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Government of Kerala (GoK) through the Phase-II i.e. Capital Region Development
Project (CRDP-II) has taken up city-region infrastructure projects such as:
The High Power Committee under the Chairmanship of Hon’ble Chief Minister has
decided to take up four priority projects, these are:
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Need of the Project
Social Need
Kerala has the advantage of having a higher share of educated and professionally
qualified youth in its population which far exceed the national average of India.
Over the past 3 decades, technically qualified and skilled youths of the state has
been taking advantage of the high employment opportunities in Middle East which
have been recording a steady decline for past years and expected to further
reduce in the next decade. Therefore the state needs to act urgently to accelerate
public and private investments in employment generating activities to help generate
adequate earning opportunities for the growing up generation.
Further the financially sound 1stand 2nd generation Non Resident Keralites in Middle
East will be looking to return in the next decade due to retirement and
retrenchment who will have investible wealth and adequate entrepreneurial and/or
employable skills. Unless the state prepares adequate avenues for deployment of
their wealth and experience, the state would lose such resources to other
competing markets.
The state also faces a unique challenge to find a sustainable development model
given its high population density, high land cost, and vulnerable eco system. The
state witness multi faced development pressure which needs to be balanced and
directed strategically to minimize opportunity cost for development activities and
ensure sustainability of the natural ecosystem of the state.
Economic Need
Kerala has comparative advantage in attracting investment in high skilled- high tech
sectors such as Aerospace electronics, Robotics & Instrumentation, Information
Technology, Media and Entertainment, Healthcare, Tourism and Hospitality sectors.
Investments in these sectors would enable adequate network effect in generating
indirect and induced employment opportunities across the state. However the state
has to compete with the several investment regions in developed and developing
world by offering world class infrastructure, high degree of ease of doing business,
competitive cost of operations and world class quality of life to attract global
investment in these sectors.
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broad base the service sector economy which will help generate multiple economic
activities within the state. State intends to broad base its revenue base by through
appropriate measures based on value enhancement to beneficiary and socio-
economic equity.
Project Objective
Creation of a Special Investment Region which will serve as a world class hub for
multiple economic activities and a vibrant socio-cultural habitat offering a
sustainable quality of life matching the best global standards.
Outer Area Growth Corridor project is perceived as “A new township built alongside
Outer Ring Road (ORR) similar to Special Economic Zone with proper Master
Development Plan & special Development Regulations to attract Investments and
Talents, has been taken up to achieve the following objectives:
Project Location
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Project Components
The proposed
Outer Area
Growth Corridor
comprises of
following
a) A transit
corridor inter-
connecting all
National and
State
Highways
leading to capital city of Thiruvanathapuram with the upcoming International
Container Transshipment Terminal (ICTT) at Vizhinjam.
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sides connecting the main carriageway with all leading radial and arterial
roads of Thiruvananthapuram city and the other major district
roads/other district roads in the outer areas of the capital region.
ii. ORR starts from National Highway no. NH66 (old NH 47) near Paripally
(from Navaikulam) and
end point is Vizhinjam
Bypass/NH66 (direct
connectivity to
Vizhinjam Port) with a
link to Mangalapuram.
iii. The
length of the ORR is
about 78.880
Kilometers, i.e Trunk
alignment from
Navaikulam to Vizhinjam: 65.630 Kilometers and Link alignment to
Mangalapuram is about 13.250 Kilometers.
iv. The right of way (RoW) for the ORR is 70 meters. RoW area of about
600 hectares shall be acquired for the ORR.
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viii. The initial screening report (ISR) for ORR has been completed, the
Detailed Project Feasibility Report is in progress is expected to completed
by end of July 2019.
b) A Special Investment Region comprising geographic area of about 400 sq. km.
(spread along 2.5 Km
on either side of the
transit corridor) will
have mixed land use,
public and private
land ownership with a
detailed Master Plan
and Planning
Regulations to guide
public and private
development activities
in a systematic and
sustainable manner.
Government also proposes to bring a special legislation in the form of SIR Act
which will help improve the
ease of doing business and
investment competitiveness
of the Project to the
desirable global standards
to attract maximum
possible investment in
employment generating
economic activities in the
project area.
c) Multiple “Development Zones” (within the SIR Area) which will act as Nuclei of
economic activities and a strong growth driver to SIR and State.
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The Project area has lower population density thus offering adequate vacant land
for development activities. It has a fair degree of social infrastructure thus
reasonably lowering the development cost. The area also has less vulnerability to
ecological systems. Thus the project will have higher benefit –cost ratio (BCR).
Proximity of the project area to the capital city helps in easier administrative
facilitation which is crucial for the success factor for project.
Apart from proximity to upcoming ICTT, Vizhinjam, the project location can derive
benefit from its proximity to the aero-space center of VSSC, IT Hub of Technopark,
and many major tourist locations including Kovalam, Varkkala, Poovar and Ponmudi
in the Capital region.
Further the several reputed higher education institutions in the capital region would
help offer the much needed knowledge networks required for a high tech economic
city.
Presence of many good quality health care institutions and multiple cultural
institutions in capital region would help compliment the social infrastructure to
achieve the desired levels of quality of life.
Project Outlay
The project envisages a capital expense of approx INR 20 Bn for construction of
the transit corridor. In addition the projected cost of land (about 490 hectares) for
Right of Way (60 meter for road section and 10 meter for green cover area) of the
transit corridor would be INR 30 Bn. The cost of land (about 500 hectares) for
multiple development zones identified would be INR 20 Bn and the cost of public
infrastructure in the SIR would be INR12 Bn.
Thus the expected total capital outlay for the project over the expected
development period of 10 years would be approx. INR 82 Bn
Capex for the transit corridor has been agreed in principle by MoRTH/NHAI to be
funded under the Bharatmala scheme of Government of India and value capture
financing shall be from a mix of user fee and infrastructure development charges /
property tax revenues for the access controlled corridor.
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The land cost is expected to be financed through an innovative scheme of Land
Bonds which will aim to finance the cost of acquisition by capturing the value
enhancement in real estate and additional economic activities generated by the
project.
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infrastructure sector. Considering all these points we need to create a new working
model for Kerala.
Successful experiences of CIAL, KIAL and KMRL demonstrates the crucial role of
public sector in creating capital intensive infrastructure.
However the service level standards offered to the public user by infrastructure and
utility services are important to ensure reliability and adequacy of social
infrastructure. Role of private sector is also important in attracting commercial
users. It has been experienced in most cases that private sector has an edge
over public sector in providing cost efficient service quality standards.
In the case of infrastructure, typically risks are front loaded while returns are tail
loaded. Regulatory and political risks are high during the initial planning stage of
the project prior to financial closure. While private sector would be averse to
assume such risks, the government/ public sector is better positioned to manage
these risks better than private sector. However operational risks such as
construction and maintenance risks are generally better managed by private sector.
Therefore a strategy combining the relative efficiencies of public and private sectors
would be most effective
Thus five SPVs may be formed each under the respective administrative department.
a. Roads - Under PWD
b. Solid Waste Management - Under LSGD
c. Energy - Under KSEB
d. Drinking Water & Liquid Sewerage management - Under KWA
e. Communication Network : Under Department of IT
Human Resources:
Necessary technical and managerial manpower from respective department may be
deputed to these SPVs. SPVs may appoint professionally skilled staff on long term
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contract for critical functions such as finance and marketing or hire the services of
professional agencies based on work requirement.
To meet the land cost, the GoK may authorize issue of Land Bonds which can be
managed by an existing institution of the state such as KFC/KSIDC.
Expected Economic/Benefits:
The benefits associated to the society from a project like ORR in the OAGC are:
i. Vehicle Operating Cost Benefits
ii. Vehicle Operating Time Benefits
iii. Benefits from reduction in Road Accidents
iv. Multiplier Benefits from Users of the ORR
v. Benefits from Private Investments along the ORR
vi. Employment Generation & Additional Economic Benefits from Implementation
of the ORR Project
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✓ Spur economic development;
✓ Create about 3.5 lakh to 5.5 lakh jobs;
✓ Increase economic output of Kerala by Rs. 16,527 crores;
✓ Connect labour to employment opportunities;
✓ Support the region’s growing population;
✓ Lower automobile pollution in the area; and
✓ Demonstrate a willingness of the government to partner with the private
sector.
The project puts ORR residents to work in high-end jobs with good pay, spurs
economic development, and supports the outer region’s future population. The
enduring benefits of the ORR outweigh its upfront costs.
Note: All pictures used in this report are for representative purpose only
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