. A separate Project Management Group (PMG) needs to be instituted in all cases and separate accounts should be maintained for the project;

vi. The project proposals must be accompanied by a project appraisal carried out by an independent public financial institution;

vii. The projects assisted under the scheme will not be eligible for financial assistance / subsidy under any other Government schemes; and,

viii. In case the project does not succeed and there is any default by the promotees, the financial institution can recover its loan component and also the subsidy component on behalf of the Department of Tourism.

2.5 Mode of Assistance i. The assistance / subsidy would be released to SPV through the financial

institution funding the project in the case of those promoted by private parties. In the case of others, the assistance would be released to the respective Government agencies;

ii. The assistance would be preferably credit linked and back ended; and iii. It would be released in three instalments as detailed below:

a) 25% of the assistance after 25% of the total cost of the project has been contributed by the promoters;

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b) 50% of the assistance after 50% of the promoter’s amount is contributed; and,

c) 25% of the assistance after the project is fully functional.

2.6 Monitoring and Evaluation The financial institution funding the project is responsible for regular

monitoring and periodic evaluation of the project compliance with agreed milestones and performance levels. In case there is no financial institution involved in the project, an agency will be designated while sanctioning the project for regular monitoring and evaluation, and the cost of the same will be met out of the scheme.

The Ministry of Tourism also has a separate Monitoring Group consisting of the concerned Joint Secretary and Director incharge of the scheme along with the Financial Controller to regularly monitor and review the sanctioned projects.

3. The Study Objectives The study has been commissioned by the Ministry of Tourism to evaluate

whether the scheme has been able to meet the objectives of promoting large scale revenue generating projects and to make specific recommendations for its modification to facilitate increased participation by private and public sector organizations. The specific objectives of the study are the following:

• Evaluating whether the scheme has been able to meet its objective of promoting large scale revenue generating projects for development of tourism infrastructure through public-private partnership and in partnership with other Government / Semi-Government agencies;

• Assessing the progress of selected projects and their performance in terms of revenue generation and usage of assets. The assessment would also identify the constraints and difficulties faced in the implementation of the projects, if any, and the specific sources / reasons for such constraints; and

• Based on such evaluation, formulate specific recommendations for bringing about improvements / modifications in the scheme for facilitating increased participation by various public and private sector organization in the implementation of the scheme.

4. The Parameters of Evaluation The objectives of the Study in relation to the scheme can be translated into

the evaluation of the following parameters:

4.1 Spread and Depth of Projects An evaluation of the spread and depth of projects taken-up both in terms of geographical spread and type of projects since the inception of the scheme will provide valuable information about the pattern of implementation and directions of the scheme. It will also bring out regional variations in the use of the scheme. A review of all the 21 projects sanctioned during the Tenth Plan

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period is, therefore, considered essential. This was done by analyzing the list of projects made available by the Department of Tourism

4.2 Popularity of the scheme Several State/UT Governments have not taken advantage of the scheme

during the Tenth Plan period. The reasons for the same may include awareness deficit, difficulties in the conceptualisation of suitable projects, identification of partners and preparation of project reports, conditionalites and risk perceptions, etc. Identification of exact reasons and understanding the factors contributing to the success of the scheme in some of the states is considered necessary to suggest measures for ensuring enhanced use of the scheme. This was done through a questionnaire survey and personal interviews in selected states.

4.3 Non-Conversion of Feasibility Studies A few of the State Governments like Gujarat, Maharashtra and West Bengal

took assistance for the conduct of feasibility studies but those studies did not fructify into investment projects, during Tenth Plan. The assessment of reasons for the same is considered necessary to suggest suitable modifications to the scheme. This was done through another questionnaire survey and telephone interviews.

4.4 Hurdles in Project Implementation The implementation of projects may be affected by various factors including (i)

delays in the completion of various formalities (ii) difficulties in meeting various conditionalities imposed by the scheme (iii) delays in the availability of finance and subsidies (iv) timely non-availability of critical inputs, etc. It is also possible that the project did not encounter any problem whatsoever and could be completed in time. It would be useful to assess the exact situation in respect of various projects from those who have taken up implementation of such projects. This was done by analyzing the progress of implementation of selected projects.

4.5 Performance of Completed Projects Assessment of performance of completed projects in terms of assets created,

gross and net profits, employment, etc. will provide adequate indicators to judge whether the scheme has been useful in improving techno-managerial efficiencies in the construction and management of large revenue generating tourism infrastructure projects. It can also indicate the directions in which the scheme needs modifications.

5. Approach and Methodology An integrated approach consisting of documentation of all the available data

in respect of projects sanctioned during Tenth Plan period, questionnaire surveys and personal interviews have been adopted for the completion of the evaluation study. Data available with the Ministry of Tourism have been documented. Questionnaires surveys, telephone interviews and field visits for covering different parameters of the study have been suitably planned and administered. The details are indicated in the following paragraphs:

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5.1 Documentation of Project Details A comprehensive database of the identified projects has been compiled from the relevant files and reports available with the concerned agencies for assessing the spread and depth of the projects.

5.2 Questionnaire Survey In view of a multiplicity of factors that needed to be assessed as indicated, a set of questionnaires have been designed and sent to the State/UT Governments and industry associations. The respondents were also reminded periodically.

5.2.1 Popularity Survey The popularity of the scheme amongst State/UT Governments, industry associations has been assessed through a questionnaire (Appendix - II) specifically developed for the same as detailed below:

(a) Coverage

The survey covered the institutions and industry associations who were involved in tourism projects. In particular, the following were covered:

• Secretary / Director of State Tourism Departments • Managing Directors of State Tourism Corporations • Tourism industry associations like FHRAI, HAI, TAAI, etc. • Industry associations like CII, FICCI, ASSOCHM, etc.

Individual members of different industry associations involved in tourism projects/investments were also contacted either personally or over telephone during field visits.

(b) Method of Survey

The questionnaire has been mailed to the listed respondents by post and by e–mail. The respondents were also reminded periodically. In the case of States being visited by the Consultants, attempts were made to collect/verify the questionnaires. Three State Governments and an industry association returned the questionnaires duly filled in and information on awareness about the scheme was obtained through personal interviews from two more states and eight individual investors. The information was also collected over telephone from five industry association and 14 individual investors. The inputs received by post, e-mail, personal contacts or through telephone were tabulated and analyzed.

5.2.2 Study of Regional Variations The reasons for regional variations in making use of the scheme has been assessed through another questionnaire duly developed for the same (Appendix - III).

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(a) Coverage

The survey covered the States of Andhra Pradesh, Haryana, Karnataka, Kerala, Punjab and Tamil Nadu which have been successful in taking up at least one project under the scheme.


The questionnaire has been addressed to the promoters of each project and reminded them periodically. In the case of projects identified for performance assessment, the questionnaires were collected at the time of field visit while four project authorities completed the questionnaires and returned the same by themself, details in respect of other projects had to be collected at the time of personal interviews. The inputs thus received have been tabulated and analyzed.

5.2.3 Assessment of Non-Conversion of Feasibility Studies The reasons for non-conversion of feasibility studies into investment projects

is assessed through another questionnaire designed for the same (Appendix-IV).

(a) Coverage

The survey covered the States of Gujarat, Maharashtra and West Bengal, which have availed assistance for feasibility studies but have not taken-up any investment project.


It was also a mail enquiry. The questionnaire developed for the survey has been sent to the agencies which got the feasibility study conducted and it was followed-up by reminders. The States were also contacted over telephone and information collected. Apart from the above States, information was also collected from Karnataka and Andhra Pradesh through personal visits and from Tamilnadu through telephone.

5.2.4 Assessment of Hurdles in the Implementation and Performance of Selected Projects This is a critical aspect of the study and has been given considerable attention and only selected projects were covered.

(a) Selection of Projects

The following projects were identified by the Ministry of Tourism for assessing the progress of the projects with particular reference to utilization of funds and assets created.

Sl. No. Project Amount Sanctioned

(Rs. in Lakhs)

1. Setting-up of Taramati Cultural Complex, Hyderabad (Andhra Pradesh) 62.50

2. Coorg Golf Tourism Project, Virajpet (Karnataka) 53.00

3. Lulu International Convention Centre, Thrissur (Kerala) 250.00

4. Convention Centre, Suraj Kund, Haryana 127.84

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The above projects in four states include one cultural centre, one golf course and two convention centres. However, in order to have a wider coverage, four additional projects consisting of (i) Karnataka Luxury Train (ii) Bannerghatta Biological Park near Bangalore in Karnataka (iii) Development of Marina at Bolghatty Island, Kochi and (iv) Integrated Development of Golf Course and Country Club at Kochi, Kerala were also took up by the consultants for detailed study.


A questionnaire for collecting all the relevant details has been designed (Appendix-V) and sent to the project authorities. They were also reminded periodically. The consultants also visited the respective States and persuaded them to provide the details.

5.3 Field Visits Field visits were undertaken by the study team to have interactions with State

Government agencies, industry associations, financial institutions and other stake holders including individual members of industry to gather first hand information about awareness acceptance/effectiveness of the scheme and experience of the promoters of selected projects. Some of the selected projects were also visited to have a visual impression of them and to verify the performance of each of them. The opportunity was also used to collect/verify the questionnaires filled-up by the respective agencies. The dates of field visits are as given below:

Sl. No. State/Union Territory Dates of Visit 1 Assam 25 – 28, May 2008 2 Andhra Pradesh 16 – 17, April 2008 3 Chandigarh (UT) 22 – 24, April 2008 4 Gujarat 22 – 23, July 2008 5 Haryana 22 – 24, April 2008 6 Punjab 22 – 24, April 2008 7 Karnataka 16 - 20, June 2008 8 Kerala 18 – 24, April 2008 9 Orissa 4 – 8, May 2008 10 Rajasthan 5 – 7, May 2008 11 Uttarakhand 22 – 27, May 2008

6. Tabulation and Analysis The data collected through various methods were integrated in the in-house

computers, compared, validated and tabulated as per pre-designed tabulation plans so as to bring out specific parameters being studied. The tabulated results were then analyzed to identify the factors, which affected the implementation of the scheme both positively and negatively. The progress and performance of the projects surveyed were also analyzed.

7. Integration and Report Writing The project team consisting of those experienced in the Indian tourism industry

integrated the results obtained from the analysis of data with their findings during personal interviews and interactions and prepared a comprehensive report bringing out the strengths and weaknesses of the scheme in its present format, recommending improvements/modifications required for making the scheme more popular with the private sector and semi-government agencies and measures required for ensuring that public funds are effectively used and become a real catalyst.

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8. Lay out of the Report The report contains five Chapters including this one which explains the

methodological aspects of the study. An analysis of the performance of the scheme in terms of utilisation of plan funds, year wise and geographical spread of the projects, popularity of the scheme, extend of participation of private sector, etc is given in second Chapter. The third Chapter contains an evaluation of each of the projects selected for detailed study. The fourth Chapter contains an integrated review of all the findings and specific recommendations for the improvement/modification of the scheme. An Executive Summary containing major findings and recommendations is given in the fifth Chapter.

******

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THE SCHEME DURING TENTH PLAN 2


II. THE SCHEME DURING TENTH PLAN

1. Plan Allocations The scheme “Assistance for Large Revenue Generating Projects” (LRGP) was taken up during Tenth Plan with an overall Plan allocation of Rs. 98 crores. As compared to the total allocation of Rs. 2900 crores for the Department, the share of the scheme is about 3.4 percent. Considering the fact that the scheme was newly introduced during Tenth Plan, the allocation is reasonable. The scheme became operational only during 2003 – 2004 after finalizing the relevant guidelines and approvals even though budget provision was made during 2002-2003. The year wise budget provisions and expenditures under the scheme during Tenth Plan as compared to total budget provisions and expenditures are given in Table – 2.1

Table – 2.1: Year – wise Budget Provisions and Utilisations (Rs. crores) Year All Plan Schemes LRGP Schemes

Budget Provision

Expen-diture

Percentage Utilisation

Budget Provision

Expenditure

Percentage Utilisation

2002 – 03 225 252.04 112 6 0 0.0 2003 – 04 325 357.40 110 18 18.00 100.0 2004 – 05 500 464.68 93 18 0.65 3.6 2005 – 06 786 768.24 98 30 9.28 30.9 2006 – 07 830 797.05 96 47 1.02 2.2

Total 2666 2639.41 99 119 28.95 24.3

Though the budget provision for the scheme has been increasing every year, the actual expenditure has decreased considerably since 2004 – 2005. The over all percentage utilization of funds under the scheme during Tenth Plan was merely 24.3 percent as against total budget utilisation of 99 percent.

Budget Provisions and Expenditure of All Plan Schemes

0200400600800

1000

2002

– 03

2003

- 04

2004

- 05

2005

- 06

2006

- 07

Years

Rs.

in c

rore

s

BudgetProvision

Expenditure

Budget Provision and Expenditure of LRGP Scheme

01020304050

2002

– 03

2003

– 04

2004

– 05

2005

– 06

2006

– 07

Years

Rs.

in c

rore

s

BudgetProvision

Expenditure

Fig: 2.1 Budget provision of All Plan Schemes Fig: 2.2 Budget provision of LRGP Scheme

2. Projects Assisted

2.1 Year – wise Progress Since the launching of the LRGP scheme in 2003 – 2004, as many as 21 projects were sanctioned. Of these, 9 projects were for conducting feasibility studies and the other 12 were investment projects. While a larger number of projects were sanctioned during the first two years of implementation; only

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one project was sanctioned during the third year. Even during the last year of Plan period only three projects could be sanctioned and among them, two were for undertaking feasibility studies. The year wise distribution of projects sanctioned during Tenth Plan is given in Table – 2.2

Table – 2.2: Year – wise Distribution of Sanctioned Projects. Year Number of Projects Sanctioned

Feasibility Studies Investment Projects Total 2003 – 04 3 8 11 2004 – 05 4 2 6 2005 – 06 - 1 1 2006 – 07 2 1 3

Total 9 12 21

Year Wise No. of LRGP Feasibility Studies Sanctioned

3

4

0

22003 -04

2004 - 05

2005 - 06

2006 - 07

Year wise No. of LRGP Investment Projects Sanctioned

8

2

11

2003 -04

2004 - 05

2005 - 06

2006 - 07

Fig: 2.3 No. of LRGP Feasibility Studies Fig: 2.4 No. of LRGP Investment Projects

2.2 State – Wise Distribution The 21 Projects sanctioned during Tenth Plan were confined only to nine states in the country. It included 4 States in the South, 2 States in the West, 2 States in the North and one State in the East. The four Southern States had a share of 16 projects out of 21 projects. Out of 12 investment projects also the Southern states accounted for 10 projects. The reasons for the concentration of projects in the Southern states are analysed separately. The State – wise distribution of projects sanctioned during Tenth Plan along with total amounts sanctioned is given in Table – 2.3 Table – 2.3: State-wise Distribution of Projects and Amounts Sanctioned.

Number of Projects Sl. No. State FS IP Total

Amount Sanctioned

(In Rs, Lakhs) 1 Andhra Pradesh 3 1 4 97.50 2 Gujarat 1 - 1 15.00 3 Haryana - 1 1 108.00 4 Karnataka 2 4 6 1463.00 5 Kerala - 3 3 1673.00 6 Maharashtra 1 - 1 15.00 7 Punjab - 1 1 725.00 8 Tamil Nadu 1 2 3 765.00 9 West Bengal 1 - 1 15.00

Total 9 12 21 4876.50 FS – Feasibility Studies, IP – Investment Projects

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State Wise Distribution of Feasibility Study Projects

1

1

0

1

02 0

3

1

Andhra Pradesh

Gujarat

Haryana

Karnataka

Kerala

Maharashtra

Punjab

Tamil Nadu

West Bengal

State Wise distribution of Investment Project

010

2

1

0

3

4

1

Andhra Pradesh

Gujarat

Haryana

Karnataka

Kerala

Maharashtra

Punjab

Tamil Nadu

West Bengal Fig: 2.5 Distribution of Feasibility Study Projects Fig: 2.6 Distribution of Investment Projects

2.3 Types of Projects The investment projects sanctioned under the scheme during Tenth Plan included a few novel projects like Marina, Biological Park and Cultural Centre apart from golf courses, tourist trains, convention centres and rope ways. The projects under feasibility study stage and waiting to be converted also included some imaginative projects like development of Fossil Park, Sea Cruise and Night Safari Park. The distribution of sanctioned projects by different categories is given in Table – 4. There seems to be a bias for the development of golf courses, convention centres and tourist trains even though the scheme has been useful in conceptualizing a few innovative projects:

Table – 2.4: Distribution of Projects by Category Number of Projects Sl. No. Category

FS IP Total 1 Golf Courses - 3 3 2 Convention Center 1 2 3 3 Tourist trains 1 2 3 4 Rope way - 2 2 5 Biological Park - 1 1 6 Fossil Park 1 - 1 7 Marina - 1 1 8 Sea Cruise 1 - 1 9 Cultural Centre - 1 1 10 Safari Park 1 - 1 11 Tourist Reception Centre 1 - 1 12 Hill Station Development 1 - 1 Total 7 12 19 FS – Feasibility Studies, IP – Investment Projects

3. Conversion of Feasibility Studies into Investment Projects Out of nine feasibility studies sanctioned during Tenth Plan, two were converted into investment projects and sanctioned during the Plan period itself. The others are at different stages of processing or conversion. The status of each of the projects sanctioned during the Plan period as reported by the respective State Government are given in Table – 2.5.

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Table – 2.5: Status of Feasibility Study of Projects

Sl.No Title of the Project State Current Status

1 Development of Dinossaur Fossil Park

Gujarat The total cost of the project is about Rs. 119 croresas per final report on integrated master plan for the proposed Dinosaur Fosill Park at Raiyo;I Village, Balasinor The State Govt. has therefore requested the Central Govt. to make available the necessary funds.

2 Coorg Golf Links Golf Tourism Project

Karnataka Already converted and sanctioned

3 Construction of TRC at Chennai

Tamil Nadu The State Government is going ahead with the project without assistance under LRGP.

4 Taramati Baradari Cultural Complex

Andhra Pradesh

Already Converted and became functional

5 Southern India Tourist Train

Andhra Pradesh

The investment project is under negotiation with the Railway Board

6 Sea Cruise between Chennai Visakhapatnam and Port Blair

Tamil Nadu Under Consideration by the State Government as reported by state government officers.

7 Mini Convention Centre at Bangalore

Karnataka The State Government has not been able to locate the feasibility study report and give any indication of its current status.

8 Development of New Mahabaleshwar Hill Station

Maharashtra Feasibility study yet to be completed

9 Setting up of Night Safari Park at Jorepokhan

West Bengal

The Government of West Bengal could not proceed with the project due to law and order problems.

Among the completed feasibility studies, the Gujarat Government will submit the proposal shortly. West Bengal could not proceed with the project due to law and order problems so far. All others except the Mini Convention Centre at Bangalore are at various stages of finalization, conversion or implementation. It is thus a question of time that these projects would be coming up for investment.

4. Popularity of the Scheme Out of 35 States and Union Territories in the country, only six states have been successful is taking advantage of the scheme. Though the three major states of Gujarat, Maharashtra and West Bengal got assistance for the preparation of feasibility reports, none of them could convert them into investment projects due to one reason or the other as indicated in the

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previous section. Among the other States, Assam did make an effort to take advantage of the scheme but could not succeed. Orissa is in the process of preparing proposals for seeking assistance under the scheme. The Rajasthan Government, though aware of the scheme, it is not familiar with the full details of the scheme. The State Government has not been able to conceptualise any suitable project and get partners for the same. The State Government has also found it difficult to set up SPV and obtain appraisal reports. The Tourism Department of Uttarakhand Government stated to be aware of the scheme and taken advantage for preparing feasibility reports/DPR for some of the projects. It is however, noted that assistance for conducting feasibility study/preparation of DPRs for some of the projects has been taken under the ‘Market Research – Professional Services’ Scheme but not under the LRGP scheme during Tenth Plan. The State Government seems to be not fully conversant with all the details of the scheme and a copy of the guidelines was obtained from the consultants.

The above analysis brings out the fact that most of the State/U.T. Governments do have a general awareness about the scheme, though many of them are not familiar with the details of the scheme. The conceptualization of suitable projects, finding partners and getting them appraised etc are not found to be easy tasks. The non availability of resources coupled with some level of mental block seem to be the main reason for the scheme not becoming very popular during Tenth Plan. The scheme has also been in operation only for a limited period of four years during Tenth Plan, and some of the State Governments are now moving to take advantage of the scheme. This is a positive development and needs to be supported through proper guidance, awareness-cum-training work shops and making available the necessary resources.

The individual private entrepreneurs and industry associations are largely not aware of it, though the scheme is intended to promote private sector participation. In the case of those private entrepreneurs who have taken advantage of the scheme, the source of information was financial institutions involved in the development of industries.

5. Private Sector Participation The primary objective of the scheme has been to catalyze private and corporate sector investments in the development of tourism infrastructure. However, among the 12 investment projects sanctioned during Tenth Plan, only 3 projects had private sector involvement. While the Lulu International Convention Centre project in Kerala has been purely a private sector initiative, the Coorg Golf Links Golf Project has been taken up by a registered Golf Club. The Golf course and Country Club at Kochi is promoted by the Government of Kerala as a Joint Sector company with major share from private individuals. All other projects have been promoted by State Government agencies like Tourism Development Corporations. Lack of awareness about the scheme, low levels of interest in such tourism projects, non – availability of support infrastructure; etc seem to be the reasons for the low levels of private sector involvement in the scheme.

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The officers of State Tourism Departments were specifically requested to indicate their views about entertaining requests for assistance under the scheme directly from the private promoters by the Central Ministry of Tourism. The State Governments, did not approve of such a procedure in view of the fact that the facilities created through the project need to be supported by the State Governments with various basic amenities like water and electricity supply, drainage and sewerage, solid waste disposal facility, etc. apart from protecting environment and local culture. It is therefore necessary to ensure that the projects supported under the scheme are considered useful and recommended by the respective States/UT Governments.

6. Regional Variations All possible attempts were made by the Consultants to identify the reasons for high concentration of projects in the four Southern states. In this context, effort was made to collect details about sources of information about the scheme, how the project was conceptualized, how the project proposal was prepared, what kind of assistances were received from other agencies, etc. Though not much information became available through the questionnaire, the interaction with the State Government agencies as well as the details available through questionnaires revealed certain patterns listed below:

i. The source of information about the scheme was largely by the Directorates of Tourism in each State;

ii. The projects were largely taken up by the State Tourism Development Corporations of the respective States;

iii. The State Tourism Development Corporations which were comparatively better placed in availability of resources, well managed and had proper liaison with the Government succeeded in taking up projects under the scheme. Further, these corporations also had the experience of implementing projects under the earlier equity scheme; and,

iv. Private sector participation in the implementation of projects under the scheme is catalyzed by the Financial Institutions. In the case of Kerala, the Kerala State Industrial Development Corporation (KSIDC) provided the necessary details of the scheme and term loan to the entrepreneur. In fact, KSIDC has full details of the scheme along with the guidelines. In the case of Coorg Golf Course Project, Tourism Finance Corporation of India (TFCI) was instrumental in promoting the project. It is thus obvious that financial institutions of the State Governments and National Financial Institutions have to be made to take a lead role in making the scheme popular among the investors.

7. Hurdles in the Implementation of Projects The State Governments who have taken advantage of the scheme largely did not report any hurdles in the implementation of the projects. However, it is understood during discussions that the agencies did face problems and as such the implementation got delayed. Invariably, the problems were in getting various clearances like environmental clearance, permissions of air port and Sea Port authorities, security clearance, etc. It is, therefore, important that the implementation agencies are encouraged to take clearances in advance.

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The State Governments who have not been able to take advantage of the scheme so far had a different story. They find it difficult to formulate suitable proposals, finding partners and getting the necessary resources for taking up projects under the scheme. The back ended support of subsidy makes it difficult to take advantage of the scheme for already resource constrained organizations of the State Governments.

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EVALUATION OF SELECTED PROJECTS 3


III. EVALUATION OF SELECTED PROJECTS

1. Introduction An important term of reference of the evaluation study as specified by the Department of Tourism was to assess the performance of completed projects in terms of assets created, gross and net profits, employment, etc. It was expected to provide adequate indicators to judge whether the scheme has been useful in improving techno – managerial efficiencies in the construction and management of large revenue generating tourism projects. The projects selected by the Department of Tourism for evaluation were:

i. Setting up of Taramati Baradari Cultural Complex, Hyderabad ii. Coorg Golf Links Tourism Project, Virajpet, Karnataka iii. Lulu International Convention Centre, Thrissur, Kerala, and iv. Convention Centre, Suraj Kund, Haryana.

The Consultants, however, attempted to evaluate four more LRG projects consisting of the following:

i. Development of Marina at Bolghatty Island, Kochi ii. Integrated Development of Golf Course and Country Club at Kochi iii. Karnataka Luxury Train iv. Bannerghatta Biological Park, Karnataka

The evaluation of the projects on the basis of the details available from the Central and State Government agencies and project implementing agencies has been summarized in the following paragraphs.

2. Taramati Baradari Cultural Complex

2.1 The Project and its Location

Taramati Baradari is a beautiful monument on a hillock at a distance of about 15 Kms towards Gandipet and about 3 Kms – away from Golconda Fort at Ibrahimbagh. It was built by Sultan Abdullah Qutub Shah who was the seventh ruler of the Qutub Shahi dynasty. He loved music, poetry and wine. Taramati was his favourite courtesan and he adorned her as ‘a flower from heaven’. He built a special Baradari for her where she used to perform. He could hear her singing from his court in Golconda fort as the legend goes. The incredibly advanced acoustics found at the fort lend credibility to the claim. According to popular lore, she used to sing and dance all the way to the Fort on moonlit nights.

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Photographs of Taramati Baradari

Taramati Baradari, built around 1625 AD is on a small hillock. It is a two-storied structure with twelve arched doorways. The Central Court meant for cultural programmes is provided with a corridor all around. The walls are extensively treated with elegant stacco work depicting beautiful floral and geometrical designs. The Project is aimed at converting this complex into a high class cultural tourist complex. The site of the monument and its surroundings is already an internationally known tourist spot with Golconda Fort nearby and a number of other attractions like Essel World, Ocean Park, Treasure Island, etc around it. In an adjacent hillock there is also another historical monument ‘Premavati Baradari.’

2.2 Project Justification Taramati Baradari monument truly reflects an amalgam of culture, heritage, romance and grace. The revival of the monument to its original glory through renovation and creating a heritage friendly ambience and a state of the art convention centre as a perfect venue for musical concerts, performing arts, exhibitions, meetings and conventions is expected to enhance its tourism appeal both within the country and abroad.

2.3 Planned Facilities The project promoted by the Andhra Pradesh Tourism Development Corporation (APTDC) has been to create an exclusive complex for culture, entertainment and leisure around the heritage monument. The facilities planned along with the respective capacities are given in Table – 3.1

Table – 3.1 Facilities Planned in Taramati Cultural Complex Sl. No. Activity/Facility Capacity 1. Illumination of monument --- 2. Open air auditorium 1600 Person 3. Air Cooled Plenary Hall 500 Person 4. Banquet Hall 250 Person 5. Multi-Cuisine Ethnic Restaurant 85 Person 6. Sagi Bar 40 Person 7. Business Centers (2) --- 8. Exhibition Hall --- 9. Accommodation 32 Rooms 10. Swimming Pool and Health Club --- 11. Parking lot 100 Cars/200

Two-wheeler 12. Landscaping with expanded lawns, rose

garden and shrubbery.

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‘Chowki Dinner’ in traditional Nawabi style and royal ambience in the open terraced lawns around the monument is organized for groups on request. The cultural package include sound and light shows depicting the history and events related to Taramati Baradari and organizing international level cultural competitions.

2.4 Project Cost and Financing The cost of the project initially was Rs. 10 crores with CFA of Rs. 2.50 crores, State contribution of Rs. 5.5 crores and a loan component of Rs. 2.0 crores. While the CFA component was to be used for the construction of Open Air Auditorium and the Plenary Hall, the loan component was to be used for the construction of accommodation unit, bar and restaurant and food courts. However, the actual cost escalated to Rs. 11.39 crores. The Government of Andhra Pradesh contributed about Rs. 6.56 crores while the Government of India contribution was only Rs. 0.625 crores. The balance amount of Rs. 4.205 crores was raised by the APTDC itself.

2.5 Project History and Implementation The Government of Andhra Pradesh sought CFA of Rs. 2.50 crores in March 2004 for the execution of the project. The Ministry of Tourism, however, advised the State Government to undertake a feasibility study of the project and sanctioned a sum of Rs. 2.50 lakhs in May, 2004 for the completion of the feasibility study. The proposal was re-submitted by the Government of Andhra Pradesh in October 2004. The Ministry of Tourism sought a number of clarifications and considered only two specific components of the project costing Rs. 2.5 crores and sanctioned Rs. 62.5 lakhs as central share by the end of March, 2005. A sum of Rs. 30 Lakhs was also released as first installment. Though as per the conditions of sanction, the project was to be completed within 24 months, the State Government was able to complete and commission the entire project in 2006. The State Government was able to achieve it as the implementing agency APTDC started the construction work without waiting for the sanction of CFA.

2.6 Performance The cultural complex has already become popular with several corporate houses for organizing meetings and conferences. On an average, the complex has been hosting about four conferences/conventions per month since its commissioning. A number of cultural programmes are also being held in the complex including Golconda Festival during 18th to 20th April every year. The complex has been able to earn a revenue of about Rs. 1.05 crores during 2006-07. It has also been able to generate employment opportunities to a large number of persons. The other benefits of the project include the following:

i. The historical monuments have been restored to its original glory blending with original architecture;

ii. The complex now attracts a large number of visitors; iii. It has become a focal point for reviving music, dance and cultural festivals

in Hyderabad; and,

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iv. Much abused site is now transformed into a vibrant cultural complex.


2.7 Review Taramati Baradari Cultural complex is one of the successful projects taken up under the LRGP scheme by the Government of Andhra Pradesh. The complex by itself is a great tourist attraction in the outskirts of Hyderabad and has become popular with both domestic and foreign tourists. However, APTDC had problems in arranging the requisite funds as CFA was limited to Rs. 62.5 lakhs only as other components of the project were considered ineligible for CFA.

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3. Coorg Golf Links (CGL) Golf Project


The project envisaged the upgradation of an existing 9 hole golf course in Coorg district into a 18 hole golf course. Coorg or Kodagu district of Karnataka is a new found favourite of travelers. Untouched by urban chaos, this tiny cluster of towns and villages offer everything that is natural-crisp air, thick tropical forest, miles and miles of exotic spice and coffee plantations, extensive paddy fields and diverse flora and fauna. Coorg is, infact, known for its misty hills, lush forests, plantations, orange groves, rice valleys and countless water streams. The tourist attractions of the area include:

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Rooms at Coorg Golf Links

i. Madikeri Fort ii. Raja’s Seat iii. Talakaveri iv. Irrupu and Abbey Falls v. Nagarhole National Park vi. Valanoor vii. Omkareshwar Temple viii. Byle Kuppe ix. Cauvery Nisarga Dhama

The CGL Golf Project is located at village Bittangala in Virajpet Taluk of Coorg district. The place is approachable by road from Mysore and is at a distance of about two hours drive.

3.2 Project Justification The upgradation of the existing 9-hole golf course to 18 holes and construction of a 10-room accommodation unit with other facilities is expected to promote tourism industry in the area, meet the need for quality golfing facilities and generate additional direct employment to 30 persons.

3.3 Project Cost and Financing Coorg Golf Links, registered under the Karnataka Societies Registration Act, took up the project with an estimated cost of Rs. 277 lakhs. The Society would raise Rs. 214 lakhs from its members and Rs. 10 lakhs as loan from Tourism Finance Corporation of India (TFCI). The balance amount of Rs. 53 lakhs was to be received from the Department of Tourism as Capital Subsidy under the LRGP scheme.

3.4 Project History and Implementation The initial proposal for seeking financial assistance under the scheme from the Ministry of Tourism was submitted by the Tourism Finance Corporation of India (TFCI) in February 2004. The proposal sought a capital subsidy of Rs. 50 lakhs on a total project cost of Rs. 240 lakhs. TFCI was to give a term loan of Rs. 40 lakhs. The Ministry advised the TFCI in March 2004 to appraise the project and prepare a feasibility report. The requisite study was conducted by TFCI and the feasibility report was submitted in May 2004. The total Project cost was revised in the report to Rs. 277 lakhs and subsidy amount to Rs. 53 Lakhs. The project was sanctioned in June 2004 and released Rs. 15.90

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lakhs to TFCI as first instalment of the subsidy, subject to certain conditions including the following:

i. The Board of Governors (BOG) of the Golf Course should have a nominee of the DOT

ii. TFCI should sanction its share of Rs. 10.00 lakhs term loan iii. The work and the financial expenditure would be monitored and certified

by TFCI. iv. The project is to be completed by March 2005.

A review of the physical and financial progress of the project by the TFCI in June, 2005 revealed that the development of additional nine holes has been mostly completed except for landscaping. However, the construction of the accommodation facility was yet to be taken-up. It was noted that the members of the golf club had raised Rs. 194.34 lakhs as on 30th April 2005 as against the envisaged contribution of Rs. 214 lakhs. The expenditure out of the above contribution was Rs. 192.15 lakhs. There was also cost overrun as the expenditure on some of the items was more than the budgeted amount. CGL has not availed the term loan of Rs. 10 lakhs sanctioned by the TFCI till April 2005. TFCI could release Rs. 8 lakhs as term loan only by February 2005 as CGL could not meet the conditions of term loan earlier. The second and final instalments of the subsidy were not released till March, 2008 as the contributions of other partners were not fully utilized for the project. The project is now nearing completion.

3.5 Performance The golf course has been imparting training to school children in nearby schools and South India Junior Golf Tournament competitions are being conducted during the last four years. The club has a membership of 450 golfers from outstations because of affiliations with clubs like Bangalore golf Club, Ooty Gymkhana Club and Bombay Gymkhana Club. The gross profit of the golf club was Rs. 1,297,643 during 2006 – 07 and it decreased to Rs. 675, 809 during 2007 – 08. The total number of persons employed in the golf course at present is 35 including 20 females.

3.6 Review The completion of the project has been delayed considerably. According to CGL, the delay has been due to shortage of funds and climatic conditions, which did not permit construction work all through the year. Non – availability of CFA in time, also contributed to the delay the implementation of such projects are time consuming and as such it is important to fix reasonable time targets and streamline procedural formalities. Through the golf courses, per-se cannot be considered as a tourism facility, the location of CGL golf course has the advantage of being located in a rural area having tremendous tourism potential. The required land and source of water were also readily available. In terms of investment it, however, cannot be considered as a ‘Large Revenue Generating Project’. Even, the gross profit has been a few lakhs of Rupees annually.

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4. Lulu International Convention Centre, Thrissur 4.1 The Project and its Location The project envisaged the establishment of a large International Convention Centre at Thrissur which is the cultural capital of Kerala and presents a Kaleidoscope of deep routed cultures, glorious traditions and delightful sensations. Pooram festival at Thrissur temple has become one of the greatest attractions even for tourists from abroad. The famous Guruvayoor temple is about 30 Kms away from Thrissur. The Convention Centre is located at a distance of about 5 Kms away from the city at Panchikkal on the side of Thrissur-Kozhikode Highway. The Cochin International airport is about 39 Kms away and Calicut airport is at about two hours drive from the city. Thrissur is also an important rail node of Southern Railway and is linked to most major towns inside and outside Kerala.

Lulu International Convention Centre

4.2 Project Justification A market study conducted by the promoter revealed the scope for a convention centre at Thrissur to meet the requirements of Thrissur, Palghat, Malapppuram and Calicut districts in Kerala as the only other Convention Centre in the State is located at Cochin. Since three private sector banks are having their head offices at Thrissur, it is expected that banking conventions would be held in the city. The Centre is also expected to attract a number of marriage functions as several marriages are solemnized in Guruvayoor temple. Being an educational city, a number of educational seminars are held every year and those can also be attracted to the Convention Centre.

4.3 Planned Facilities The facilities provided in the complex include a large Convention hall with a capacity of 2000 seats, 3 mini conference halls of 200 and 100 seats each with flexible partitions, 2 dining halls, a large central courtyard, a prayer hall, toilets and a large parking area which can accommodate 750 cars at a time. The convention centre is supported by a 40-room accommodation unit, multi-cuisine restaurants, kids play park, locker facility and travel desk.

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4.4 Project Cost and Funding The estimated cost of the project was Rs. 19.50 crores as per the details given in Table – 3.2:

Table – 3.2 Item-wise Cost of Lulu International Convention Centre

Sl. No. Particulars Cost (Rs. Lakhs)

1 Land (29340 Sq. m.) 475.00 2 Land Development 114.60 3 Building and Civil work

a. Convention Centre b. Service Hotel c. Office block and others

449.75 120.00

68.95 4 Machinery and Equipments 546.60 5 Other Miscellaneous expenses 175.10 Total 1950.00

Say Rs. 19.5 crores

The project was to be financed with a promoter’s contribution of Rs.10 crores, Central Government grant of Rs.2.5 crores and loans of Rs. 5.0 crores from Corporation Bank and Rs.2.0 crores from Kerala State Industrial Development Corporation (KSIDC).

4.5 Project History and Implementation

The proposal for Central Financial Assistances to the tune of Rs.2.50 crores was prepared by the KSIDC and sent to the Ministry of Tourism through the Government of Kerala in March 2005. The admissibility of CFA as per the guidelines of the scheme was under consideration since then and a number of clarifications were sought on project appraisals by financial institutions, formation of Special Purpose Vehicle (SPV) and its validity etc. and ultimately it was sanctioned in December, 2006. The proposal was under examination for such a long time as there were several grey areas in the guidelines of the scheme. However, the project was completed and commissioned by October 2007 as the company has started the construction work at least a year before the sanctioning of CFA.

4.6 Performance The Convention Centre and the hotel have become fully functional and meeting primarily the needs of local community for marriages and other social functions. Corporate meetings and club events of local institutions are also being held in the Convention Centre. The financial performance of the centre during 2007-08 in terms of gross profit is provisionally estimated to be negative. However the centre has been able to provide employment to 126 persons including 21 women. While 12 of them were employed through contractors, others were employed directly on a regular basis.

4.7 Review The project is an excellent example of private sector participation in providing infrastructure facilities with partial cost sharing by the Government. However,

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a convention hall with 2000 seats along with three other mini conference halls cannot be supported by the existing tourism facilities in the town and nearby areas for holding even national level conventions or conferences. The room capacity available is too little and approach roads from both the airports are narrow and congested at several places. The 40-room accommodation unit provided along with the Convention Centre can also serve only domestic tourists and local community. Though the centre may become viable due to increased local demand, it needs to be seen, how far, it could serve the purpose of tourism in view of the fact that accommodation infrastructure required to support a convention centre of over 2000 seating capacity is not available either within the complex or in the vicinity.

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5. Convention Centre at Surajkund, Haryana

5.1 The Project and its Location Surajkund is a historic site in which a sun temple existed in the first millennium. The remains of the temple can still be seen. The temple and the enchanting surroundings of the place won the heart of a Tomar chieftain Suraj Pal, who belonged to a clan of sun worshippers. Raja Suraj Pal built a sun pool and amphitheatre in this area with the sun temple at its periphery. The place was later named as Surajkund in memory of the chieftain who built the complex.

Photographs of Surajkund Convention Centre

Surajkund crafts mela is being held during 1st to 15th February every year in this picturesque tourist complex of Haryana Tourism. The complex is a flagship project of Haryana Tourism Corporation and it is well connected to Delhi, Gurgaon and Faridabad by road. The nearest airport is at Delhi. It is 35 minutes drive from the Indira Gandhi International Airport and 25 Kms from Indira Gandhi Domestic Airport.

5.2 Project Justification In view of its vicinity to Delhi and availability of accommodation and limited conference facilities in Rajhans hotel, being run by the Haryana Tourism Development Corporation, a number of conferences, seminars and other such events are already taking place in Surajkund. However, the complex has the potential to become an important convention and conference destination. The existing hotel has 262 rooms, restaurants, mini-conference halls, health club and other facilities. The lakes, water sports facilities and sprawling lawns around the hotel provide an ideal setting for all visitors including convention/conference tourists to visit and enjoy the complex. The project for the construction of a convention center with a seating capacity of 400 persons has been, therefore, taken up by the Haryana Tourism Development Corporation (HTDC) with central financial assistance under the scheme.

5.3 Planned Facilities The facilities planned include a large convention hall and two smaller seminar halls along with other support facilities like lobby, business centre, toilets,

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kitchen etc. As per the initial plan, the total covered area was about 17422 Sq. ft. and it was increased to 24540 sq. ft. at the time of implementation by adding about 7118 sq. ft. The design and drawings were also revised accordingly.

5.4 Project Cost The cost of the project initially projected was Rs. 422.27 lakhs with a Central Financial Assistance (CFA) of Rs. 108.00 lakhs. However, the cost of the project was later revised to Rs. 511.34 lakhs with CFA to the tune of Rs. 127.84 lakhs. The balance amount of Rs. 383.50 was to be met by the State Government.

5.5 Project History and Implementation The Govt. of India sanctioned a sum of Rs. 108.00 lakhs and released Rs. 100.00 lakhs by the end of March 2004 with the condition that the project should be executed through Haryana Tourism Development Corporation Limited and commissioned within a maximum period of 18 months from the date of issue of the sanction. The project, therefore, should have been commissioned by 30th September, 2005. However, only about 61 percent of the project could be completed by December, 2006 and the project area has been enhanced.

The Ministry of Tourism sanctioned an additional amount of Rs. 19.84 lakhs as per revised cost estimates. The consultants of Intercontinental Consultants and Technocrats (ICT) visited the project site on 18th April, 2008 and noted that the construction work is nearing completion. Discussions with the project authorities on 22nd April, 2008 revealed that the facility will be commissioned as per the availability of dignitaries for inauguration.

5.6 Review The convention centre is an excellent addition to the tourism facilities at Surajkund Complex. It is expected to lead to increased tourist flow and improve the occupancy levels of the hotel. It will also have positive impact on the economy of the area by providing additional employment opportunities and creating demand for various local products and services. The implementation of the project, however, has been delayed and the time over run is over two and a half years. The project has not been commissioned so far and as such its performance in terms of capacity utilisation and financial returns could not be assessed.

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6. Development of Marina at Bolghatty Island, Kochi

6.1 The Project Site and its location The project is aimed at developing a world class Marina where boats and yatchs can be kept and provided the facilities for meeting the need of recreational boating in Cochin natural harbour. It is proposed to be located at the eastern coast of Bolgatty Island in the Bolgatty Palace Hotel premises under Kerala Tourism Development Corporation (KTDC). Bolgatty island by itself is one of the hot spots for tourists visiting Kochi. The presence of a heritage hotel, mini golf course, swimming pool, picnic spot, children’s recreation area, etc in the island makes it a splendid tourist attraction. The project is proposed to be implemented by Tourist Resorts Kerala Ltd. (TRKL) in collaboration with an international partner.

Photographs of Marina at Bolghatty Island, Kochi

6.2 Project Justification: Numerous luxury yachts call at Kochi every year even now without a marina. These yachts are on their way to destinations in the Far East. After leaving Dubai, Kochi is a strategic destination and can become an intermediate berthing location on their way to Far East. Further, Kochi being one of the best natural ports in Asia, it is the ideal choice for locating a marina. Being located strategically along the maritime route Kochi can attract sailors.

6.3 Planned Facilities: It is proposed to implement the Marina in two phases. Initially, the project would be for berthing 30 boats/yachts. Facilities for berthing 20 more boats will be established in the second phase. The other facilities proposed to be established include water side facilities including utilities, board walk and seating arrangements, Marina house, shore side utilities, weather information system, internet facility, library, cable television, health and fitness equipments, restaurants, marina museum, etc. The Infrastructure proposed to be created are:

• A multi storied clubhouse complex with swimming pool. • Sports bar, Jet skiing facility; • Open paved area with facility for boat shows; • Food courts, restaurant and shopping malls; and • Paved roadways and landscaped garden; etc.

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6.4 Project Cost: The cost of the project is initially estimated as Rs. 23.68 crores. The cost has been now revised downward to Rs. 19.0 crores as per the details given below in Table – 3.3

Table – 3.3: Item – Wise Cost Sl. No. Item Cost

(In Rs. Lakhs) 1 Land 480.24 2 Construction 670.32 3 Machinery & Equipment 329.57 4 Other capital cost 418.95 5 Working Capital 4.50 Total 1903.58

The project is proposed to be financed by the Central Government by way of subsidy to the tune of Rs. 4.23 crores and the rest by the State Government and other partners apart from a term loan from KITCO.

6.5 History and Progress of Implementation The Project proposal was submitted by the State Government for assistance under the LRGP Scheme in March, 2004. The proposal was considered by the Department of Tourism and sanctioned Rs. 4.23 crores during the same month as central financial assistance. A sum of Rs. 398.50 lakhs was also released as first instalment. However, the construction work could not be started for want of approvals/clearance of the Port Trust and Department of Environment.

6.6 Review It is a unique project and would lead to substantial increase in the flow of tourists to Kochi and resultant economic benefits to the local community. The project could not be implemented in time as the requisite clearances were not obtained in advance.

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7. Integrated Development of Golf Course and Country Club at the Cochin International Airport 7.1 The Project and its Location The Project envisages the development of an 18 hole golf course with driving range/practice range and country club on a site admeasuring about 130 acres of land owned by Cochin International Airport Ltd. (CIAL), which is a public limited company formed under public- private participation model. The Government of Kerala has an equity share of 26 percent in the company. Kochi is the commercial capital of Kerala and is known as the Queen of Arabian sea. The place is well connected by air, rail and road. The site of the project is very close to National Highway and rail network apart from being within the airport premises.

7.2 Project Justification Kochi is one of the favoured destinations in Kerala both for domestic and foreign tourists. It is also one of the finest natural harbours in the world. The other tourist attractions include beaches, crystal clear and sparkling new lagoons and the famous back waters connecting other interesting destinations. The proposed golf course is expected to tap the vast potential offered by golf tourism around the world.

7.3 Planned Facilities The golf course and the club house are planned to be supported with a host of other facilities as listed below:

i. Club house with reception and sit-outs ii. Restaurant, café and bar iii. Meeting/Conference rooms iv. Card and billiard rooms v. Health club/spa and fitness gym vi. Swimming pool vii. Badminton, Table tennis and Squash courts viii. Guest rooms ix. Children’s play area, and x. Car Parking

7.4 Project Cost and Financing The project cost excluding the price of the land was initially estimated to be Rs. 13.00 crores including Rs. 12.70 crores for golf component and Rs. 0.30 crores for turf care equipment. The land cost is notionally estimated to be Rs. 50 crores though it is already owned by the CIAL and no transfer of land is envisaged. The project cost excluding land has now been revised to Rs.48.00 crores. It is proposed to be financed through non-refundable membership fee, grants from the Government of India and term loan as per the details given in Table – 3.4

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Table – 3.4: Source of Financing of the Project Rs. in crores

Long term non-refundable membership fee 34.00 Grants-in-aid from Government of India 10.00 Term Loan from KSIDC 4.00 Total 48.00

The cost projected is very high and the reasons for such an upward revision are not available.

7.5 Project History and Implementation The proposal received from the Director of Tourism of Government of Kerala was considered by the Ministry of Tourism in early 2005, sanctioned a subsidy of Rs. 10.00 crores and released Rs. 8.00 crores as first instalment by the end of September 2005. The project was to be completed within a period of 18 months. The amount was released to KSIDC with the condition that the beneficiary company CIAL should take firm steps for project implementation and KSIDC should monitor the implementation of the scheme. KSIDC was also advised not to keep the funds unutilized for more than six months from the date of release of funds.

CIAL could not start the project till April, 2007 for want of clearance from the Director General of Civil Aviation (DGCA) and non-completion of preparation of master plan, detailed engineering design and drawings etc. by KITCO. It has been reported by the KSIDC that the earth work, fencing, etc. would be completed by April, 2008. There is no indication of time frame for the completion of the entire project.

7.6 Review Though the approval of the DGCA is stated to have been received in February, 2007 the progress in the implementation of the project is not very encouraging. Though about 33 months have already elapsed since the sanctioning of the projects, no time target is still available for the completion of the project. Kochi already has a 9 hole golf course and there has been plans for the development of an 18 hole International Championship Golf Course in the form of a joint venture project between Kerala Tourism and Cochin Port Trust. If it happens the CIAL golf course will loose its significance. There were also security and environmental concerns indicated in the feasibility study conducted by GMC Golf. The measures taken to address those concerns at the implementation stage need to be monitored by an independent agency.

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8. Karnataka Luxury Tourist Train


In tune with its recent decision to identify tourism as a priority sector for development, the Government of Karnataka launched several new initiatives to give a boost to the sector. A major initiative in this regard was to start a luxury train named ‘Golden Chariot’ that would show case the tourist attractions of Karnataka, while providing a unique travel experience to the tourists. The train would have 18 coaches with 10 passenger coaches. Each passenger coach would have four coupes with a base capacity of 80 passengers. A maximum capacity of 100 passengers could be created by having provision for a third passenger in 50% of the coupes. Karnataka State Tourism Development Corporation (KSTDC) along with the Railways would implement the project.

Inauguration of Golden Chariot by Hon. President of India

8.2 Project Justification Karnataka with its magnificent cultural heritage and natural resources has great potential for the development of tourism and thereby improving the living conditions of common people. The luxury tourist train is expected to provide a timely push for sustained development of tourism in the State.

8.3 Planned Facilities and Itinerary Being a luxury product, the train has been provided with all possible facilities that a well-heeled foreign tourist might require. It include two dining/restaurant cars, two lounge cars and a pantry-cum-stores car. The entire train is also provided with a top of the line audio system for broadcasting within the train as well as for entertainment purpose. There is an option to play different kinds of music in the lounge cars, the restaurant cars and passenger coupes. The other facilities would include bar, library, curio shop, beauty saloon, health club, ayurvedic massage room, games room, television, DVD player, mobile phone, computers and facilities for sight seeing.

During peak season from October to March, the trip would be for seven days with a longer itinerary and during lean season consisting of April, May, August and September the trip would be for 4 days with a shorter itinerary. The base

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itinerary of the train is Bangalore – Mysore-Belur-Halebid-Shravanbelagola-Hampi-Dandeli-Goa-Bangalore.

8.4 Project Cost and Financing The estimated cost of the project is Rs.31.40 crores as per the details given below in Table – 3.5:

Table – 3.5: Estimated cost of the Project Sl.No. Items Cost (Rs. crores) 1. Railway Equipment 14.65 2. Interiors and Facilities 12.80 3. Pre-launching marketing costs 0.53 4. Infrastructure at tourist sites 11.10 5. Others 2.32 Total 31.40

The cost of the project would be shared between the Department of Tourism, Railways and the State Government as per the details given below in Table–3.6

Table – 3.6: Share of Cost by DoT and State Government Sl.No. Agency Amount

(Rs.Crores) 1. Railways 7.50 2. Department of Tourism 7.85 3. State Government / KSIDC 16.05 Total 31.40

8.5 Project History and Implementation The Government of Karnataka sought financial assistance of Rs.11.66 crores from the Department of Tourism under the erstwhile Equity Scheme in June 2002. However, the project could not be assisted under the equity scheme as the new scheme has come into effect by that time. The case has been processed under the new scheme and sanctioned a sum of Rs.7.85 crores as CFA in March, 2004. A sum of Rs.1.00 crores was initially released to KSTDC and Rs.3.00 crores immediately thereafter in March itself.

The project was to be commissioned within a maximum period of 18 months from the date of release of the first instalment. However, the project implementation was delayed and it was planned to be launched in November, 2007 due to non-completion and delivery of the train by the Railways. The request of the Government of Karnataka for the release of the balance subsidy amount of Rs.3.85 crores was not acceded to as the promoters did not bring the full share of investment in accordance with the guidelines of the scheme. The train has now made its maiden trip in March 2008.

8.6 Review Though the project has been conceived in 2002, it could be implemented only in 2008. It had to face several hurdles including change of scheme, non-availability of funds, non-performance of partner organizations, pre-conditions for release of subsidy amount, etc. The operational and financial performance of the project could not be assessed as it has become functional only recently.

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9. Bannerghatta Biological Park, Bangalore 9.1 The Project and its Location

The Bannerghatta Biological Park (BBP) is on the outskirts of Bangalore city at a distance of about 25 kms. Spread over an area of about 743 hectares, it has a large variety of flora and fauna including rare and endangered species of animals and birds. The park is of significant attraction to wild life enthusiasts. The Park also offers an excellent opportunity to the people of the mega city to escape from the crowd, noise and pollution with minimal expenditure of time and money. The Park has been brought under the control of ‘Zoo Authority of Karnataka’ (ZAK), a registered society, with a view to ensure intensive and focused management of the Park. The ZAK along with the Government of Karnataka took up the project for improving the tourist facilities in the Park. The project envisages upgradation of Zoo and safaris to the international standards and also to provide high class visitor facility for education, recreation, ecotourism and relaxation.

9.2 Project Justification The biological park has been set-up with the objective of:

i. construction and breeding of endangered species of animals and birds in the region;

ii. creating awareness and sensitization about wild life among people and to facilitate conservation education;

iii. undertake research on captive management of area animals; iv. becoming a rescue centre for abandoned/distressed wild life; v. propagation of ecotourism; and vi. providing a place for wholesome recreation which inculcates positive

values.

The Park was visited by about Seven lakh visitors in 2002–03 and the numbers had been increasing every year. However, the visitor facilities within the park and around were not improved in the absence of a well thought out development plan and resources constraints. The project is thus aimed at meeting the two objectives of conservation and protection of wild life as well as upgrading the visitor facilities.

9.3 Planned Facilities The biological park consists of zoo where mammals, reptiles and birds are housed; tiger, lion, bear and herbivore safaris where animals are kept in semi-open conditions within enclosures, rescue centres for re-habilitation of animals rescued from circuses; pre-historic animal park housing pre-historic animals; butterfly park for research education and breeding of butterflies; orchidarium which is a botanical garden devoted to orchids and visitor facilities including parking, drinking water, pargolas and children play ground. With a view to achieve these objectives effectively, the ZAK conceptualized an overall development plan which is least intrusive on the present green cover, preserves the serenity of the place and provides unobtrusive construction to maintain the over all homogeneity of the area in order to

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create a Park which is environmentally sensitive while being educative and recreative at the same time. The specific components of the Plan include the following:

i. Infrastructural facilities like road and pathway network connecting visitor facilities, pergola and resting areas, compound wall/chain link mesh around the biological park, storm water drainage, water treatment plant, lighting system in the zoo improvement of facilities in safaris, gardening and landscaping around the park.

ii. Tourist/visitor facilities like parking area, souvenir shop, rest and relaxation facilities development of new safaris, etc.

iii. Establishment of Butterfly Park, development of animal housing in safaris and new aviary is the zoo, development of leopard safari, beautification & conservation of existing tanks, providing signages, boards dustbins; etc.

9.4 Project Cost and Financing The estimated cost of the project is Rs. 20.00 crores to be funded by different agencies as per the details given below in Table – 3.6:

Table – 3.6: Item Wise Cost Sl. No. Item Amount

(Rs.crores) 1. Grant-in-aid by the Department of Tourism 5.00 2. Grant-in-aid by Department of bio-technology 3.82 3. Karnataka State Tourism Development Corporation 1.00 4. Central Zoo Authority 1.00 5. Zoo Authority of Karnataka 4.18 6. Loan from Karnataka Urban Infrastructure

Development Corporation Ltd. 5.00

Total 20.00

9.5 Project History and Implementation The Ministry of Tourism sanctioned an amount of Rs. 5 crores and released Rs. 4.10 crores as first instalment on 31st March, 2004. It was stipulated that the project should be commissioned within a maximum period of 24 months from the date of release of first instalment. The Project, however, could be started only in April, 2005 and physical progress is-stated to be about 25 percent.

9.6 Review The Project is unique and novel. However, the implementation has been delayed due to involvement of multiple agencies and non-availability of various clearances on time.

*******

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INTEGRATED REVIEW AND

RECOMMENDATIONS 4


IV. INTEGRATED REVIEW AND RECOMMENDATIONS

1. Scope of the Scheme The scheme is titled ‘Assistance for Large Revenue Generating Projects’. The word ‘large’ has been used in a general sense without specifying any lower limit of size. The descriptions given under the scope of the scheme also do not indicate any limits except that it provides certain qualitative characteristics of the projects which can be assisted under the scheme. The characteristics indicated are:

i. the project by itself should be a tourist attraction or used by tourists; and ii. it generates revenue through a levy of fee or user charges on the visitors.

The projects funded under the general scheme ‘Product/Infrastructure Development for Destinations and Circuits’ also do satisfy both the above characteristics in a large number of cases. For example, (i) construction of budget accommodation, restaurants and wayside amenities (ii) SEL shows, (iii) procurement of equipments directly related to adventure tourism, etc also have the above characteristics. In the absence of specification of any qualifying limits, the Ministry had to provide assistance to both very small and fairly large projects costing Rs.2.77crores to Rs.48.0crores.The costs of each individual projects sanctioned during Tenth Plan and reviewed by the consultants are given in Table – 4.1.

Table – 4.1: Estimated Costs of Projects Sanctioned During Tenth Plan

Sl. No. Project Title Cost (Rs. crores)

1 Taramati Baradari Cultural Centre 11.39 2 Coorg Golf Link Golf Project 2.77 3 Lulu International Convention Centre 19.50 4 Convention Centre at Surajkund 5.11 5 Development of Marina at Bolghatty Islands 19.04 6 Integrated Development of Golf Course and

Country Club at Cochin International Airport 48.00*

7 Karnataka Luxury Tourist Train 31.40 8 Bannerghatta Biological Park, Bangalore 20.00 Total 157.21

[*Rs. 98.00 crores including notional cost of land]

While Coorg Golf Link Golf Project had the least cost of R. 2.77 crores, the revised cost of the Golf Course and Country Club at Cochin International Airport is the highest at Rs. 48.00 crores excluding land. Projects involving small investments are not likely to have any significant impact on tourism promotion and infrastructure development and thus the efforts involved in processing, sanctioning and monitoring may not be commensurate with the benefits. It is also not the purpose of the scheme to spread resources thinly over a large number of projects. It may, therefore, be ensured that the projects which can have significant impact on tourist inflow/spending only are funded under the scheme.

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In the case of projects involving very high investments, the cash outflow from budgetary sources can be fairly large. Hence, it is important to ensure that such projects lead to substantial benefit to the local community including income and employment generation. It is, therefore, recommended that all projects costing Rs. 50 crores and above including the cost of land may be subjected to economic and social cost benefit analysis before sanctioning.

2. Coverage of the Scheme The illustrative list of projects eligible for assistance under the scheme as indicated in the guidelines include golf courses, convention centres, tourist trains, cruise terminals, cruise vessels, etc. As in the case of infrastructural facilities like roads, railways, etc, some of the items in the illustrative list need not necessarily be tourism oriented as they may be largely used by local community instead of visitors. At the same time, the list also does not include some of the critical infrastructural facilities like small segments of roads, rail and train services, airport and air services, etc connecting tourist destinations to the nearest transport nodes. The list also does not include emerging tourism products like yoga parks, spas, health parks and centres, etc. The general aspects to be considered in the case of some of the above facilities while sanctioning financial assistance are given in the following paragraphs.

2.1 Golf Courses India is perhaps the first country outside Great Britain to establish a golf course in 1829 to meet the needs of British personnel in India. Over the years, about 160 golf courses have been developed in different parts of the country, mostly by the British rulers, urban elite or defence personnel as an exclusive entertainment facility for those who have developed the golf courses. Of late, some of the companies having hotel chains or resorts have also developed golf courses. But all of them are mostly membership driven rather than tourist driven.

There are differing views about the usefulness of golf courses as tourism product, particularly in the context of India. In general, a view has emerged that the quality of golf courses in India is such that they cannot become tourism products capable of attracting professional golfers from developed nations. They can at the most become add on facilities to otherwise attractive destinations. A truly international golf course is required to have highly invigorating climate and environmental conditions, impeccable facilities, unique challenges and hazards and high class maintenance which are difficult to sustain.

The above view has emerged despite the fact that India has a large number of golf courses designed by luminaries like Peter Thomson, Jack Nicklaus and Greg Norman. These include Delhi Golf Club, Jaypee Greens Golf Resort – Noida, Classic Golf Resort – Gurgaon, Presidency Golf Club – Mumbai, Bangalore Golf Club, Karnataka Golf Association Golf Course, etc. According to travel industry representatives specializing in golf tourism, the total number of international tourists playing in India in any particular year will not exceed a few hundreds.

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These are mainly holiday tourists with itineraries covering multiple tourist centers and their indulgence in golf is restricted by the duration of stay in each place. The problems cited by the travel industry in promoting golf tourism in India include (i) lack of awareness about Indian golf courses in the overseas markets, and (ii) restricted availability of golfing facility to non-members. While some of the golf courses do not allow non-members to use the facility, some others have imposed restrictions on weekends and number of visitors. For example, Delhi Golf Course do not allow non-members during weekends.

In view of the above, it is recommended that golf course projects for CFA may be evaluated in terms of its likely contribution to tourism industry, particularly in terms facilities extended to tourists, conditions under which tourists are allowed to use the golf course, linkages with travel industry, etc.

It would also be useful to evolve a golf tourism policy by taking into account the trends in international golf tourism, golf facilities open to tourists in India, the quality gradation of such golf courses, linkages between tourism industry and golf clubs, investment requirements, publicity and promotional efforts required, etc.

2.2 Convention Centres Convention Centres of tourism importance are generally built around commercial towns and high class holiday destinations. Such convention centres are supported by several facilities like business hotels, restaurants, communication and computer facilities, presentation and display facilities, office equipments and document handling facilities, instant money change and banking facilities, specialist conference and convention organizers, etc. While the community halls in different towns and cities can serve the purpose of holding small seminars and conferences, community functions, cultural shows, etc, these cannot be considered as tourism infrastructure as those taking advantage of such facilities do not travel beyond their usual environment and thus cannot be considered as tourists. A tourism related convention centre cannot be a stand alone facility as in the case of a community hall but has to be supported by a host of other facilities as mentioned above. In particular, the convention centre has to be supported by high class hotel rooms in adequate number either within the site or nearby areas for the stay and relaxation of the tourists participating in the conferences/conventions. It is, therefore, recommended that project proposals for the construction of convention centres may be evaluated in terms of its expected users and availability of other attendant facilities including hotel rooms for the participation of tourists in conferences/conventions if held in such centres.

The guidelines of the scheme stipulate that hotels and restaurants will not be eligible for assistance under the scheme either on a stand alone basis or as an integral part of some other projects. This restriction really defeats the very purpose of the scheme as a convention centre without accommodation infrastructure may not serve the needs of tourism. This is exactly the problem of Lulu International Convention Centre at Thrissur as a 40 room accommodation unit cannot support a convention centre of over 2000 seats if the participants are from outside Thrissur and not from nearby areas. It is,

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therefore, recommended that hotels and restaurants which form integral parts of convention centres meant to serve the needs of tourists may be allowed assistance under the scheme.

2.3 Tourist Trains Tourist Trains are genuinely tourism products. However, there seems to be a competition among states to introduce tourist trains in each State. There are five tourist trains already in operation and a few others are in the pipeline. In view of the fact that the first tourist train ‘Palace on Wheel’ had to wait many years to become commercially successful and the train ‘Great Indian Rover’ the Buddhist circuit could not succeed, it is not known whether the market will be able to sustain a number of new trains on a state-wide basis. The Ministry may, therefore, like to consider a review of capacity utilization and commercial viability of the trains already in operation before sanctioning new proposals from the State Governments. In the case of private operators, it could reasonably be assumed that they would venture into such investment after adequate market surveys.

2.4 Transport Infrastructure and Services

A number of tourist places located in remote areas of the country are not able to attract high spending tourists and thereby improve local economy due to lack of easy accessibility. For example, a visit to several pilgrimage centres like Badrinath, Kedarnath, Gangotri, Yamunotri, Vaishnodevi, etc, and some of the exotic tourist centres like Kohima, Pasighat, Munnar, etc can be made much easier if helicopter services are made available from the nearest airport, rail head or highway link, subject to proper assessment of environmental impact and techno-economic feasibility. There are also a number of tourist destinations which lack last mile connectivity. Such connectivity constraints can easily be removed through air or cruise services by catalysing investments through assistance under the scheme. It is, therefore, recommended that provision of such last mile connectivity through air or cruise services is included in the admissible list of projects for assistance under the scheme.

2.5 Health and Rejuvenation Facilities Health and rejuvenation facilities including yoga parks, spas, health resorts/parks based on traditional system of medicine, farm resorts, etc. are emerging as unique tourist attractions of the country. India has enormous potential for the development of such forms of tourism for the economic betterment of the country. It is, therefore, recommended that health and rejuvenation facilities for tourists may be included in the list of projects eligible for assistance under the scheme.

3. Catalysing Investments One of the primary objectives of the scheme is to catalyse investments by private, corporate and institutional sectors for the development of tourism infrastructure requiring large amount of resources. It is expected to be achieved through public–private partnership and in partnership with other Government/Semi-Government agencies. The pattern of financing of projects

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assisted during Tenth Plan as summarized in Table – 4.2 provides an indication of how far the scheme has been successful in catalyzing investments in partnership with private and government agencies.

Table – 4.2: Pattern of Financing of Selected Projects. Sl. No. Project Title Proposed Financing (Rs. Lakh) Central

Govt. State Govt. and agencies

Financial Institution

Private Partner

1 Taramati Baradari Cultural Centre 62.5 1076.5 --- ---2 Coorg Golf Link – golf project 53.0 --- 10.0 214.03 Lulu International Convention Centre 250.0 --- 700.0 1000.04 Convention Centre at Surajkund 127.8 383.5 --- ---5 Marina at Bolghatty Islands 423.0 500.0 481.0 500.06 Golf Courses& Club House of CIA 1000.0 --- 400.0 3400.07 Karnataka Luxury Tourist Train 1535.0 16.5.0 --- ---8 Bannerghatta Biological Park 982.0 518.0 500.0 ---

Total 4433.3 4083.0 2091.0 5114.0 Percentage 28.20 25.97 13.30 32.53

The table indicates that about 54% of the aggregate investment in the projects studied was proposed to be provided by the Central and State Governments and their agencies. In addition,Rs.3400 lakh or 21.63% of the total investment is proposed to be raised in the form of non–refundable membership fee from the users by the CIA Golf Course and Country Club which is a joint sector company promoted by the Government of Kerala with the investments of expatriates. It is difficult to make any judgment about the feasibility of raising funds as membership fee in the case of a golf course yet to be developed. Further, investments in respect of a few of the large projects including Golf Course & Club House of CIA, Marina at Bolghatty Islands and Bannerghatta Biological Park amounting to about Rs.87.04 crores out of Rs.157.21 crores are yet to be realised. On the whole, though the scheme has been successful in attracting private sector investment in tourism to some extent, it needs to be improved significantly. The expectation that the implementation of the scheme will lead to increased public-private sector partnership and leveraging the public funding through private investment resulting into world class self – sustaining commercial tourism products is yet to be realized in appreciable measure. A major constraint to this regard has been lack of awareness about the scheme among potential private sector investors.

The projects taken up by the State Government agencies during Tenth Plan were also largely confined to a few selected states. Low awareness about details of the scheme among government agencies including financial institutions and apprehensions about some of the conditions of the scheme were among the main reasons for many of the State Governments not taking up projects under the scheme.

It is, therefore, recommended that efforts may be made for ensuring wider publicity of the scheme along with all the essential details. It would be useful to hold awareness-cum-training workshops about the scheme in different parts of the country. Such events can also be combined with investment seminars.

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4. Improving Techno-Managerial Efficiencies Improving techno-managerial efficiencies in the construction and management of large revenue generating tourism infrastructure projects has been the other major objective of the scheme. The achievement in this regard can be judged from the frequency of timely completion of sanctioned projects and financial performance of completed projects. The details of time over runs as of May, 2008 and performance of each of the completed projects are given in Table – 4.3:

Table – 4.3: Project – Wise Time Over run and Performance Sl. No.

Project Title Time over run (Months)

Gross Profit/Loss (Rs. Lakhs)

1 Taramati Baradari Cultural Complex --- 20.00 2 Coorg Golf Link Golf Project 39 Upgradation Under

completion* 3 Lulu International Convention Centre --- (-) 360.9 4 Convention Centre at Surajkund 33 Not yet functional 5 Marina at Bolghatty Islands 15 Yet to be completed 6 Golf Course and Club House at CIA 15 Not yet completed 7 Karnataka Luxury Tourist Train 31 Just Commissioned 8 Bannerghatta Biological Park 27 Not yet completed

*The gross profit of the golf course declined from Rs 12.98 lakh in 2006 – 07 to Rs. 6.76 lakh in 2007 – 08.

The implementation of as many as 6 projects out of 8 projects got delayed considerably. The total projects which were completed on time included one project sponsored by the State Government and another promoted solely by a private company. The construction of both the projects started even before the necessary sanctions were issued by the Department of Tourism for financial assistance.

The time over runs are primarily due to lack of scientific planning and monitoring. In most cases, the steps for obtaining necessary clearances were initiated only after the Central Government has released the first installment of subsidy. The procedure has now been revised and only an approval in principle is issued now to enable the agencies to proceed with obtaining various clearances. It will definitely improve the time gap between the release of funds and starting of actual implementation of the projects.

Neither the project proposals nor the supporting feasibility study reports did include any activity analysis or PERT chart for any of the projects sanctioned during Tenth Plan. As a result, none of the projects had any monitorable milestones set for implementation. The time targets mentioned in the sanction letters for the completion of the projects were generally arbitrary and not based on any activity analysis. For example, in the case of Coorg Golf Link Golf project, the time allowed was just seven months for the conversion of a 9 hole golf course into a 18 hole golf course and for the construction of ten rooms as guest accommodation. Non-indication of various clearances/approvals required and absence of any activity analysis or PERT chart do not go well with the implementation of the scheme.

In view of the above, it is recommended that technical feasibility analysis including environmental sustainability, pollution control and various clearances/approvals required to be obtained before taking up the

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implementation of the project may be made compulsory along with financial feasibility studies. In addition, it should also be insisted that the project proposals contain detailed activity analysis and realistic PERT charts so that the implementation of the project can be monitored scientifically. The release of first installment of assistance should be done only on completion of all the technical requirements including all clearances/approvals.

Though there was no time over run in the case of the project ‘Lulu International Convention Centre’ it has incurred a heavy loss of Rs 6.8 crores during first two years of its operation despite having received a capital subsidy of Rs. 2.50 crores from the Central Government. Though it may not be expected that the project would become break-even in the first three years, the magnitude of revenue losses during the first two years do not indicate that the project would become viable in the near future. Creation of excess capacity and non-availability of support infrastructure, particularly accommodation facility for holding large meetings and conferences with participants from outside town is one of the reasons for the poor financial performance of the project. The availability of such facilities therefore needs to be ensured while sanctioning assistance for the construction of convention centres.

5. Projects Promoted by Government Agencies The scheme does not make any distinction between projects promoted by government agencies and private sector except that the formation of a separate SPV is not required in the case of government agencies. In other words, all the conditions imposed by the scheme are equally applicable to both private sector projects and projects promoted by government agencies. There are, however, a few conditions which restrain the government agencies in taking advantage of the scheme. These are:

i. The quantum of subsidy will be normally be determined through a competitive bidding process with a cap of Rs. 50 crores, subject to a maximum of 25% of the project cost or 50 % of equity contribution of the private promoter whichever is lower. Specific reasons will be required to be brought on record in case competitive bidding process is not adopted for determining the quantum of subsidy.

ii. The assistance would preferably be credit linked and back ended and would be released in three instalments. The first installment of 25% of assistance after 25% of the total cost of the project has been contributed by the promoters, the second installment of 50% only after 50 % of the promoter’s amount is contributed and the last installment of 25% only after the project becomes fully functional.

No government agency would be able to take an investment decision without having a full account of resources available from different sources. As such it is unlikely that a government agency will come forward with any project if the level of subsidy has to be decided on the basis of competitive bidding. Fortunately, there has not been a single case in which the Department of Tourism has resorted to competitive bidding even is the case of private promoters. The reasons brought in record for not resorting to competitive

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bidding could not be analyzed as the details regarding the same were not available

The procedure of credit linking and back ending the release of subsidy and that too in three installments is again a disincentive, particularly for those agencies with meager resource base. In most of the cases reviewed by the consultants the release of second and final instalments of subsidy got delayed due to lengthy procedures and it has been one of the reasons for time over runs in project execution.

The maximum amount of subsidy is also limited to 25% of the project cost. It implies the agency promoting the project has to raise 75% of the project cost. The State Government agencies like Tourism Development Corporations in most states do not find it easy to raise such resources. The LRGP scheme, therefore, did not find favour with many of the State Government agencies.

In view of the above, it is recommended that the projects with majority share being held by Government agencies may be distinguished from those with majority share being held by private investors. In the case of all the projects promoted by government agencies with majority share, the quantum of subsidy/assistance by the Central Ministry of Tourism may be fixed on matching grant basis without going through any competitive bidding process. It will be open to the Government agency to seek loan assistance from financial institutions or private sector investment for a minor share.

The central financial assistance in the case of such projects may be released in two installments. The first installment of 50% may be released on completion of all the preparatory work including approval by all the regulatory agencies. The balance 50% may be released on completion of the work to the extent of expenditure exceeding 50 % of the total share of Central and State Governments without the private sector contribution, if any. It will facilitate completion of the projects in time as most of the Government agencies do have resource constraints.

6. Public-Private Partnership The development of tourism infrastructure in partnership with the private sector is one of the prime objectives of the scheme. Promoting public-private partnership in infrastructure development is also a major policy initiative of the Government. Ministry of Finance has thus notified a scheme for providing support to Public-Private Partnerships in Infrastructure and it is known as ‘Viability Gap Funding’. The scheme has been formulated in recognition of the fact that there is significant deficit in the availability of physical infrastructure across different sectors and it is hindering economic development. It is also recognized that development of infrastructure requires large investments that cannot be undertaken out of public financing alone. In order to attract private capital as well as the techno-managerial efficiencies associated with it, the Government is committed to promoting Public Private Partnerships (PPPs) in infrastructure development. In pursuance of this commitment, a scheme titled “Scheme for Financial Support to Public Private Partnerships in Infrastructure has been formulated and notified. The details of the scheme are at Appendix – VI

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There are a number of options for providing financial support to PPP. These can be in the form of: (i) full cost recovery through user fee and no guarantees by the Government; (ii) full cost recovery through user fee and with minimum revenue guarantee; (iii) funded via shadow tolls or subsidies under an annuity scheme; and (iv)cost recovery through a combination of user fee and initial capital grant. The scheme of the Finance Ministry is on the lines of fourth option.

The scheme is intended to rope in private sector in the development of infrastructure which has long gestation period and limited financial returns. Project proposals under the scheme have to be posed by a Government or statutory entity including State Governments which owns the underlying assets. In case the project is found eligible for financing under the scheme, a private sector company shall be selected through a transparent and open competitive bidding process. The company seeking the lowest amount of viability gap funding will be selected for the implementation of the project, if all other parameters are comparable. The project has to be implemented, that is, developed, financed, constructed, maintained and operated during the project term by the company thus selected through the bidding process. International convention centres and other tourism infrastructure projects are eligible for viability gap funding under the scheme. The other conditions of eligibility include the following:

i. The project should provide a service against payment of a pre-determined tariff or user charges.

ii. The concerned Government/statutory entity should certify, with reasons: a) that the tariff/user charge cannot be increased to eliminate or reduce

the viability gap of the PPP b) that the project term cannot be increased for reducing the viability gap;

and c) that the capital costs are reasonable and based on the standards and

specifications normally applicable to such projects and that the capital costs cannot be further restricted for reducing the viability gap.

iii. The viability gap funding under the scheme shall not exceed 20% of the total project cost provided that the Government or statutory entity that owns the project may, if it so decides, provide additional grants out of its budget, but not exceeding a further 20% of the total project.

Disbursement of the grant will be made after the private sector company has subscribed and expended the equity contribution required for the project and it will be released in proportion to debt disbursements.

Since international convention centres and other tourism infrastructure projects are covered under the scheme of Ministry of Finance, the Government and statutory agencies can take advantage of that scheme in respect of projects satisfying all the relevant conditions stipulated in the guidelines.

The projects which do not satisfy all the conditions of the scheme of Ministry of Finance and are conceptualised and promoted by private entrepreneurs can seek assistance under the LRGP Scheme which is also designed on

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similar lines. The different types of projects which can be assisted under the scheme are described below:

a) Normal cases in which the underlying assets and the concept are owned by private entrepreneurs.

In the case of projects in which the project concept and the underlying assets are owned by private entrepreneurs, assistance under the LRGP Scheme can be sought to ensure that the project becomes financially viable. Such projects could be assisted subject to the following conditions:

i) The relevance and significance of the project in tourism promotion and its likely contribution to the economy of the project area is certified by the concerned State/ UT Government. It also needs to be certified that the project conforms to environmental norms and the existing socio-cultural milieu of the area.

ii) The State/UT Government undertakes to provide the required basic infrastructural facilities like water and electricity supply, drainage and sewerage facilities and proper solid waste disposal arrangements.

iii) The project proposals received through the concerned State/UT Governments with the above certificates and undertakings may be provided assistance under the scheme by following the same procedure as in the case of projects sponsored by government agencies except that the entrepreneur who floated the project will get preference if he/she is able to match the lowest bid.

It is thus recommended that projects sponsored solely by private entrepreneurs may be assisted under the scheme subject to the condition that the concerned State/UT Government certifies its usefulness for tourism promotion and environmental conformity and undertakes to provide the necessary basic facilities. The quantum of assistance will be decided through competitive bidding by the respective State/UT Governments subject to the condition that the entrepreneur who floated the project will get preference if he can match the lowest bid. The amount of assistance also will not exceed 25% of the total project cost or Rs.50 crores whichever is lower.

b) Projects in which competitive bidding may not be feasible

In rare cases, in which competitive bidding is not possible due to use of proprietary products or processes or exclusive rights or licenses granted to specific persons or community like forest rights granted to certain tribes in the proposed projects, the requirement of competitive bidding may be dispensed with by a High Level Committee constituted by the Department. The quantum of assistance, subject to the ceilings, may also be decided by the Committee.

c) General conditions for both types of projects

The assistance under the scheme to private entrepreneurs has to be subject to the following conditions so as to ensure that the scheme becomes effective in catalysing genuine tourism infrastructure projects.

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(a) The equity contribution of the entrepreneur shall not exceed 51 percent of the total project cost and the balance has to be raised by way of loan from recognised financial/banking institutions.

(b) The subsidy amount will be released only after the private entrepreneur has subscribed and expended the equity contribution required for the project.

(c) The subsidy will be released to the financial/banking institution in proportion to debt disbursements.

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EXECUTIVE SUMMARY 5


V. EXECUTIVE SUMMARY

1. The Study The study has been commissioned by the Ministry of Tourism, Government of India to evaluate the performance of the scheme ‘Assistance for Large Revenue Generating Projects (LRGPs)’ with a view to assess whether the scheme has been able to meet its stated objectives and to make specific recommendations for bringing about improvements/modifications in the scheme. The scheme has been launched during the Tenth Plan with the objective of promoting large scale revenue generating projects for development of tourism infrastructure through public – private partnership and in partnership with other Government/Semi-Government agencies and improving techno-managerial efficiencies in construction and management of such projects. The study has been undertaken by professional tourism consultants of Intercontinental Consultants and Technocrats Pvt. Ltd (ICT), a certified ISO 9000 international company.

An integrated approach consisting of documentation of all the available data, questionnaire surveys and personal and telephone interviews with state government agencies, promoters of different projects and industry representatives was adopted for the completion of the study. Some of the selected projects were also visited by the consultants for having a direct understanding of the project and progress of implementation. In particular, the consultants studied (i) the spread and depth of the projects, (ii) popularity of the scheme (iii) reasons for non-conversion of feasibility studies into investment projects, (iv) hurdles faced by the promoters in implementation of projects, and (v) performance of completed projects.

2 Major Findings

The major findings of the study in brief are the following:

i. The utilization of budget allocations for the scheme declined considerably since 2004 – 05. The overall utilization of funds under the scheme during Tenth Plan period was only 24.3 percent;

ii. The number of States which could take-up investment projects during Tenth Plan was merely six. The four Southern States of Andhra Pradesh, Karnataka, Kerala and Tamilnadu had ten projects out of 12 projects sanctioned during Tenth Plan.

iii. The most popular types of projects taken-up under the scheme were Golf Courses, Convention Centres and Tourist Trains. The scheme has, however, been useful in conceptualizing a few innovative projects.

iv. Most of the State/UT Governments do have a general awareness about the scheme though many of them are not familiar with the details of the scheme. There is also considerable awareness deficit about the scheme among industry representatives and investors.

v. The Southern States have been able to take advantage of the scheme during Tenth Plan because of the fact that the Tourism Development

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Corporations of those States were comparatively better placed in availability of resources, liaison with the Government and experience in managing commercial projects.

vi. There has been greater participation of private sector in promoting projects under the scheme in those States where the State Industrial Development Corporations were fairly active and aware of the details of the scheme.

vii. The State Governments which have not taken advantage of the scheme found it difficult to formulate suitable proposals, finding partners and getting the necessary resources to take up projects under the scheme. The back ended release of subsidy is also considered to be a constraint for taking up projects under the scheme by resource constrained organizations of the State Governments.

viii. The projects sanctioned under the scheme during Tenth Plan included very small to comparatively larger projects and all of them have been treated on par. The very small projects cannot be considered as ‘Large Revenue Generating Projects”. Similarly the projects with very high costs would need careful scrutiny to ensure its economic and social benefits.

ix. Though the scheme has been useful in attracting private sector investment in tourism to some extent, it needs to be improved significantly. The second objective of improving techno-managerial efficiencies in the construction and management of large revenue generating tourism infrastructure projects is also seems to have not been fully realized.

x. None of the projects sanctioned during Tenth Plan had any monitorable milestones and time targets for completion of the projects were fixed arbitrarily.

xi. The implementation of a number of projects got delayed as the implementing agencies started preparing implementation plans, and sought clearances from various agencies only after the project has been sanctioned and the first installment of assistance has been released. The procedure has been recently revised and approval in principle is initially given before releasing the assistance.

xii. The conditions of deciding quantum of subsidy through competitive bidding and credit linked back end release of subsidy in installments are stated to be deterrents for not taking up projects under the scheme by State Government agencies. The level of subsidy is also found to be inadequate; and

xiii. The scheme for financial support to public private partnerships in infrastructure launched by the Ministry of Finance for providing ‘Viability Gap Funding’ covers all tourism infrastructure projects including convention centers.

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3 Recommendations i. Since the awareness about the details of the scheme is fairly low

among government agencies including financial corporations and also among potential investors, efforts may be made for ensuring wider publicity of the scheme along with all the essential details. It would be useful to hold awareness-cum-training workshops about the scheme in different parts of the country. Such events can also be combined with investment seminars.

ii. It may, therefore, be ensured that the projects which can have significant impact on tourist inflow/spending only are funded under the scheme.

iii. All projects costing Rs. 50 crores and above including the cost of land may be subjected to economic and social cost benefit analysis before sanctioning.

iv. Golf course projects for CFA may be evaluated in terms of its likely contribution to tourism industry, particularly in terms facilities extended to tourists, conditions under which tourists are allowed to use the golf course, linkages with travel industry, etc.

v. It would be useful to evolve a golf tourism policy by taking into account the trends in international golf tourism, golf facilities open to tourists in India, the quality gradation of such golf courses, linkages between tourism industry and golf clubs, investment requirements, publicity and promotional efforts required, etc.

vi. Project proposals for the construction of convention centres may be evaluated in terms of its expected users and availability of other attendant facilities including hotel rooms for the participation of tourists in conferences/conventions if held in such centres.

vii. Hotels and restaurants which form integral parts of convention centres meant to serve the needs of tourists may be allowed assistance under the scheme.

viii. The Ministry may like to consider a review of capacity utilization and commercial viability of the trains already in operation before sanctioning new proposals from the State Governments.

ix. Provision of last mile connectivity to tourist destinations through air and cruise services may be included in the admissible list of projects for assistance under the scheme

x. Health and rejuvenation facilities for tourists may also be included in the list of projects eligible for assistance under the scheme.

xi. Technical feasibility analysis including environmental sustainability, pollution control and various clearances/approvals required to be obtained before taking up the implementation of the project may be made compulsory along with financial feasibility studies. In addition, it should also be insisted that the project proposals contain detailed activity analysis and realistic PERT charts so that the implementation of the project can be monitored scientifically. The release of first

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installment of assistance should be done only on completion of all the technical requirements including all clearances/approvals.

xii. The projects with majority share being held by Government agencies may be distinguished from those with majority share being held by private investors. In the case of all the projects promoted by government agencies with majority share, the quantum of subsidy/assistance by the Central Ministry of Tourism may be fixed on matching grant basis without going through any competitive bidding process. It will be open to the Government agency to seek loan assistance from financial institutions or private sector investment for a minor share.

xiii. The central financial assistance in the case of such projects may be released in two installments. The first installment of 50% may be released on completion of all the preparatory work including approval by all the regulatory agencies. The balance 50% may be released on completion of the work to the extent of expenditure exceeding 50% of the total share of Central and State Governments without the private sector contribution, if any. It will facilitate completion of the projects in time as most of the Government agencies do have resource constraints.

xiv. Since international convention centres and other tourism infrastructure projects are covered under the Viability Gap Funding Scheme of Ministry of Finance, the Government and statutory entities may take advantage of that scheme in respect of the projects satisfying the stipulated conditions

xv. Projects sponsored solely by private entrepreneurs may be assisted under the scheme subject to the condition that the concerned State/UT Government certifies its usefulness for tourism promotion and environmental conformity and undertakes to provide the necessary basic facilities. The quantum of assistance will be decided through competitive bidding by the respective State/UT Governments subject to the condition that the entrepreneur who floated the project will get preference if he can match the lowest bid. The amount of assistance also will not exceed 25% of the total capital cost of the project or Rs.50 crores which ever is lower.

xvi. In rare cases in which competitive bidding is not possible due to use of proprietary products or processes or exclusive rights or licenses granted to specific persons or community like forest rights granted to certain tribes in the proposed projects, the requirement of competitive bidding may be dispensed with by a High Level Committee constituted by the Department. The quantum of assistance, subject to the ceilings, may also be decided by the Committee.

xvii. The assistance under the scheme to private entrepreneurs may also be subject to the following conditions:

(a) The equity contribution of the entrepreneur shall not exceed 51 percent of the total project cost and the balance has to be raised by way of loan from recognised financial/banking institutions.

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(b) The subsidy amount will be released only after the private entrepreneur has subscribed and expended the equity contribution required for the project.

(c) The subsidy will be released to the financial/banking institution in proportion to debt disbursements.

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ANNEXURES

Appendix – I

Ministry of Tourism SCHEME OF ASSISTANCE FOR LARGE REVENUE GENERATING PROJECTS

1. Preamble: It is recognized that the development of tourism infrastructure projects requires very large investment that may not be possible out of the budgetary resources of the Government of India alone. In order to remove these shortcomings and to bring in private sector, corporate and institutional resources as well as techno-managerial efficiencies, it is proposed to promote large revenue generating projects for development of tourism infrastructure in public private partnerships and in partnerships with other Government / Semi-Government agencies.

2. Scope of the Scheme: Large revenue generating project, which can be admissible for assistance under this scheme, should be a project, which is also a tourist attraction, or used by tourists and generates revenue through a levy of fee or user charges on the visitors. Projects like Tourist trains, Cruise vessels, Cruise Terminals, Convention Centres, Golf Courses etc. would qualify for assistance. However, this is only an illustrative list.

Hotel & Restaurant component will not be eligible for assistance under the scheme either on a stand-alone basis or as an integral part of some other project. Besides hotel & restaurants, procurement of vehicles and sports facilities like stadiums will also not be eligible for assistance under the scheme.

3. Promoters of Project: While considering projects for Grant-in-aid under this scheme, priority will be given to projects promoted by private sector and the projects with public private partnership. However, in some cases where private sector participation is not possible or is not forthcoming, then the proposals/projects promoted by State Govts. State PSUs, Central Govt, Ministries/Departments like Railways, ASI and Central agencies like Port Trust and CPSEs will be eligible.

4. Eligibility for assistance: Justification for providing assistance/subsidy would be ascertained on the basis of feasibility study/DPR at the stage of consideration of the project by the Competent Authority. While selecting projects, priority would be given to projects which have strong private sector participation and involve least subsidy outgo. The projects selected for assistance under this scheme would not be eligible for subsidy from other schemes of Central Government or State Governments. Similarly, the projects which have already availed subsidy/financial assistance from any other scheme of the Central or State Govt., would not be eligible for Government of India assistance under this scheme.

5. Requirement of a Special Purpose Vehicle (SPV): A SPV would have to be set up by the implementing partners in case a private party is promoting the project, prior to the consideration of their project under this scheme. However, where the promoter of the project is a State Govt., State PSU or Central Agencies like Port trust or Central PSU, a separate SPV need not be required. In both the cases, a separate Project Management Group would be required and separate accounts would be maintained for the project. The Project Management Group, where SPV has to be set up will consist of (i) MD/CEO

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Appendix – I

of the SPV (ii) Project Director/Manager (iii) Finance Director (iv) A representative of the State Govt. to be nominated by them.

In the other cases, the Project Management Group will consist of (i) MD/CEO of State PSUs/Central PSUs/Statutory Body, (ii) State Tourism Secretary(where State Govt. is directly involved), (iii) Project Director/Manager (iv) Finance Director of the Central/State PSU/Statutory Body or the Director-Finance Department of State Government.

6. Appraisal/Feasibility Report: All project proposals under this scheme must be accompanied by project appraisal carried out by an independent public financial institution. Grant-in-aid for preparation of DPR would be admissible at 50% of the actual cost subject to a maximum of Rs.25 lakh per project. No Grant-in-aid would be admissible for preparation of Feasibility Report.

Public financial institutions, in this case, will include a public financial institution under Section 4A of the Companies Act, 1956 and any institution notified by the Government as authorized to discharge the functions of a public financial institution under this Scheme. Anyone of these institutions could also fund the large revenue generating projects admissible under the scheme.

7. Norms for funding: The amount of assistance under the scheme would be released to Government agencies or PSUs, if the project is promoted by them. In case a private party is promoting the project, the assistance would be released to SPV through the financial institutions. The quantum of subsidy for the projects will normally be determined through a competitive bidding process, with a cap of Rs.50 Cr. subject to a maximum of 25% of total project cost or 50% of equity contribution of the private promoter, whichever is lower. Specific reasons will be required to be brought on record in case competitive bidding process is not adopted for determining the quantum of subsidy. The minimum equity stake of the private promoter would be 51 %, wherever the private sector participation is envisaged in the projects. The total project cost in this case will mean the total of:

i. Capital cost of the project, including cost of land, material, labour, transport, consumables, testing, commissioning, overheads, contingencies, interest during construction, insurance and supervision (including any taxes and levies);

ii. Pre-operative cost such as formulation, development, designs and engineering; and Expenses related to fund mobilization if required, such as fees for financial services and brokerage.

The assistance would preferably be credit linked and back ended and would be released in three installments. The first installment, limited to 25% of the assistance to be provided by the Ministry, will be released only after 25% of the total cost of the project has been contributed by the promoters. The second installment, limited to 50% of the assistance to be provided by the Ministry, would be disbursed only after 50% of the promoter's amount is contributed. The last installment of balance 25% of the assistance, to be provided by the Ministry, will be released after the project is fully functional.

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Appendix – I

8. Recovery of Government Grant: In case the project does not succeed, and there is any default by the promotees, the Financial Institution can recover its loan component and also recover the Grant-in-aid component on behalf of Ministry of Tourism.

9. Approval procedures: The project proposals will be appraised by SFC/EFC depending upon the cost of the project before obtaining approval of the competent expenditure sanctioning authority.

10. Monitoring and Evaluation: The financial institution, which is funding the project, will be responsible for regular monitoring and periodic evaluation of project compliance with agreed milestones and performance levels. In case there is no financial institution involved in the project then an agency will be designated while sanctioning the project for regular monitoring and evaluation as stated above and the cost for the same will be met out of the scheme. Ministry of Tourism will have a separate Monitoring Group consisting of the concerned Joint Secretary & Director in charge of the scheme along with Financial Controller to regularly monitor and review the sanctioned projects.

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Appendix - II

M/s Intercontinental Consultant and Technocrats (ICT) Pvt. Ltd. A-8, Green Park, New Delhi – 110016

Tel. No. : 91-11-26863000, Fax No. : 91-11-26855252, E-mail : [email protected]

Questionnaire-I

QUESTIONNAIRE FOR POPULARITY SURVEY

(The Ministry of Tourism has been operating a scheme of “Assistance for Large Revenue Generating Projects” since the Tenth Plan to bridge infrastructural gaps in tourism by catalyzing private and corporate sector investments in tourism. Several states have, however, not taken advantage of the scheme, though a subsidy upto 25% of the project cost is admissible subject to certain conditions. It may be due to several reasons which may be scheme specific or state specific. This questionnaire is intended to know more about such reasons.)

1. Name and Address of the Respondent : ………………………………………………..

…………..…………………………………………………………………………………………………..

2. Whether your institution / organization was aware of the scheme earlier? : Yes / No

3. If yes, did your institution / organization had all the details about the scheme? : Yes / No

4. If yes, since when? (Please indicate the year) : …………

5. Did you make any effort to take advantage of the scheme : Yes / No

6. If no, please indicate reasons (please tick appropriate boxes) :

(i) No project eligible for assistance could be conceptualized

(ii) No partners could be identified

(iii) Difficulty in the preparation of project reports

(iv)

Could not spent the required time and effort to prepare acceptable project proposals

(v) Scheme involved substantial financial risks

(vi)

No previous experience in implementing projects with loans from financial institutions

(vii)

Assessment of eligibility for assistance / subsidy through feasibility study / DPR is difficult

(viii) Determination of amount of subsidy by bidding process is not acceptable

(ix) Setting-up of Special Purpose Vehicle was difficult

(x)

Difficult to get project appraisal reports prepared by independent public financial institutions

(xi) Assistance is available under other schemes not involving serious risks

(xii) Government subsidies come with several conditionalities

(xiii) (Please specify) ……………………………………………………………………

7. What are your views about the usefulness of the scheme? ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… 8. Please indicate suggestions, if any, for the modification of the scheme with regard to scope,

eligibility, quantum of assistance / subsidy and implementation procedures. Reasons for such modifications may also be indicated.

Date :

Place :

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Appendix - III



Questionnaire-II

QUESTIONNAIRE FOR IDENTIFYING THE FACTORS WHICH PROMOTED FORMULATION OF POJECTS UNDER THE SCHEME OF

“ASSISTANCE FOR LARGE REVENUE GENERATING PROJECTS”

1. Name and Address of the Respondent : ……………………………………………….. …………………………………………..…………………………………………………………………..

2. How did you come to know about the scheme? : ……………………………………………….. …………………………………………..…………………………………………………………………..

3. Who provided you the details of the scheme? : ……………………………………………….. …………………………………………..…………………………………………………………………..

4. How the decision was taken to go ahead with the project? :

………………………………………..……………………………………………………………………..

5. Did you get any assistance in preparing the project proposal? : Yes / No

6. If yes, please indicate from whom and what assistance?

………………………………………..……………………………………………………………………..

7. How did you establish the financial viability of the project?

………………………………………..……………………………………………………………………..

8. Which financial institution did the project appraisal?

………………………………………..……………………………………………………………………..

9. How prompt and helpful was the institution in making the appraisal?

………………………………………..……………………………………………………………………..

10. Which financial institution provided loan assistance?

………………………………………..……………………………………………………………………..

11. How prompt and helpful was the financial institution in providing the assistance?

………………………………………..……………………………………………………………………..

12. Do you consider that Government subsidies are easily available? : Yes / No

13. What was your experience in this project? : Yes / No

14. (a) Do you own any other enterprise? : Yes / No

(b) If yes, what is the total investment in that enterprise (in Rs. lakhs)

…………………………………………………………………………………………………….

(c) Was that enterprise making Net Profit during last three years? : Yes / No

15. Since when you are in business? (Please indicate the year) : ………..

16. Since when you are in tourism industry? (Please indicate the year) : ………..

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Appendix - III

17. What are your academic qualifications? : ……………………………………………….. Questionnaire-II

18. Do you consider that the State Government is helpful in promoting private sector investment in tourism? : Yes / No

19. Are the industrial and tourism policies of the Government useful for public and private sector partnership in tourism development? : Yes / No

20. Is the decision taking process of the State Government objective and transparent?

………………………………………………………………………………………………………………

21. What are your general views about the scheme? : ………………………………………………..

………………………………………………………….…………………………………………………...

………………………………………………………….…………………………………………………...

………………………………………………………….…………………………………………………...

22. Please indicate your suggestions, if any for the modification of the scheme with regard to scope, eligibility, quantum of assistance and implementation procedures? Justify your suggestions by giving reasons.

………………………………………………………….…………………………………………………...

………………………………………………………….…………………………………………………...

………………………………………………………….…………………………………………………...

………………………………………………………….…………………………………………………...

Date :

Place :

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Appendix - IV



Questionnaire-III

QUESTIONNAIRE FOR ASSESSING THE REASONS FOR NOT CONVERTING FEASIBILITY STUDY REPORTS INTO INVESTMENT PROJECTS

(The Ministry of Tourism provided assistance for conducting feasibility studies for the projects to be assisted under the scheme “Assistance for Large Revenue Generating Projects.” However, some of these project reports were not converted into investment projects. This questionnaire is to know about the reasons for the same.)

1. Name and Address of the Agency : …………………………………………………...

…………………………………………………...………………………………………………………….

2. Name of the project for which feasibility study was conducted. …………………………………………………...………………………………………………………….

3. Agency which conducted the feasibility study. : …………………………………………………...

4. Who engaged the agency? : …………………………………………………...

5. When the study was assigned? : Date : ……………………

6. When the study report became available : Date : ……………………

7. What was the total cost of the project : Rs. …………………… lakhs

8. The sources of funding envisaged and the : Source Amount shares of each. (Rs. Lakhs)

………………………….. ……………… ………………………….. ……………… 9. Whether the feasibility study established financial viability? : Yes / No 10. What were the payback period and Internal Rate of Return before tax?

………………………………………………….………………………………………………………… 11. What were the reasons for not converting the feasibility study report into investment project

during Tenth Plan? (Please tick the relevant boxes)

(i) Shortage of time

(ii) Non-availability of partners

(iii) Inability to secure funding from financial institutions

(iv) Non-availability of internal resources

(vi) Others (Please specify)

12. What are your general views about the scheme? ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… 13. Please indicate your suggestions, if any for the modification of the scheme with regard to

scope, eligibility, quantum of assistance and implementation procedures. Justify your suggestions by giving reasons.

……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… Date : Place :

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Appendix - V



QUESTIONNAIRE FOR ASSESSING THE PROGRESS OF THE PROJECT AND DIFFICULTIES ENCOUNTERED

1. Name and Address of the Agency Promoter : …………………………………………………... ………………………………………………….…………………………………………………………..

2. Title of the Project : …………………………………………………... ………………………………………………….…………………………………………………………...

3. Description of the project including the details of facilities planned, expected users, attraction features, etc.

……………………………………………………………………………………………………………… ………………………………………………………………………………………………………………

4. Details of collaborating agencies, if any along with their specific contributions.

……………………………………………………………………………………………………………… ………………………………………………………………………………………………………………

5. Details of cost estimates of the project.

Item Amount (Rs. Lakhs)

Land

Construction

Machinery and Equipments

Other Capital Costs

Working Capital

Total

6. Projected Financial Ratios

(a) Pay back period : …………………………………………………

(b) IRR before tax : …………………………………………………

(c) NPV : …………………………………………………

7. Details of implementation milestones set and performance so far.

Sl. No. Milestone Target Date Date achieved Reasons for delay,

if any

Questionnaire-IV

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Appendix - V

8. (a) Did you face any problem in the completion of various formalities : Yes / No for getting assistance under the scheme?

(b) If yes, please indicate the exact problems. : …………………………………………...

………………………………………………………………………………………………………

9. (a) Did you face any problem in meeting any of the conditions of the : Yes / No scheme?


………………………………………………………………………………………………………

10. (a) Did you face any problem in getting financial assistance? : Yes / No


………………………………………………………………………………………………………

11. (a) Did you face any problem in getting any of the critical inputs / : Yes / No equipments?

(b) If yes, please indicate the exact details. : …………………………………………...

………………………………………………………………………………………………………

12. Indicate if you have faced any other problems which delayed the execution of the project or increased the cost of the project.

………………………………………………………………………………………………………………

………………………………………………………………………………………………………………

13. Details of assets created :

Sl. No. Details Unit Cost

(a) Land Area Sq. m.

(b) Cost of Land Rs. in Lakhs

(c) Cost of Development Rs. in Lakhs

(d) Area of Building Sq. m.

(e) Cost of Construction of Building Rs. in Lakhs

(f) Cost of Construction of Other Infrastructure and Utilities Rs. in Lakhs

(g) Cost of Machinery and Equipments Rs. in Lakhs

(h) Other Capital Costs Rs. in Lakhs

Total Cost Rs. in Lakhs

14. Number of persons employed at the construction / development stage and duration

Category Number Duration (Months)

Men

Women

Total

Questionnaire-IV

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Appendix - V

Questionnaire-IV

15. Number of persons employed after commissioning of the project by category

Number of Persons Category

Male Female Total

Direct regular employment

Direct casual employment

Employment through contractor

Total

16. Financial performance of the project during the last two accounting years

Rs. Lakhs Items

2006-07 2007-08

Gross Receipts

Gross Expenses

Gross Profit

Net Profit

Tax paid to the Government

17. What are your general views about the scheme?

……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ………………………………………………………………………………………………………………

18. Please indicate your suggestions, if any for the modification of the scheme with regard to scope, eligibility, quantum of assistance and implementation procedures. Please justify your suggestions with reasons.

……………………………………………………………………………………………………………… ……………………………………………………………………………………………………………… ………………………………………………………………………………………………………………

……………………………………………………………………………………………………

Date :

Place :

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Appendix – VI

Scheme for Support to Public Private Partnerships in Infrastructure

A. Whereas the Government of India recognizes that there is significant deficit in the

availability of physical infrastructure across different sectors and that this is hindering economic development;

B. Whereas the development of infrastructure requires large investments that cannot be undertaken out of public financing alone, and that in order to attract private capital as well as the techno-managerial efficiencies associated with it, the Government is committed to promoting Public Private Partnerships (PPPs) in infrastructure development; and

C. Whereas the Government of India recognizes that infrastructure projects may not always be financially viable because of long gestation periods and limited financial returns, and that financial viability of such projects can be improved through Government support.

D. Now, therefore, the Government of India has decided to put into effect the following scheme for providing financial support to bridge the viability gap of infrastructure projects undertaken through Public Private Partnerships.

1. Short Title and Extent

(i) This scheme will be called the Scheme for Financial Support to Public Private Partnerships (PPPs) in Infrastructure. It will be a Plan Scheme to be administered by the Ministry of Finance. Suitable budgetary provisions will be made in the Annual Plans on a year-to year basis.

(ii) The scheme shall come into force with immediate effect.

2. Definitions

In this scheme, unless the context otherwise requires:

Empowered Committee means a Committee under the Chairmanship of Secretary (Economic Affairs) and including Secretary Planning Commission, Secretary (Expenditure) and the Secretary of the line Ministry dealing with the subject.

Empowered Institution means an institution, company or inter-ministerial group designated by the Government for the purposes of this scheme.

Lead Financial Institution means the financial institution (FI) that is funding the PPP project, and in case there is a consortium of FIs, the FI designated as such by the consortium;

Private Sector Company means a company in which 51% or more of the subscribed and paid up equity is owned and controlled by a private entity;

Project Term means the duration of the contract or concession agreement for the PPP project;

Public Private Partnership (PPP) Project means a project based on a contract or concession agreement, between a Government or statutory entity on the one side

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Appendix – VI

and a private sector company on the other side, for delivering an infrastructure service on payment of user charges;

Total Project Cost means the lower of the total capital cost of the PPP Project: (a) as estimated by the government/statutory entity that owns the project, (b) as sanctioned by the Lead Financial Institution, and (c) as actually expended; but does not in any case include the cost of land incurred by the government/statutory entity; and

Viability Gap Funding or Grant means a grant one-time or deferred, provided under this Scheme with the objective of making a project commercially viable.

3. Eligibility

1. In order to be eligible for funding under this Scheme, a PPP project shall meet the following criteria:

(a) The project shall be implemented i.e. developed, financed, constructed, maintained and operated for the Project Term by a Private Sector Company to be selected by the Government or a statutory entity through a process of open competitive bidding; provided that in case of railway projects that are not amenable to operation by a Private Sector Company, the Empowered Committee may relax this eligibility criterion.

(b) The PPP Project should be from one of the following sectors:

(i) Roads and bridges, railways, seaports, airports, inland waterways;

(ii) Power;

(iii) Urban transport, water supply, sewerage, solid waste management and other physical infrastructure in urban areas;

(iv) Infrastructure projects in Special Economic Zones; and

(v) International convention centres and other tourism infrastructure projects;

Provided that the Empowered Committee may, with approval of the Finance Minister, add or delete sectors/sub-sectors from the aforesaid list.

(c) The project should provide a service against payment of a predetermined tariff or user charge.

(d) The concerned Government/statutory entity should certify, with reasons;

(i) that the tariff/user charge cannot be increased to eliminate or reduce the viability gap of the PPP;

(ii) that the Project Term cannot be increased for reducing the viability gap; and

(iii) that the capital costs are reasonable and based on the standards and specifications normally applicable to such projects and that the capital costs cannot be further restricted for reducing the viability gap.

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4. Government Support

(1) The total Viability Gap Funding under this scheme shall not exceed twenty percent of the Total Project Cost; provided that the Government or statutory entity that owns the project may, if it so decides provides additional grants out of its budget, but not exceeding a further twenty percent of the Total Project Cost.

(2) Viability Gap Funding under this scheme will normally be in the form of a capital grant at the stage of project construction. Proposals for any other form of assistance may be considered by the Empowered Committee and sanctioned with the approval of Finance Minister on a case-by-case basis.

(3) Viability Gap Funding up to Rs. 100 crore (Rs. One hundred crore) for each project may be sanctioned by the Empowered Institution subject to the budgetary ceilings indicated by the Finance Ministry. Proposals up to Rs. 200 crore (Rs. Two hundred crore) may be sanctioned by the Empowered Committee, and amounts exceeding Rs. 200 crore may be sanctioned by the Empowered Committee with the approval of Finance Minister.

(4) Unless otherwise directed by the Ministry of Finance, the Empowered Institutions may approve project proposals with a cumulative capital outlay equivalent to ten times the budget provisions in the respective Annual Plan.

(5) In the first two years of operation of the Scheme, projects meeting the eligibility criteria will be funded on a first-come, first served basis. In later years, if need arises, funding may be provided based on an appropriate formula, to be determined by the Empowered Committee, that balances needs across sectors in a manner that would make broad base the sectoral coverage and avoid pre-empting of funds by a few large projects.

5. Approval of project proposals.

(1) Project proposals may be posed by a Government or statutory entity which owns the underlying assets. The proposals shall include the requisite information necessary for satisfying the eligibility criteria specified in paragraph 3 above.

(2) Projects based on standardized/model documents duly approved by the respective Government would be preferred. Stand-alone documents may be subjected to detailed scrutiny by the Empowered Institution.

(3) The Empowered Institution will consider the project proposals for Viability Gap Funding and may seek the required details for satisfying the eligibility criteria.

(4) Within 30 days of receipt of a project proposal, duly completed as aforesaid, the Empowered Institution shall inform the sponsoring Government/statutory entity whether the project is eligible for financial assistance under this Scheme. In case the project is based on standalone documents (not being duly approved model/standard documents), the approval process may require an additional 60 (sixty) days.

(5) In the event that the Empowered Institution needs any clarifications or instructions relating to the eligibility of a project, it may refer the case to the Empowered Committee for appropriate directions.

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(6) Notwithstanding the approvals granted under this scheme, projects promoted by the Central Government or its statutory entities shall be approved and implemented in accordance with the procedures specified from time to time.

(7) In cases where viability gap funding is budgeted under any on-going Plan scheme of the Central Government, the inter-se allocation between such on-going scheme and this scheme shall be determined by the Empowered Committee.

6. Procurement process for PPP Projects

(1) The Private Sector Company shall be selected through a transparent and open competitive bidding process. The criterion for bidding shall be the amount of Viability Gap Funding required by a Private Sector Company for implementing the project where all other parameters are comparable.

(2) The Government or statutory entity proposing the project shall certify that the bidding process conforms to the provisions of this Scheme and convey the same to the Empowered Institution prior to disbursement of the Grant.

7. Appraisal and monitoring by Lead Financial Institution

(1) Within four months from the date on which eligibility of the project is conveyed by the Empowered Institution to the concerned Government/ statutory entity, the PPP project shall be awarded in accordance with paragraph 6 above; provided that upon application made to it by the concerned Government/statutory entity, the Empowered Institution may extend this period by not more that two months at a time.

(2) The Lead Financial Institution shall, within three months from the date of bid award, present its appraisal of the project for the consideration and approval of the Empowered Institution; provided that upon application made to it by the concerned Government/statutory entity, the Empowered Institution may extend this period by not more than one month at a time.

(3) The Lead Financial Institution shall be responsible for regular monitoring and periodic evaluation of project compliance with agreed milestones and performance levels, particularly for the purpose of disbursement of Viability Gap Funding. It shall send quarterly progress reports to the Empowered Institution which will make a consolidated progress report once every quarter for review by the Empowered Committee.

8. Disbursement of Grant

(1) A Grant under this scheme shall be disbursed only after the Private Sector Company has subscribed and expended the equity contribution required for the project and will be released in proportion to debt disbursements remaining to be disbursed thereafter.

(2) The Empowered Institution will release the Grant to the Lead Financial Institution as and when due, and obtain reimbursement thereof from the Finance Ministry.

(3) The Empowered Institution, the Lead Financial Institution and the Private Sector Company shall enter into a Tripartite Agreement for the purposes of this scheme.

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The format of such Tripartite Agreement shall be prescribed by the Empowered Committee from time to time.

9. Revolving Fund

A revolving fund of Rs. 200 crore (Rs. Two hundred crore) shall be provided by the Finance Ministry to the Empowered Institution. The Empowered Institution shall disburse funds to the respective lead financial Institutions and claim reimbursement thereof from the Ministry of Finance.

10. Guidelines

The Guidelines issued vide Ministry of Finance Press Release as well as OM of F. No. 2/10/04-Inf. dated 19th August 2004 stands withdrawn with immediate effect.

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Documents