ASSIGNMENT 3

SOCIAL COST BENEFIT ANALYSIS-SOLUTIONS

-NIKITA
PANDEY

PROBLEM 2

The SCBA of proposal to close the branch line passenger services from station A to station B:

COST
1)annual cost of train movement(maintenance,
signalling, depreciation charges)-1,520,000
2) Loss in fare collection
=200*2*8*250=8,00000
3)cost of extra travelling time taken by bus-
800*(40/60)*2*2=rs2133
BENEFIT
1)Train value for selling-2,40,000
2)total fare collected by bus for round trip i.e A
to B and B to A for taking (800*2) journeys,
considering single trip fare charges is rs4 =
800*2*8*250=3,200,000

TOTAL COST=2322133=2MILLION APPROX TOTAL BENEFIT=5440000=5MILLION APPROX

SINCE THE BENEFIT IS MORE THAN THE COST OF THE PROJECT ,HENCE THE PROPOSAL CAN BE MADE
FORWARD.

PROBLEM 3

The SCBA of 80 mile road from a capital to a village may be defined as follows: discount factor for
year 1=0.9 (1/(1+0.1)) and for 30 years sdf=0.057

COST
1)cost to build a road
1)construction cost-24 million rupees (one
shot cost)
2)AM cost- 1million rupees=30 million for 30
years
2)cost of developing additional 50,000 acres of
land in one year=50000*3000*0.9=135 million
rupees
3)relocation cost=5000*8000*0.9=36million
4)decreased income of boat operator for 30
years year=0.5million*0.057*30=0.855 million
BENEFIT
1)saving in cost of shipping agricultural
produce-)=0.5*0.9=0.45 million in one
year=0.855millions FOR 30 YEARS
2) earnings from production of crops after 5
years until 30
years=50000*1000*0.057*30=85.5million
SDF=1/(1.1)^30=0.057
3)earnings of small holders for 30
year=1500*0.057*8000*30=20.52million
4)other crop yielding uptill first 5
year=200*50000*0.62*5=31million
 5)boat costing for operation=3 million 5)increase in value of development land=280
million
6)tax revenue collected for 30 years=30
*0.057=1.71million rupees

7)value of timber output in first year clearing

inorder to build road=20*0.9=18 million

TOTAL COSTS=229 MILLION TOTAL BENEFITS=438 million

SINCE THE BENEFIT IS MORE THAN THE COST OF THE PROJECT ,HENCE THE PROPOSAL CAN BE MADE
FORWARD.