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Vol. XXIX No. 15, November 16-30, 2019

Revamp deep-sea fishing scheme to provide relief for fishermen

by A Special Correspondent

Readers may remember that we had published a two-part article regarding TN’s deep-sea fishing scheme earlier, in Madras Musings Vol. XXVIII, Nos. 10 & 11. This is a follow-up article to monitor the scheme’s progress. – The Editor

It has been two years since the Central and Tamil Nadu governments launched a deep-sea fishing project as a jointly funded arrangement. The project provided a major capital subsidy to replace 2000 boats with modern vessels for deep-sea fishing, thereby obviating the dependence on trawling in Sri Lankan territorial waters and offering hope of saving our fishermen from being jailed by Sri Lankan authorities for transgressing fishing rights.

The Central and State Governments extended a total of 70 per cent capital subsidy (50 per cent from the former and 20 per cent from the latter) towards the cost of vessels then estimated at Rs. 80 lakhs each. The beneficiary was required to provide 10 per cent of the cost – Rs. 8 lakhs – and the balance was loaned by banks. The total outlay was Rs. 1,600 crores, of which Rs. 1,120 crores was to be subsidised by the governments.

The scheme holds promise of lucrative earnings through better technology and deep-sea fishing, which is more sustainable. It was liberal in terms of funding and subsidies but its design, even at the outset, did not address the situational needs of target beneficiaries.

With two years having gone by since the launch, our doubts over the scheme’s ability to meet its objectives are proving to be real. Considering that the livelihood and safety of thousands of our fisher families are involved, speedy implementation, say, within 2-3 years, has become a matter of high urgency. Even the 2-3-year span is too long to bear. To replace 2,000 boats over three years is a nearly impossible task, considering the delivery time needed by boat yards to meet such a large order. The scheme, by its current design, has not taken this crucial factor into consideration.

So far, only 600 applications have been received. Of this, 65 have signed the tri-partite agreements involving the boat builder, the Fisheries Department and the beneficiary. Only 16 of this 65 have commenced operations. At this pace, there is little hope of the fishermen’s problem ever being solved.

Some amount of major revamping must be done without delay to salvage the situation and regain hope. A review of the operational aspects of the new scheme would serve to identify the changes needed to wean away, within two years, a substantial number of families from fishing in doubtful waters. Cost overrun, slow rate of delivery of vessels and the absence of assured buyers for the catch are three major obstacles which need to be addressed.

Price escalations and the lack of provision for the cost of fishing nets have taken the outlay per vessel from Rs. 80 to 100 lakhs. Having come so far, it seems necessary to increase the capital subsidy to cover the higher outlay. By increasing the capital subsidy, only 1,600 replacements would be possible within the original outlay of Rs. 1,600 crores, as against the planned 2,000. This is still a better option than to wait for increased allocation to cover 2,000 replacements, risking the collapse of the scheme due to under-recognition of the capital cost. A further long bureaucratic process for new sanctions cannot be afforded.

An evaluation of the financial feasibility shows that at Rs. 9.5 lakhs worth of catch per voyage and 2 voyages per month, with fishing limited to 7 months in the year, the gross income from deep sea fishing could be 3-4 times the gross income from present operations in shallow waters. This opens the possibility to assign owners of 2 or 3 boats as shareholders of one deep-sea vessel instead of one boat owner/s for one vessel. This still enables each family to get increased earnings compared to the current practice, without the risk of jail. More importantly, this approach overcomes the critical hurdle of delivery time. It reduces the number of vessels needed for replacement from 2,000 to 1,000 with two owners each, or 700 with three. 1,000 or 700 vessels could be procured in half or a third of the time. The scheme can be completed in 2 or 3 years as procurement of 350 vessels per year is relatively feasible.

The revamp would shorten the time for project completion. By widening participation to 2 or 3 owners per vessel, the burden of funding their share of capital cost would get reduced. The arrangement also does not shut off opportunity to single ownership per vessel at a later stage, as any partner can buy off the share of the other, as and when confidence in the new venture grows. Slow deliveries of vessels are the biggest impediment to quick implementation. To save time, the State government should place bulk orders in advance, instead of individuals placing orders as and when each of them complete funding and other formalities. This way, the building of vessels can commence and the boats can be transferred to the owners as and when they are ready.

It is unlikely that the fisher households would have the financial strength to hold the stock, a perishable commodity, in expectation of a fair price. This weakness, exploited by intermediaries, could result in uneconomic prices and distress sales. To minimise this risk, the Fisheries Department must extend assurance of purchase at a minimum support price. This support is necessary at least in the initial stages till fisher families can organise themselves as a co-operative set up. Working capital is another issue to be resolved, but this may not present much difficulty as the bank funding the vessel purchase can also extend the working capital with the catch as the collateral.

Happily, potential beneficiaries of the scheme have expressed much interest in adopting the new system as it takes care of the safe return of men from their daily fishing expeditions in alien waters and also holds promise of higher earnings. Eventual ownership of a 100-lakh asset with substantial capital contribution by the government should be a major attraction. With such a positive predisposition in its favour, the opportunity to successfully enforce the scheme and resolve the long-standing fishermen issue should not be missed.

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