" You are right, welfare of the people should be the highest concern. But welfare of Human Beings can't be at the cost of welfare of every other living species.
Leave aside religious mumbo-jumbo/BJP/DMK/Rama, Environmental scientist have expressed grave concern for this project. Even if you discount marine life death/decay, the sea-currents are stadily depositing sands on the palk straight.
The current day palk-strait is a few hundred feet shallower than it was 1000-2000 years ago.
This means that the activity of dredging the sea (after constructing the canal) has to go-on forever. Not only that it would have to be done more frequently and hence would be an expensive activity.
Now you really know who would prosper. The people or some vested-interests like shipping/dredging companies.