The cabinet yesterday took two big ticket decision, one was recapitalisation of banks and two, was an almost Rs 7 lakh crore push for infrastructure, specifically to the road and highways sector.
Road Transport & Highways Minister Nitin Gadkari in exclusive interview to CNBC-TV18 explains what one should expect over the next few years as part of highway development programme.
He touched upon various issues related to highway developments – the Bharatmala Project, NHAI awards, electric vehicles, road safety etc.
With regards to Bharatmala Project he said it covers about 60,000 kms of which 35,000 kms is part of Phase I. He said they aim to get this project off the ground by December 2018.
Talking about awards by NHAI, he said he is not satisfied with the award target of 6000 kms but expect a target of 10000 kms by March, 2018.
He is also confident of closing the current financial year at 30 km per day and expect to hit 40 km per day by end of next financial year.
He is confident that there would be no problem of raising funds from the market to fund various projects because many pension funds, insurance funds and foreign investors have shown interest.
The Bharatmala Project would be funded via CRF funds, budgetary allocations and monetisatin of projects, he said.
NHAI bonds could be one of way of raising funds, said Gadkari adding that he is confident of raising Rs 5 lakh crore via these bonds because NHAI projects are economically viable and has a AAA rating.
He said further clarity on NHAI bond issue would come in one months' time.
Below is the verbatim transcript of the interview.
Q: It is almost Rs 7 lakh crore over the next five years and Bharatmala is only aspect of this overarching highway development programme that got the cabinet clearance. If you can specify for us, in terms of award, how soon can we actually expect some of these road projects to be awarded out and what can be expected at least as far as the first year is concerned?
A: Actually, total Bharatmala project is for 60,000 km, out of which first phase of 35,000—36,000 km, that cost involved is Rs 8 lakh crore. Now, this is the first phase out of which already, for 25,000 km, we have already prepared the detailed project report (DPR) and for 9,000 km we have already ordered DPR for that. So today, some of the projects we are in position that we can start. And now, my target is before December, 2018, at any cost -- it is my target and not commitment, at any cost, we want to start this project of Rs 7 lakh crore before December, 2018. And whatever the target which I declared, my track record is 100 percent clear that always I am in position to fulfil that.
Q: But if I can ask you to give us a little more colour on the numbers. You are saying that your target is to get this off the ground by December, 2018. Now as part of the first phase of Bharatmala is concerned, I ask you this because a lot of analysts have raised the concern that yes, a lot of these projects are at the DPR stage, but from the DPR stage to the actual process of the execution starting on the ground, it could take at least a year, if not more. So, what should we realistically then expect?
A: This is not a correct perception. I am giving you an example. In 2011-2012, the award for road construction was 2,000 km and 2015-2016 it was 16,000 km. So it is eight times more. It means that the land acquisition, utility shifting, all the problems are eight times more. So today, there is no problem about land acquisition, out of which the 25,000 km DPR which is ready now, some of the projects we have started land acquisition. So I am confident that before 2018, 100 percent project we will start.
At the same time, different schemes are going on and under that scheme also, we are expecting the investment of Rs 6 lakh crore. So that is also part of the project, but it is difficult for me to make commitment about that projects. Again, one thing which I will tell you, because of this decision of cabinet, it is not only for Bharatmala. Here is a decision for division of work and decentralisation of power. The first time the cabinet has cleared and given more powers to NHAI. My Chairman and my team is working very fast and if compared with the previous track record, the record is good. So for this year, I am expecting the track record from them about the award of road construction of 10,000 km.
Q: From NHAI?
A: Yes.
Q: You are saying 10,000 this year from NHAI?
A: Yes, up to the end of March and I am confident that they are fully capable that they can award 10,000 km of road construction.
Q: Because the number that we were working with was between 5,000 km and 6,500 km. That was the expected rate as far as the awards from NHAI is concerned. You are saying it could be 10,000 km.
A: NHAI Chairman and my secretary is always giving me this 6,500 km, but I am not satisfied on that.
Q: You are not satisfied?
A: I said no, you have to do 10,000 km. And now, the way in which the power is delegated to NHAI, I feel that our Chairman and his team is in the position to go up to 10,000 km.
Q: We often get lost in big numbers, Rs 7 lakh crore, 25,000 km, 84,000 km and so on and so forth. So let me, for the sake of simplicity, break this down in terms of what it is going to come down to eventually when we talk about execution on the ground on a daily basis. Currently, we are doing about 24-30 km a day. If we want to achieve the 84,000 km target that you have set out as part of this scheme that the cabinet has approved, it means doing 40 plus km everyday. You believe that that is doable, that is achievable?
A: First of all, I am not talking about 84,000 km, I have never commited to this target. But, I will assure you one thing. At the end of March, for this year, we will be, as long as we will complete the target of 30 km per day, more than that, I am trying for that. Last year, it was 23 km per day and the next year, 100 percent I am confident we will be more than 40 km per day.
Q: You are saying you will close this financial year at more than 30 km a day?
A: Yes. One thing I am telling you very frankly and fairly. You just check my track record from last three years when I became a minister. I am not a minister. Whatever I declare, I always fulfil that. So you record it and after March you can ask me. At the same time, at the end of March, my target, I am not talking about my commitment, it is my target, more than 30 km per day and at the end of next year, March, it will be more than 40 km per day. And for that purpose, I always make persuasion, follow up and I solve the problems.
There is a lot of problems with land acquisition, environmental clearances. I always follow up, take meetings for that and by the cooperation of the state government and my all cooperative colleagues, I am very much confident about their capability and we are in position to complete that target.
Q: Since we are talking about targets, to achieve that target, what about the funding? When we talk about this almost Rs 7 lakh crore, it is about Rs 1.41 lakh crore, that is the budgetary support that totally you get.
A: No, I do not have the exact report, but when we prepared the project of Bharatmala, from eight months we are working on that and here there is a financial model. One is budgetary provisions that we have. Second is from Central Road Funds (CRF). Third is from monetisation. Now first we have already tendered the first project of toll-operate-transfer (TOT) of Rs 6,000 crore is in tender. So we have the project where we get more than Rs 1.25 lakh crore. There are lot of projects with us now on TOT.
Q: That is what you hope to monetise?
A: TOT, yes. The third thing is, already government has given permission to raise the Rs 70,000 crore from the market out of which we have raised Rs 15,000-16,000 crore -- Rs 3,000 crore in London Stock Exchange, Rs 8,000 crore LIC and now, I am confident that there is no problem. We can raise it from Indian market. NHAI's rating is AAA. At the same time, we have a lot of offers from pension funds, insurance funds, foreign investors.
But now, my feeling is in such an economic situation, for the road construction in the country, we should encourage the investment from the common man, the service people, the journalists, the teachers, the labourers and government servants. These small people, they are investing their money in some chit funds and other things. Now the bank rate is reduced. So my idea is we can give them 1-1.5 percent more interest than banks and we can go for bonds. And now we have appointed a consultant.
Q: So NHAI bonds?
A: Yes, but NHAI is an authority. So that is why we appointed a financial consultant by which we can make a special vehicle which is guaranteed by NHAI. We will go for capital market, we raise the fund from the common people and after their retirement, 10-15 years, we will give them interest more than banks, more than chit funds and that will be a secured scheme for the poor people, the service people of India. At the same time, their contribution for making of great infrastructure in the country.
Q: So when do you hope to launch these infrastructure bonds?
A: I am just waiting for the consultant reports for NHAI. We have already appointed him. After his report, we will decide.
Q: Is it likely to happen within this financial year or do you believe that you will have to wait for the next financial year?
A: Within a month.
Q: Within a month you will get the report?
A: Yes. You know our track record. At the time of Cochin Shipyard, our need was Rs 1,650 crore. We have received 76 times oversubscribed, Rs 1.26 lakh crore, 76 times oversubscribed. So that is the credibility of our department, our corporation, our authority in the mind of the people of India. So I am confident that the poor people, the middle class people, the service class people will respond to me and by which we can raise the fund from the market. And my interest is by making this infrastructure, I want to transfer this benefit to the poor people, the service class people of this country where I assure them to give them 10-15 years interest more than banks.
Q: What is the kind of money that we are talking about? What is the quantum that you are expected to raise?
A: I do not want to declare that amount.
Q: Ballpark? What are you working with?
A: It can go to Rs 3 lakh crore, Rs 5 lakh crore I can raise it, because it is a need for me. My projects are economically viable, my internal rate of return (IRR) is good, my rating is AAA. Now one of the company is now making the rating of NHAI, reputed company, so we do not have any problem. We are in a position that we can get that much money from the capital market.
Q: So the Finance Minister said that the bank recap bonds, we should have clarity on that by December. Are you saying that perhaps even as far as the infrastructure, I am using the word infrastructure loosely, the infrastructure bonds that you are talking about, perhaps will coincide with that?
A: No that is the different bonds. Actually, the bank sector is now the way in which the Finance Minister has already declared the package related to the banking sector. I am only talking about limited with infrastructure. My limited response is related with road sector, shipping, ports, inland waterways and now, I am related with the Ganga, the Pradhan Mantri Krishi Sinchai Yojana, even I am working on that river connectivity and at any cost, within three months I am going to start three major projects related to the river connectivity where the investment is more than Rs 80,000 crore. So, for that purpose, the National Bank For Agriculture And Rural Development (NABARD) is the agency where we can get the fund. But in NHAI, we do not have any problem.
Q: I just want to come back to that target that you said that you are not satisified with 6,500 km, you would like to close the year with 10,000 km. If I look at the project execution by NHAI, it is expected to reach 3,000 odd km in 2017-2018 and over 3,500 km in the next fiscal. So how do you see this from about 3,500-4,000 km?
A: You are talking about the targets given by the administration, the bureaucracy. I am the minister. I am going to decide.
Q: But the bureaucracy has to deliver.
A: 100 percent. I will see that they will deliver. It is my responsibility. It is my task and I know how to get it done. I will make up the process fast, fast track decision making process. Now I am giving, already we have sanctioned, giving more power to NHAI and related to the land acquisition problem, I am always in contact with all the Chief Ministers and Chief Secretaries, I am calling meetings, making persuasions and whatever the problems for them, I am responsible for that. I will push them, I will support them, I will cooperate with them and at the same time, I am confident that they have the capability and we can do it and we can achieve our goal.
I am giving you one example.When I was talking about when there was 2 km per day road construction, I was talking about 15-18 km, no one was in position. No one was expected from me that we will achieve the goal of 20 km more because it is a track record. Even from independence, the way in which the road, it is a track record and Bharatmala is the first infrastructure project, big project, first time in the history of our country, launched by our government under the leadership of Prime Minister Modi, no one was confident about it. But now, we are now going up to 30 km per day. So, there is some maybe gap because target and getting the result, performance, there is a gap. But I am sure.
Now I am telling you about the history of award. Now, the award this year, we want to cross 20,000 km more award for this year. There are some problems because rainy season, land acquisition, we are making the law very strictly about land acquisition must be more than 80 percent. There is a lot of appointment, that financial closure from the bank, there is a problem. But still, I always have a persuasion of 1-2 projects, I am always taking review. I always find out where is the problem and my always positive attitude for helping NHAI people, ministry people, and if the problem is not solving on their level, then I intervene and I take the responsibility, I pursue it and we solve it.
Q: Two quick questions, one related to NHAI - possibility of an IPO, is that still something that you are pushing forward with because we understand that there were some issues that had cropped up. So, NHAI IPO, is that likely to be on the cards?
A: I am trying my level best to go to capital markets within a month. We are waiting for the report from financial consultant. The Prime Minister already has given us a direction to register all corporations in the stock exchange. However NHAI is a authority so there are some legal problems. So, on that basis there are some suggestions, we can make some special vehicle for that with NHAI and then we can go for the capital market which is backed up by NHAI. However I don't know what is the solution. After the financial consultant gives us the report on that, we will decide and we will go for the capital market.
Q: Let me move away from roads and highways to talk about the other ambitious target that you have set and that has to do with the electrification plan that you have put forward by 2030. You were very clear when you spoke at SIAM that come hell or high water, you will move to electric vehicles by 2030. You also said that by the end of the year you hopped to take the electric vehicle policy to cabinet, where do things stand now as far as the EV's policy is concerned?
A: Our automobile sector is very important sector. Automobile sector export is Rs 1,45,000 crore and this is an industry of capital investment of Rs 4,50,000 crore. This is an industry which is giving maximum jobs to the youth of this country.
I am not against petrol and diesel and other things but the country is facing serious problem related with pollution. Pollution is a big problem for the common man from health point of view. You know the Delhi pollution situation and now Mumbai is on that way, Bengaluru is on that way, traffic jam, air pollution, water pollution, it is a big concern.
So, second thing which is important is import substitute, cost effective, pollution free and indigenous technology.
Today because of my persuasion we have electric auto rickshaw, e-rickshaw, then we have electric bus. In Mumbai the city bus service BEST, their cost per kilometre is Rs 110. In electric air conditioned bus their cost is Rs 65-70 per kilometre. The London transport model is the ideal model.
In transport ministry we just decided to give all presentations from London transport system where 9 operators are there. On the basis of that I appeal to all the transport ministers that you can use electric buses, you can use ethanol buses.
In due course of time, a bike is going to be launched in the country which is on flex engine, 100 percent on bio ethanol or petrol. Now within two months a bike is going to be launched on 100 percent electric.
Lot of people have already started manufacturing of electric cars and electric buses are available. Now when the number increases it is going to reduce the cost of the vehicle.
Q: Are you still that by 2030 we will be only electric or are you saying that there is room for the combustion engine to also coexists?
A: When you get benefits, when cost effectiveness is there - suppose you have a car and your petrol consumption is suppose Rs 8000 per month and by taking electric car of the same cost, your consumption comes down to Rs 1500 or Rs 2000 then you don't need any advice from anybody, you will purchase it. Also the maintenance cost is very less. So, that is the reason that people will accept it.
Q: So, you are saying the market will determine, the government is not saying that they will phase out or ban the use of petrol and diesel vehicles?
A: In a convention some of the leading speaker was telling, the government should be clear, it should give a clear direction to the policy. Tell us what is the government plan on this? I said, we don't want to encourage petrol and diesel cars, we want to encourage all our motor transport on basis of ethanol, bio-diesel, bio-CNG, electric and alternative fuel and we are very much concerned about pollution.
The second thing is it is cost effective, pollution free, import substitute and indigenous.
Third thing, in Ganga we have 97 projects for water recycling and 55 state government projects where we are going to improve that project and again recycle the water. In these 150 projects I have received an offer from a consultant that he can collect methane from that material and bifurcate methane from CO2 and we get bio-CNG. So, I am talking with the petroleum ministry and IGL that you come and take all the bio-CNG and give it to the people in that area. It is import substitute, cost effective, pollution free and it is indigenous.
Q: When do you move cabinet with the electric vehicle policy?
A: It is not my responsibility. NITI Aayog has already started it, they have taken my advice, they have taken the advice of other ministries and now they are submitting their proposal for electric vehicles to the cabinet and then it will be decided by the cabinet.
Q: Are you going to be asking the finance minister for more budgetary support and to the tune of what?
A: BharatMala is a good project but still there is no promise from finance minister. I request him to increase our budgetary support.
Q: How much more would you like?
A: The way in which we are developing the infrastructure, it is the dream of new India of our Prime Minister, we are developing the road sector and started when it was 96000 kilometer to 200000 kilometer of national highway, making 12 express highways, converting four lane into six lane, six lane into eight lane, two lane into four lane. So, we need too much support from the finance minister. I don't want to quote what I am demanding for that. However I am in contact with the finance minister.
Our finance minister is very clear that he wants to support infrastructural development. From the first day he has always insisted on development of infrastructure. I am expecting a good support from him.
Q: On account of GST what has been the impact as far as the sectors that you handle are concerned, what is the feedback that you have got coming in from industry because at this point in time we do know that a review is underway, whether rate rationalisation is the need of the hour etc, what is the recommendations that you perhaps would be putting forward when it comes to GST implementation?
A: In my ministry one meeting was organised with the shipping sector, with the finance secretary and lot of issues he solved. Now related with the road construction contractors, there are some reservations, grievances are there. The investors, contractors, stakeholders they are meeting me. There are some legitimate and genuine problems, we are going to organise a meeting with the finance secretary.
Q: Is it only related to the GST rate that they fall under or other issues are also there?
A: There are issues regarding the procedure, regarding taxes.
Q: Have the cost of projects gone up on account of the GST?
A: Yes and that is my concern.
Q: What is the escalation?
A: There are lot of different type of interpretations. The stakeholders in the sector, they have lot of concern with GST. The Prime Minister has already given direction to all of us that in your ministry if there is some problem with the GST, you call the finance secretary and have communication and cooperation between the stakeholders and the finance ministry. Since this is the first time we are launching GST, these are the teething troubles. I am confident that in our meeting with the finance secretary we will be in a position to solve all the issues related with GST.
Q: A lot of what comes under your portfolio and your various ministries, it is going to be responsible for providing the fillip to the economy since we are talking about getting back to the high growth trajectory of 8 percent plus growth. Do you feel confident now that perhaps towards the end of the year - are you seeing visible signs of things picking up on the ground and what is going to be the priority as far as you are concerned?
A: When I took charge as the minister I fixed my target for five years. At the end of five years my all ministries we will contribute 2-3 percent to GDP growth. Second target was creating employment potential for 1 crore youth of this country. Third target is, presently every year we have 150000 deaths on the road, out of which 36 percent of accidents are on national highway. So, at any cost my mission is to save the life of the people. Constructing more roads is priority for me but more than that my priority is how I can save the life of people. So, to reduce the death rate in accidents from 150000 we will try our best to make it 50 percent less. So, these are the three targets for me.
Fortunately or unfortunately whatever target I decided always I am in position to achieve my goal. Let us try, I am confident that regarding these three sectors my target is very clear, very transparent. My all colleagues, my secretaries, my chairman and myself are all working hard and with team spirit and cooperation of all of us it is not only my success, it is the success of a team. So, with cooperation of all stakeholders in my department definitely I will be in a position to complete this target.
One more target is there, in my road sector, shipping sector I had decided for investment of Rs 25 lakh crore. I am confident that at the end of December 2018 or somewhere before election, when we will complete five years, I will be in position where my ministry will contribute Rs 25 lakh crore of investment in the sector, 2-3 percent addition of growth rate for GDP, at the same time creating 1 crore jobs and reduce the accident deaths by 50 percent. These are the four targets for me. My team and I are working day and night for that. I am confident that with the help of all the sectors, all the stakeholders, we will be in position to complete this dream.
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