Seldom has a politician been admired by the public, opposition and media alike, as the current Union Minster for Road Transport and Highways, Shipping and Water Resources, River Development & Ganga Rejuvenation – Shri Nitin Gadkari. He is a known visionary and an able executioner. Ever since he has taken charge of the Ministry of Roads and Shipping, the sectors have seen unprecedented activity. The mega projects under his supervision – Bharatmala, Sagarmala, Water transport, National River Linking Project and Ganga Rejuvenation – promise to transform the infrastructure of this country like never before. We remain grateful to his ministry for letting us host him for an exclusive interactive session, with the premier investors (public and private) of the country on 2nd November 2017. Some excerpts from the enlightening discussion:
A: Bharatmala Paryojna is a project for developing 65,000km of corridors, highways, and expressways. Out of this, the development of 34,800km will be taken up in Phase-1 at an investment of Rs 5.35trillion. The development of DPRs for 25,000km is being taken up now. We will complete Phase-1 by 2022, and should wrap up awarding of projects before 2019. Phase-2 will entail 30,600km of road upgradation.
We will take up work on expressways and economic corridors first. We plan to have around 50 economic corridors with a total length of 9,000km. In Bharatmala, we will have 45 bypasses and 28 ring-roads. For the first time, for timely work completion, we will use pre-cast sections to construct over 1000 bridges. Under Bharatmala, project stretches have been identified through detailed origin-and-destination studies, freight-flow projections, and geo-mapping. The Bhaskaracharya Institute for Space Applications and Geo-Informatics helped us to identify these stretches.
Bharatmala’s funding will not be a problem, because we have multiple sources:
Our capital markets have a very high appetite for infrastructure players. We recently came out with Cochin Shipyard’s public issue. We were asking only for Rs 15bn, but the IPO was subscribed 76 times – the market was ready to give us Rs 1.26trillion! NHAI is three to four times more financially stronger than Cochin shipyard – so I believe there should be good demand for NHAI too.
Besides, I want the common people to participate and benefit from the infrastructure development of our country. We plan to offer NHAI bonds, which will provide the holders with 7.25-7.50% interest – which is more than the current fixed-deposit rate – with a higher rate for senior citizens. By subscribing to these bonds, the common people of this country will earn more on their savings and get a chance to participate in the development of infrastructure of the country.
The problem with the current situation is that our interest rates are very high – too high to make projects feasible. IRR expectations from various projects are also elevated. Hence, we are looking at various overseas financing options where we can fund the projects at a much lower cost (than what the current banking system provides).
Overall, my department has a target to spend Rs 25trillion over the next five years – in roads, shipping, and water resources. This will create over 10mn jobs and contribute 2-3% to the GDP of the country.
A: I don’t agree that land acquisition is still a problem. Over the last three years, we have done a lot to improve processes – especially in land acquisition. In 2014 (when the NDA government came into power), over 100 projects were stuck due to various reasons – by simplifying the process and with steps such as premium rescheduling, equity infusion, and retendering projects, we have revived all these stuck projects. In fact, we have tried to get faster land clearances for projects that were stuck due to land acquisition.
As of today, we have a policy of not awarding any project unless we have acquired 80% land for the project. With this policy, you can see how land acquisition will not be a problem. The compensation that we give for acquiring land is also very high. You won’t believe this, but these days, people are coming to our department and asking us to acquire their land for our projects.
In fact, at this very moment, we have Rs 20bn deposited with the Maharashtra state government and Rs 8bn with the Uttar Pradesh government for land acquisition. There could be few exceptional cases where problems crop up – but otherwise,land acquisition is not a problem anymore.
A: If you take the example of your city – Mumbai. Here, the cost of running BEST (Brihanmumbai Electric Supply and Transport) buses is Rs 110 per km. Compared to this, an electric bus will cost Rs 65 per km. In Nagpur, we are running buses on ethanol and they cost us only Rs 70 per km. Electric-vehicle technology has already reached a stage where it can be put into commercial use, especially for public transport.
It is very simple really – electric vehicles offer you an alternative that is indigenous, cost effective, environment friendly, and an import substitute. By using these vehicles, we provide a boost to local manufacturing, reducing operating costs, reducing pollution, and reducing our dependency on oil imports. The benefits are manifold.
In Nagpur, we already have 200 e-taxis running through the city and we have also built over 80 charging stations. For electric vehicles, charging stations are very important. We are talking with IOC, HPCL, etc., – to open charging stations at their petrol pumps. Small vehicles such as two-wheelers, one can even charge them at home. For larger vehicles and longer travel, you need regular charging stations.
We are trying to promote e-rickshaws and e-buses in a big way. We already have over 150,000 e-rickshaws running in the country. We are also looking for funding from foreign banks, to procure e-buses.
A: I think the incentives are already there in the system. There is 12% GST on electric/hybrid vehicles – which is one of the lowest. The power tariffs are at an all-time low – as low as Rs 2.5/unit. I think those are enough incentives and any more are not required.
A: No, I will not allow any regulator in any of my departments. I do not want a body that does not have even 1% stake in anything to make decisions for my sector. I want decisions to be taken fast, and I do not believe that a regulator will help that cause. We have already seen what regulators have done in other sectors such as power and airports. For my departments, we have arbitration procedures in place. We have also made 75% payments mandatory if a developer wins the arbitration. After all this, I don’t believe there is a need for a regulator – not in my departments.
For me, the argument is very simple – electric vehicles offer you an alternative that is indigenous, cost effective, environment friendly, and import substitute.
A: Road accidents is a very big problem in India. Every year, there are 500,000 accidents and 150,000 deaths due to road accidents. We need to reduce this. Additionally, 68% of all vehicular pollution is caused by commercial vehicles that are more than 15 years old. This is why we are formulating a transport policy that deals with the scrapping of old vehicles. We have proposed that owners who offer their vehicles for scrapping will receive a ‘scrap certificate’, which they can use to part-finance their new vehicles. So for example, if you bought a truck for Rs 15 lakhs (Rs 1.5mn), and 12 years later you offer it for scrap, you will receive a certificate of let’s say Rs 2-3 lakhs (Rs 200,000-300,000). You can use this certificate to waive off that amount from your new truck purchase.
The policy is with the finance ministry for the last 4-5 months, primarily as they are assessing the GST angle. But I am sure we will be able to implement this policy very soon – which will lead to reduction of pollution and road accidents across the country.
A: Auto sales in India are growing at the rate of 22% every year. This is clearly not sustainable. Any amount of roads we build or upgrade will not be sufficient to provide for this kind of growth. Hence, we have to provide a better and more economical substitute for road transport.
To give you an example, road transport costs Rs 2.58 per-tonne per-km as compared to Rs 1.4 for railways and only Rs 1.06 for waterways. Clearly, water transport is much more cost effective and efficient than roads and railways. It is also environment friendly and reduces the load on our railways and highways network. In India, logistics costs are as high as 18% of total costs as compared to 12% in Europe and only 8% in China. If we were to move our entire logistics to waterways (which I know is not possible), our costs will fall to 6%. As a transport minister, I am sorry to say this to investors in the roads sector – but my priority is first waterways, then railways, and lastly – roads.
We are actively working towards this goal. India has 111 rivers and 20,000km of waterways. We are planning to convert a large part of these into navigable waterways. Already, work on the 1,080km Allahabad to Haldia waterway is going on. Simultaneously, waterways are sanctioned in Goa, Mumbai, on the Brahmaputra River, and many more across the country. By December (2017), we intend to start work on 10 inland waterways. Just yesterday, we moved 240,000 tonnes of steel from Vizag to Allahabad through inland waterways.
A: You see, that’s the thing! I went to the PM to tell him about some problems that my (road transport) departments were facing and he gave me this additional duty (chuckles). But on a serious note, we are executing things in this segment as well. For example, in rivers inter-linking projects, we will be awarding work on three projects – one in MP and two others in Maharashtra, worth Rs 1trillion, in the next few months. On other links, too, work is progressing. The farmers of this country will benefit immensely from this project (floods and droughts will reduce). My target is to double the current irrigated land in the country, by 2022.
On the Ganga River front, the earlier minister has also done a commendable job – out of the 97 projects planned, 90 have been awarded. We are planning to retender 55 old projects and award 300 projects to purify the river water.
A: From 1st December 2017, all new commercial vehicles are mandated to have a pre-fixed ETC tag. There are around 8-9 technologies that we are considering for reading the cards and automatically weighing the commercial vehicles, so that the time at the toll plazas is drastically lowered. We have already tagged over 1.7mn old vehicles with ETC tags, and the process is going on. We are also in the process of tying up with various banks to implement this. All these systems should be in place by March 2018.
A: [Laughs] I am a simple farmer from Maharashtra. Many people think that I am a technology person, or have knowledge about infrastructure and all. But I am a simple commerce graduate, and my passion is farming. But we all are working, day and night, because we want to work for the country – as we have been given this opportunity by the people of this country.
I believe in making quick and fast decisions. I believe that you either take decisions, or you can go for surveys, committees, and meetings. It is not that we do not do surveys or research for our projects – for example, the entire Bharatmala project has been planned on the basis of extensive research. However, decision-making has to be very fast – I try to do this, and believe that this approach works best.
I believe in making quick and fast decisions. I believe that you either take decisions, or you can go for surveys, committees, and meetings.
So, I am also the head of a government committee that has the responsibility to resolve any inter-ministerial disputes. If there is any trouble between two ministries, they are ‘supposed’ to come to me for a resolution. However, because of my reputation for taking quick decisions, they end up resolving disputes on their own and usually tell me that there is no problem [laughs].
So fast decision making is the key here, and that is all I try to do. I am not highly educated, and don’t have much technical knowledge about roads or infrastructure. But I have the desire to do something good for the country, and that is what drives me and helps me to maintain a balance.
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