300 words on statue of unity is use of money or wastage of money?
Answers
first and foremost, the majority of money spent on the project is done by L&T, one of the big player in infra sector, while a small portion of it 10% is contributed by government. One can debate whether it is fair or not to spend tax-payer’s money (200 Cr) on such a project, but essentially it is L&T that is building the statue.
Although there are multiple benefits served by this project, as claimed by GOI, lets dissect the ROI part.
Disclaimer: Please correct me for my assumptions, rather than jumping guns and abusing me. I would not engage in petty politics and negative feedbacks. This analysis is only for solving ROI purposes and not to support/oppose any view-points.
Expenses = 430 Million USD
Sources of revenue:
Observation deck view: cost of ticket = Rs 350
Observation Deck view, Valley of Flower, Memorial, Museum & Audio-Visual Gallery, SOU site, Sardar Sarovar Dam
Entry ticket: child = 60; adult = 120
Valley of Flower, Memorial, Museum & Audio-Visual Gallery, SOU site, Sardar Sarovar Dam
Bus ticket: Rs. 30.
Parking – yet to determined, but for simplicity assume Rs 20.
Statue of Liberty gets 4 million tourists each year. Let’s assume, Statue of unity would host half of 4 million tourists. For convenience of calculation, let us assume that the sight would host 30% children and 70% adults (A 3-member family with 2 adults and a child).
Some points to consider, not everyone would go to the observation deck. Assume (60% of tourist buy observation, whereas 40% invest in entry tickets.)
Not everyone would be taking a bus. Assume (50% would be visiting by car).
number of adults: 1.4 million (2*70%)
number of children = 0.6 million (2*30%)
number of adults who would visit observation deck = 0.84 million (1.4 * 60%)
number of adults who would only buy entry tickets = 0.56 (1.4*40%)
number of children who would visit Observation deck = 0.36 million (0.6 * 60%)
Number of children who would buy entry tickets = 0.24 million (0.6 * 40%)
Number of tourists taking bus = 1 million (2 * 50%)
Number of parking tickets = 1 million/4 = 0.25 million (Assuming a car has 4 passengers on an average)
Revenue = 0.84*350 + 0.56*120 + 0.36*350 + 0.24*60 + 1*30 + 0.25*20 = 294 + 67.2 + 129.6 + 14.4 + 30 + 5 = 550 million-rupee = 7.5 million USD
Assume 10% growth in revenue.
Assume maintenance and other charges to be 5%. Total expense in 30 years would be 500 Million USD.
In 15 years, revenue would be 240 Million USD. In 30 years, the estimated revenue would be 830 million USD. So, the break-even should be somewhere between 30-35 years. From an economic point of view, I would say yes it is.
Edit 1: Based on Feedback, I realized that people were looking for a more detailed analysis. However, this is a simplistic model and I am in no capability to include all possibilities and cases. I appreciate all the feedback and encourage others to state their opinion.
Edit 2: After digging in, I realized that that the statue was built on PPP model with the contributions of GOI, Govt. of Gujarat, donations, and private sector funding. The initial spending was estimated to be 200 Cr, while the rest of the project was handed over to L&T for a bid of Over 2600 Cr. So essentially, the government is not spending 3000 Cr. Now government’s fund of 200 Cr could be debated, but essentially it is being built by L&T and I would assume that L&T knows how it can make money out of the project.
Edit 3: There’s a concept called budget allocation. You allocate whatever you earn to various needs such as, infrastructure, health ,education, safety, tourism, personal development etc. If you spend everything on one need, you would be lacking in others.
Based on your comment (and other people), it’s a bad thing to spend money on expanding tourism/development or anything that has nothing to do with health, education, farmers etc.
To your point that it would have ideal had people contributed to it, I completely agree but people of Gujarat chose a government to help them run business and the government chose to do this. If they are unhappy, they could throw them out of power and chose others who focus on infrastructure, health, education. We can wait and watch.