Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Final Report
Intercontinental Consultants
and Technocrats Pvt. Ltd.
A-8, Green Park, New Delhi - 110 016, India
October, 2008
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.
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CONTENTS
SL. PAGE
DESCRIPTION
NO. 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 1-6
Studies
5.2.4 Assessment of Hurdles in the Implementation and 1-6
Performance of Selected Projects
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)
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DESCRIPTION
NO. NOS.
3 Conversion of Feasibility Studies into Investment 2-3
Projects
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
3.2 Project Justification 3-6
3.3 Project Cost and Financing 3-6
3.4 Project History and Implementation 3-6
3.5 Performance 3-7
3.6 Review 3-7
4 Lulu International Convention Centre 3-8
4.1 The Project and its Location 3-8
4.2 Project Justification 3-8
4.3 Planned Facilities 3-8
4.4 Project Cost and Financing 3-9
4.5 Project History and Implementation 3-9
4.6 Performance 3-9
4.7 Review 3-9
5 Convention Centre at Surajkund 3-11
5.1 The Project and its Location 3-11
5.2 Project Justification 3-11
5.3 Planned Facilities 3-11
5.4 Project Cost 3-12
5.5 Project History and Implementation 3-12
(ii)
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DESCRIPTION
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5.6 Review 3-12
6 Development of Marina at Bolghatty Island 3-13
6.1 The Project and its Location 3-13
6.2 Project Justification 3-13
6.3 Planned Facilities 3-13
6.4 Project Cost 3-14
6.5 History and Progress of Implementation 3-14
6.6 Review 3-14
Integrated Development of Golf Course and Country 3-15
7
Club
7.1 The Project and its Location 3-15
7.2 Project Justification 3-15
7.3 Planned Facilities 3-15
7.4 Project Cost and Financing 3-15
7.5 Project History and Implementation 3-16
7.6 Review 3-16
8 Karnataka Luxury Tourist Train 3-17
8.1 The Project and its Location 3-17
8.2 Project Justification 3-17
8.3 Planned Facilities and Itinerary 3-17
8.4 Project Cost and Financing 3-18
8.5 Project History and Implementation 3-18
8.6 Review 3-18
9 Bannerghatta Biological Park 3-19
9.1 The Project and its Location 3-19
9.2 Project Justification 3-19
9.3 Planned Facilities 3-19
9.4 Project Cost and Financing 3-20
9.5 Project History and Implementation 3-20
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)
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DESCRIPTION
NO. 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 i-iii
Generating Projects
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 xi-xv
Infrastructure
(iv)
INTRODUCTION 1
Evaluation Study for the Scheme of
‘Assistance for Large Revenue Generating Projects’
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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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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(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.
(b) Method of Survey
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.
(b) Method of Survey
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. Amount Sanctioned
Project
No. (Rs. in Lakhs)
Setting-up of Taramati Cultural Complex, Hyderabad
1. 62.50
(Andhra Pradesh)
2. Coorg Golf Tourism Project, Virajpet (Karnataka) 53.00
Lulu International Convention Centre, Thrissur
3. 250.00
(Kerala)
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.
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THE SCHEME DURING TENTH PLAN 2
Evaluation Study for the Scheme of
‘Assistance for Large Revenue Generating Projects’
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 Expendit ure of All Plan Schemes
Budget Provision and Expenditure of
1000 LRGP Scheme
800
Rs. in crores
50
Rs. in crores
05 5
06 6
7
20 - 04
03 3
06 6
04 4
05 5
07
20 – 0
20 - 0
20 - 0
-0
0
0
0
–
–
04
02
02
20
20
20
20
20
20
Years Years
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 Year wise No. of LRGP Investment
Studies Sanctioned Projects Sanctioned
1
2 1
3
2003 -04
2003 -04
2004 - 05
0
2004 - 05
2005 - 06 2
2005 - 06
2006 - 07
2006 - 07
8
4
Fig: 2.3 No. of LRGP Feasibility Studies Fig: 2.4 No. of LRGP Investment Projects
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State Wise Distribution of Feasibility Study State Wise distribution of Investm ent Project
Projects Andhra Pradesh 0 Andhra Pradesh
1 1
2 0
Gujarat Gujarat
3
1
1 Haryana Haryana
1
Karnataka Karnataka
0
Kerala Kerala
Maharashtra Maharashtra
1 0
Punjab Punjab
1 4
0 Tamil Nadu Tamil Nadu
2 0 West Bengal 3 West Bengal
Fig: 2.5 Distribution of Feasibility Study Projects Fig: 2.6 Distribution of Investment Projects
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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.
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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.
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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.
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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
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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,
iv. Much abused site is now transformed into a vibrant cultural complex.
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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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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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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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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.
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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.
5.6 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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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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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
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INTEGRATED REVIEW AND
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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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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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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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EXECUTIVE SUMMARY 5
Evaluation Study for the Scheme of
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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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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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(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
i
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.
ii
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.
********
iii
Appendix - II
Questionnaire-I
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 : info@ictonline.com
(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.)
Date :
Place :
iv
Appendix - III
Questionnaire-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 : info@ictonline.com
5. Did you get any assistance in preparing the project proposal? : Yes / No
9. How prompt and helpful was the institution in making the appraisal?
………………………………………..……………………………………………………………………..
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
(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) : ………..
v
Appendix - III
Questionnaire-II
17. What are your academic qualifications? : ………………………………………………..
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 :
vi
Appendix - IV
Questionnaire-III
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 : info@ictonline.com
(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)
vii
Appendix - V
Questionnaire-IV
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 : info@ictonline.com
3. Description of the project including the details of facilities planned, expected users, attraction
features, etc.
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
Land
Construction
Working Capital
Total
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Appendix - V
Questionnaire-IV
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?
(b) If yes, please indicate the exact problems. : …………………………………………...
………………………………………………………………………………………………………
10. (a) Did you face any problem in getting financial assistance? : Yes / No
(b) If yes, please indicate the exact problems. : …………………………………………...
………………………………………………………………………………………………………
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.
………………………………………………………………………………………………………………
………………………………………………………………………………………………………………
14. Number of persons employed at the construction / development stage and duration
Men
Women
Total
ix
Appendix - V
Questionnaire-IV
Number of Persons
Category
Male Female Total
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
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 :
x
Appendix – VI
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
xi
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.
xii
Appendix – VI
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.
xiii
Appendix – VI
(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.
xiv
Appendix – VI
xv