Investors who turned their back are coming back: Nitin Gadkari

NEW DELHI, 19/05/2016: Minister for Road Transport and Highways and Shipping, Nitin Gadkari during an interaction with The Hindu at his residence, in New Delhi on Thursday. Photo: V. Sudershan.   | Photo Credit: V_Sudershan

Union Road Transport, Highways and Shipping Minister Nitin Gadkari is confident of pushing through Rs 25 lakh crore of investments in the critical transport sectors under his watch over the NDA government's tenure. While private sector developers who had abandoned highway projects in 2014 are now coming back into the fray, the minister said the biggest challenge he faces is not financing, land acquisition or environmental clearances, but slow decision making processes in the administration. Edited Excerpts from an interview with The Hindu's Somesh Jha and Vikas Dhoot:

Two years after taking charge, do you feel India's economy is out of the woods yet?

Look, when we came to power, the GDP (gross domestic product) growth stood at 4.25 per cent, now it has gone up to 7.5 per cent. There was a shortage of coal – we have a surplus coal after two years and similar is the case with the power generation. We can’t also say that everything is sailing smoothly, but the train that got derailed during UPA regime is back on track. Talking about infrastructure, road was built up at the speed of 2 km per day earlier. Now, it stands at the highest ever pace of 25 km per day. In our sector, after completion of two years, I have commissioned work worth Rs 2.5 lakh crore. For the first time in history, the profits of 12 major ports and three flagship organisations – Cochin Shipyard, Shipping Corporation of India, Dredging Corporation of India – more than Rs 6,000 crore. In the port sector, it is for the first time that our efficiency compared to the private players is better. While one of the largest private port's efficiency declined 1.6 per cent, ours rose by 2.46 per cent. There is improvement in ports, inland waterways sector has opened up and work worth Rs 4,000 crore has been initiated inGanga. There were landmark decisions in the automobile sector –Euro VI emission norms will set in by 1 April 2020. We have launched ethanol, bio-diesel, CNG and electric buses and encouraging its use. These are import-substitute, cost-effective and pollution-free. Talking about irrigation, there were around 89 projects valued at Rs 1.5 lakh crore under AIBP (Accelerated Irrigation Benefits) which were dead assets. We will spend Rs 80,000 crorein four years to complete these AIBP projects. For the first time, Rs 20,000 crore per year has been budgeted for Pradhan Mantri Krishi Sinchai Yojana which will assist states. There were 3.60 lakh bank accounts earlier and today, 21.7 lakh crore accounts have been opened. The petroleum gas subsidy savings has helped 5 crore people to get gas cylinders. The health and insurance schemes for the poor has been a success. We have had a positive approach in development programmes for all the strata -- villagers, poor, labour and farmers. There was an indecisive government (earlier) but now we have a government with a vision for development. Our relations have improved with neighbouring countries. We are making roads connectivity to Bangladesh, Nepal, Bhutan, Mynamar andBangkok. Earlier, it used to take 18 hours to travel via road from Agartala to Kolkata but now it’s possible to travel from Agartala to Kolkata via Dhaka. In all the countries that Prime Minister Narendra Modi has visited – be it theUnited States, Russia, Australia, UK or Dubai our prestige and respect has gone up. We have tried to build good relations with Pakistan. We have been able to control Naxalite movement and due to state support, we have successfully kept a check on cross-border terrorism. I think, overall, on all the fronts there has been good work.

People have more expectations from us and it will take us some more time to fulfill those. It took 60 years for the Congress here we have only completed two years and not all expectations can be met in two years but I can confidently say that the work that has not happened in last 60 years, we will make it happen in five years.

What about road links to Pakistan?

The Prime Minister himself visited Pakistan and extended his hand for friendship. Till the time Pakistan stops sponsoring cross-border terrorism and doesn’t keep a check on terrorist and terrorist organisation coming into India, there can’t be good relations. Pakistan too is suffering from poverty and malnutrition and I feel at this point, we all should joins hands in fighting these issues and move towards development. We have good relations with Bangladesh and we will do our best to maintain good terms with Nepal. We are good with Bhutan. Everywhere we are putting our efforts to maintain good affairs.

The Atal Bihari Vajpayee-led NDA government had launched the Golden Quadrilateral project of four-laned national highways connecting all metros. At the time, it was said to be one of the most ambitious national projects embarked upon, since Sher Shah Suri's times. What's the big plan for Infrastructure in this government?

In our country, the road length is 52 lakh kilometres but out of this, only 96,000 km is the national highways network. At present, 40 per cent of the entire traffic commutes on this two per cent road. This has caused five lakh accidents, three lakh injuries and 1.5 lakh people dying on road (every year). Now, we have decided to increase the national highways network to 2 lakh km from 96,000 km. We have already declared 1.55 lakh km of roads and when the highways network will expand to 2 lakh km, 80 per cent of the country’s traffic will ply on it. Earlier, four-laning of roads was done when traffic volume was more than 25,000 PCUs (passenger car units per day) which has been decreased to 10,000 PCUs. We have taken two historic steps. One per cent of the cost of construction (of roads) will go into plantation, beautification and maintenance and one per cent on road safety. So, Rs 5,000 each will be spent on this in the next four years. We will come up with 1,300 road side amenities and the tender for 60 is already out. We have identified 300 spots for parking plaza, hotels, motels, restaurants, petrol pump, service centres, handloom stores, fruit and vegetable shops, helipad and a small hospital for treatment of the locals. It will boost employment.

We will open Logistics Park on the Easterly and Westerly bypass road so that godowns are located outside Delhi. I have also told (Delhi chief minister Arvind) Kejriwal if all the godowns can be located outside Delhi, it will reduce the traffic and pollution here. We are building 14-lane Delhi-Meerut expressway. So, we are building roadways, expressways, highways in the entire country and I think this will create huge jobs. Usually, investments worth Rs 1 crore give employment to 70 people. I will complete Rs 2.5 lakh crore investments by 26 May, and I will give you the list of the projects, you can calculate the jobs that it will create with that scale of investment. The country needs a policy that generates employment and without infrastructure, both industry and agriculture cannot prosper and the GDP will not grow. I have kept American President John Kennedy’s quote in my office which says, ‘American roads are not good because America is rich but America is rich because American roads are good.’ So, prosperity comes with roads.

But our first priority is waterways, followed by railways and roads. In China, 45 per cent of the passengers and goods travel through waterways, similarly in Japan and Korea it is 43-44 per cent, in European countries it is more than 40 per cent but here it stands at only 3.5 per cent. If you go by waterways, you spend 20 paisa (on logistics), through railways Rs 1 and by road you spend Rs 1.5. That’s why we have decided to convert 111 rivers into national waterways. We have 7,500 km coastline and we are building six new ports out of which work on three new ports will commence this year.

You claim that the Ministry doesn’t lack funds but private sector interest has been lukewarm and the the Finance Ministry is facing burden from the Seventh Pay commission...

Please understand my economic model. The budget for the road sector is Rs 55,000 crore. Then, our income from toll collection is Rs 10,000 crore. If I securitise my toll income for 15 years, I will get Rs 130,000 crore which leaves us with around Rs 2 lakh crore. If I securitise the government’s funds that went into completion of 111 projects, I will get 1 lakh crore. This makes it Rs 3 lakh crore in total. Apart from this, the government has given us approval to raise Rs 70,000 crore tax-exempted bonds, so that becomes Rs 4 lakh crore. Then, if I build more roads from this fund, I will get more toll collection. So, out of my target of completing work worth Rs 25 lakh crore, I will spend Rs 10-12 lakh crore in roads and Rs 15-20 lakh crore in shipping.

Can you elaborate on the securitisation aspect?

The pension funds and insurance funds are ready to take my funds. I will go into tripartite agreement and tell them we will give six per cent returns. That’s not an issue. The budget provision for shipping sector has been only Rs 1,800 crore. I have made a profit of Rs 6,000 crore last year. Next year, it will go up to Rs 8,000 crore and then 10,000 crore. So in four years, I will have profit worth Rs 40,000 crore. Then, I have fixed deposits worth Rs 15,000 crore in banks. This means a total of Rs 55,000 crore add to that Rs 10,000 from creditors so it comes out to be Rs 65,000 crore. I have a turnover of Rs 4,000 crore in ports and shipping in dollar terms. Now, for eight-laning concrete road project from JNPT to Panvel, I took loans in dollar terms at the rate of 2.75 per cent, instead of the borrowing rate of 12 per cent that I took in other projects. So, I took a loan of Rs 3,000 crore at 2.75 per cent. So on this Rs 4,000 crore (forex-based) turnover, I will take loans worth Rs 50,000 crore at 2.75 per cent in dollar terms. So, I have funds worth Rs 1 lakh crore. Then, I will get returns on these projects too.

You are talking of external commercial borrowings (ECBs)?

No, it is not ECB. Recently, I took loan from banks for the eight-lane Panvel project in dollar terms instead of rupees. So, I have Rs 50,000 crore. I am not dependent on the finance ministry for budget. I am spending Rs 4 lakh crore in ports – Rs 1 lakh towards port rail connectivity, Rs 2 lakh for port road connectivity and Rs 1 lakh crore on mechanisation and modernisation of ports. I will spend Rs 8 lakh crore towards 27 industrial clusters barring the investments on inland waterways and smart cities. So, I have targeted spending Rs 25 lakh crore whereas the actual work is worth around Rs 30 lakh crore. I am not amongst those ministers who make shallow promises. I say what I mean and I mean it.

What are the kinds of problems you have faced in executing the projects?

My problem is not related to land acquisition and environment clearance. My problem is addressing the decision-making process in administration. We have taken 21 Cabinet decisions and a lot of committees have been set up. The decision in such committees takes months to complete. I want to fasten this process. That is my responsibility and I don’t blame anyone for that. You go to any contractor and they will say we have saved them. When I became the highways minister, 403 projects worth Rs 3.85 lakh crore were stalled and today, only 14-15 projects worth Rs 30,000 crore are languishing and the problems related to the rest are solved. Had I not addressed those issues, the banks’ NPAs (non-performing assets) would have shot up to Rs 3 lakh crore. I have saved the bankers and the industrialists from this trap. I held thousands of meetings with contractors and bankers. So I called all the stakeholders and solved the big issues. So, a positive approach, transparent system, time-bound approach, team spirit and development-oriented system are the strengths of our management.

Out of the stalled projects, how many did you have to terminate?

We have terminated 43 projects out of 403 projects. We have issued fresh tenders and work on many of these has already begun. Four such projects have started on the hybrid annuity model too.

What about the expressways?

This year, we will begin work on the Vadodara-Mumbai expressway. The highway alignment on Delhi-Jaipur is almost complete and similar is the case with Delhi-Katra expressway. We have planned Delhi-Meerut, Bangalore-Chennai, Hyderabad- Bangalore and Vijaywada-Bangalore projects.

How will the land packaging work in such projects? The developers have demanded the land access along the highways in the past…

There are three successful models of land acquisition in the country – one is in Amravati, another in Surat and third is Navi Mumbai airport. The model is that we will acquire land and return 40 per cent of the land to the owner after development, 20 per cent will go into building infrastructure and the rest 40 per cent we will take. The cost of land will decrease with this model. Now, let’s say we build a logistics park on a 1,000 acre land. We will give 400 acre land to the land owner, NHAI will get 400 acre land and the rest 20 per cent land can go into building petrol pump or road side amenities so a new township will be created in the form of logistic park. This innovate model will help farmers, create employment and lead to development.

What is the response you have got on the hybrid annuity model for highways?

When I became the minister, the PPP (public-private) model was not getting any response. Already 17 projects have been commissioned on the hybrid annuity model. The response on the Build Operate Transfer (BOT) toll model was tepid as the market situation was not good. I will tell you an instance. Larsen & Tourbo (L&T) Chairman AM Naik came to me and said his company’s board has taken a decision to not do any road projects and he decided to exit the road projects taking a penalty of 1.5 per cent. Now, L&T is doing nine projects worth Rs 15,000 crore. So, the situation has changed and investors who had exited are coming back.

Your ministry is also planning to develop roads through the Swiss Challenge model. But Dr. Vijay Kelkar panel had criticised the model recently in its report.

We have drafted a Cabinet note and if the government permits us, we will go ahead. But I feel the Swiss Challenge model is not required in the road sector. We don’t have technology and resources and land problems.

And you will acquire the land for developers?

We have made it a rule that without acquiring 80 per cent of the land, we will not give work orders or permits.

But you said decision making in the administration is an issue…

File is pending for months with various committees. That’s the biggest challenge for us. Although we have succeeded to a very large extent, but more work needs to be done.

What about the Chabahar port you were supposed to develop in Iran?

The Prime Minister is going to Iran on May 23 and I may also accompany him and finalise the agreement.

What will be the model?

We have formed a global company and Kandla port and JNPT (Jawaharlal Nehru Port) has claimed equity in it and we will build the port.

So, Iran will also have stakes in it?

We will develop the port and return it to Iran in some years.

There were NPA issues with banks. How do you plan to get their support?

The banks are not giving loans and financial closure is taking years. Banks are scared of giving loans looking at pending cases with CBI and CVC and also because of the media. I have told this to the finance minister. I plan to set up an Infrastructure Finance Corporation on the lines of the Power Trading Corporation. We have floated a Cabinet note. We plan to bring foreign funds.

What is the timeline to double the national highways?

Within three months. At present, we have completed 1.55 lakh kilometres and till the next Parliament session, we will achieve that target.

What was the response of the Delhi government on the logistics park proposed by you to ease congestion and pollution in the capital?

The Delhi government is very much receptive. I extend help to everyone -- all Congress chief ministers or whether it is Kejriwalji or Lalu (Prasad)ji. I don't do politics in my work.

There were a lot of issues related to the diesel cars…

In Delhi, there are 18-20,000 diesel taxis. The Supreme Court had put a ban on them. We requested the court that we respect your judgement and we will not give diesel permits going ahead and try to convert diesel vehicles into CNG.

Don’t you think diesel recently got unfairly demonised campaign?

Look, there is no denying that diesel causes pollution. That’s why ethanol, bio-diesel and bio-CNG are the future. Fifty buses in Nagpur run on ethanol provided by us. We made a royalty of Rs 18 crore from Mahrashtra government by selling toilet water and 100 buses are running from the bio-CNG produced from it. It is a import substitute, cost effective and pollution-free model. If you go for innovation, entrepreneurship, technology, research and Digital India, then sky is the limit.

Five Indian cars recently failed the Global NCAP safety test…

Along with safety, we also need to take the cost of vehicles into account. We are trying to align with the western country standards but we also need to look at the paying capacity of our citizens. We will look at the report and will take decisions through an integrated approach. But if we conform to those standards, the cost of vehicle can go up by 15 per cent and if that happens, it will hit the affordability of the people.

Even after two years of the government, industry sometimes feels that they are unable to see the progress on ground…

All I can say is that I can give you the details of whatever I am telling you right now. We don’t claim that all the sectors are a success. We are still facing issues in some sectors. For instance the sugar industry had collapsed, a few projects in the power sector were stuck, shipbuilding industry was facing tough time, steel industry also collapsed but recession is there on a global scale too. We are doing our best to bail out industry from these problems.

What is your message to the young voters? Hold on for how much time?

We are moving ahead on a positive tangent on development. Our programmes are getting positive results and going ahead, the country will go ahead. Our economy will be at par with China and there will be robust employment generation. Villages, poor, labour and farmers will prosper and our dream of corruption- and terrorism-free country will be fulfilled. Congress was in power for 60 years. We have done a lot in these two years and we will continue to do so and people should give us more time.

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