“Neither do we have a money problem, nor do we have a land acquisition problem,” says Nitin Gadkari.
He is one of the busiest ministers in the National Democratic Alliance government. A significant part of Prime Minister Narendra Modi’s promise of new India rides upon his work — the challenge of building next-generation infrastructure for the country. Union Minister for Road Transport and Highways, Shipping and Water Resources, River Development and Ganga Rejuvenation Nitin Jairam Gadkari speaks to Swarajya about progress on India’s highway expansion programme, inland waterways, cleaning up the Ganga and more.
It is projected that India will need more than Rs 50 lakh crore in the coming years to be invested in infrastructure. If you take road infrastructure, the two major issues here are land acquisition and lack of financing — the capital markets in India are not deep enough. So, how are you moving about ensuring that such an enormous amount of investment comes in, especially when the PPP (public-private partnership) model which we have tried for the last few years has not worked in a very satisfactory manner? You have been moving towards the EPC (engineering procurement construction) contracts and now you have brought in the hybrid annuity model. What do you think is the way forward to mobilise resources?
In our country, we have 52 lakh km of road length, out of which only 96,000 km are National Highways and 40 per cent of the country’s traffic is on 2 per cent of roads. We have taken a decision to increase the length of National Highways to 200,000 km, out of which 170,000 km has been declared. Eighty per cent of the country’s traffic will finally run on National Highways.
Neither do we have a money problem, nor do we have a land acquisition problem. We have a system problem, a problem of mindset. There is no money problem. You are correct as far as the PPP model is concerned in the UPA government. When I took charge as minister, there were 403 stalled projects, the total cost involved was Rs 385,000 crore. Today I think it would be fair to say that 99.99 per cent problems have been solved. My ministry saved Indian bankers from potential NPA (non-performing assets) of Rs 300,000 crore. Everything is moving fast now.
In land acquisition alone, we have spent Rs 68,000 crore. Once upon a time, in a road project, land acquisition was 15 per cent of the cost. Now it comes to 35 per cent and in some instances can be as high as 50 per cent. Whether you like it or not, it is political compulsion — we have to accept it. As a farmer I’m happy that the farmers are getting higher prices, but land acquisition is not a problem. That is the reason that when I had taken charge as minister, we were building 2 km per day; today it is 28 km per day and soon it will be 40 km per day.
We have decided that without 80 per cent of land acquisition, we would not give an appointment letter. That is the reason that I do follow-ups every day. I have a six-hour meeting with the Uttar Pradesh chief minister and all his officers in Lucknow; seven-hour meeting with the Uttarakhand chief minister in Dehradun, then a seven-hour meeting with Nitish Kumar-ji in Patna and a nine-hour meeting with Devendra Fadnavis in Maharashtra, over video conferencing, following up on every project. I’m pursuing. It is difficult, but not impossible.
You said that when you came to office, there were lots of projects which were stalled and you revived those projects. How exactly did you do that? What exactly were the problems facing those projects?
The people who were 80 per cent responsible for this was the government. There was no land acquisition. There was no environment, forest clearance. For two-and-a-half years, the minister did not sign a single file. If the project involves tree cutting, it will need environment and forest clearance. How can you expect the contractor to complete the work? But we would hear government people say, ‘Sir, this is because of this contractor.’ But I found out others are responsible too — those who prepare the detailed project reports, the road agency…
So now it is not with the contractor, it is not with the bankers. The Prime Minister appointed a committee under my chairmanship for clearing infrastructure projects. We have held a lot of meetings, we clear the projects, we solve the problems, we complete the land acquisition, we do the follow-up. We call the bankers and we make the settlement with the bankers.
We have taken 22 decisions in the cabinet with the help of the Prime Minister and the Finance Minister and on the basis of that we solve the problems. And lastly, we have taken the decision that if the project is more than 50 per cent complete, we will finance it, and many of the projects are being financed by the National Highways Authority of India (NHAI). This way, we found the way out and now everyone is moving.
I’ll give you only one example of a company… Larsen & Toubro (L&T). Their chairman Mr A M Naik once came to me. ‘Sir, we are sorry. We are not at all interested to make any roads. We want to close this section and we are facing huge losses and it is difficult for me to complete the projects. Please, sorry.’ I requested them… one of the projects from Amravati to Surat in my area was very important, but he said, ‘No sir. We will go back.’ And today the same L&T is working with me, having works of more than Rs 15,000 crore and doing 11 projects.
That’s great news…
Everyone is doing well. That is because we are transparent, corruption-free, time-bound. No one can make any type of corruption charges against the ministry. We have signed contracts of more than Rs 8 lakh crore, but no contractor needs to come to my office. For 17 tenders, no one was there. So, we planned a new model, called it hybrid annuity model.
The hybrid annuity model means land acquisition will be our responsibility, utility shifting will be our responsibility — then, of the cost of the project, 40 per cent we will give as a guarantee need, 60 per cent he has to raise, out of which 30 per cent he has to give, and the other part he will take from the bank. Toll will be collected by the NHAI and we will return his money back on annuity basis with bank interest plus 3 per cent profit. So, in the construction, he is getting 15-20 per cent profit and on annuity basis he gets 3 per cent profit. We have already signed contracts for 80 to 90 projects of Rs 2 lakh crore and the projects are moving fast.
Now we are again moving to think on the PPP model. I’m not for any investment from foreign aid — they are welcome, but suppose I’m going to complete a project with my own money. Immediately I go to the bank and monetise it for 20 years. Let’s say the project cost is Rs 2,000 crore. By monetising, I will be getting Rs 3,000 crore — so it’s my good profit and I’m giving work to the Indian contractors. So I can raise Rs 10 lakh crore from the capital market. I’m saying this because when I was a minister in Maharashtra, I started to raise the money from the capital market for the Mumbai-Pune express highway, the Worli-Bandra sea link project and 54 flyovers in Mumbai.
Let me give you a recent example. I had gone to the capital market for Kochi Shipyard. I was there at 9 o’clock, when my private secretary told me: ‘sir, there is a problem. Cancel the programme today — postpone it.’ I asked why. He said, ‘the stock exchange index has gone down by 300 points. Today is not a good day.’ I said: ‘nothing doing, whatever happens we will see.’ I went. After I reached, photos of my holding the bull were taken. At 10 o’clock I rang the bell. By 10:36, the issue was oversubscribed 76 times, and I got Rs 126,000 crore.
Now I’m making a scheme that all journalists, doctors, lawyers, teachers, constables — from their money I want to make roads. I will give a priority to that. More than foreign investment, I want to give priority to them. Banks give 6 per cent interest. I say, ‘for 10 years, I will give you 8 per cent interest and I will give on monthly basis. NHAI has AAA rating and I’m giving you guarantee.’ And I ask investors, ‘do you want returns on daily basis? Then I will give on daily basis. If you want weekly, then I will give weekly. There is no problem of money, money is lying there.
Now I will monetise 105 projects — Rs 125,000 crore. I have Rs 10,000 crore toll income. I will get Rs 175,000 crore immediately. In ports, Rs 5,000 crore turns into dollars — I can get Rs 50,000 crore with less than 2 per cent interest.
The problem is the mindset of the people who work in government. This planning, that planning, ‘it has gone outside budget’ — they waste time on all this. No shortage of funds. We can do four times more work than this, we can do Rs 25 lakh crore work. Today, we have crossed Rs 8 lakh crore. Rs 2,000 crore is my shipping sector budget, but I’m doing Rs 16 lakh crore work. The port model we have today is like landlord model — we do only land acquisition and construct breakwater. The rest is all PPP. Where are we investing? And our profit margin is Rs 7,000 crore this year.
Why is the government charging tolls on the highways and other utilities? The pre-construction cost of any project is borne by the government — the land acquisition, the utility shifting and then you also give viability gap funding to the private player. So a very big portion of the project is basically borne by the government and then the private player is making a profit over it. So there is a political question regarding this thing — why the toll collection if money is not a problem?
The first thing is that if you want good services you have to pay for it. You can have your programme in a five-star hotel, or if you don’t want to pay money then sit in Ramlila Maidan. If you want to sit for free, then have chai-pani and sit there. You want good roads, you want good services, you have to pay for it.
It used to take seven to eight hours to go from Mumbai to Pune when there was no express highway. Now it takes only two hours — this is saving of time and saving of fuel. You have to pay the toll and I’m talking confidently only because of my toll income. If you are going to stop my toll income, then I have to only talk about Rs 71,000 crore from my budget. How am I making all these projects? Because of my toll income. I’m monetising that income and that’s why I’m talking about Rs 25 lakh crore. If you cancel the toll, my income will be Rs 400,000 crore. So, the best way to understand it is — if you want good services, you have to pay for it.
And the second thing, now this is a project of 50 km. Cost of the project is, suppose, Rs 400 crore with bridges and everything. Now, we are going for the tender process. It’s a business for the contractors and the PPP investments — they are not social workers, they are not priests, they are doing it to earn money. When they fill the tender, A says, ‘I will complete this project as per your standards and for nine years, with my rates, will take toll.’ B says, ‘I will take toll for 10 years.’ C says, ‘I will take toll for 11 years.’ Whoever makes the lowest offer, we award the tender to them, and sometimes it is less than our EPC cost. Competition has to be there, because there has to be a business interest, and for that, there has to be toll.
There is a tunnel called the Zojila Pass tunnel. We called for tender three times — only two companies used to come. I sat down and changed the financial and technical qualifications of that tender — seven companies participated. On a Rs 6,000-crore proposed cost for the tunnel, we could save Rs 1,400 crore. Because of competition. In Maharashtra, I have changed qualification norms and could save Rs 6,000 crore.
In the financial and technical qualification team, only 70-80 people used to work earlier. Now I have increased it to 300-400 people. Naturally, our cost has reduced due to better technical and financial reviews.
Quality of construction has to be improved and cost of construction has to be reduced, using new technology. Now, tar is Rs 45 per kg, waste plastic is Rs 7-8 per kg. You can put 8 per cent plastic into the mix. You can reduce the cost. With oil slag in Jamshedpur, we have built airstrip, roads. Using oil slag, we are constructing 150-kilometre road between Hospet and Bellary.
I have booked 285 lakh tonnes of cement. Can you imagine what is the rate? Rs 120-130-140 per bag. Tax extra, transport cost extra. In the market, it is Rs 350. I have warned them, 40 per cent of the country’s cement is used by our department. Sixty-eight per cent improvement in construction material is because of us. I warned them, ‘I will evoke the Essential Commodities Act, you will be in trouble if you increase the rate.’ So decreasing cost of material, improving quality of construction, new innovations, new technology, using new code, using precast. Land acquisition we can’t do anything, we have to pay.
But new technology reduces the employment elasticity of the projects, right? Employment is a big debate today. If you are bringing in new technology, let’s say driverless car in the future, what will happen to employment?
This is not the case with every new technology. I’m a supporter of technology, but I’m not going to allow the driverless car. I know that my statement will be criticised on social media, but I’m not going to allow. We have a shortage of 22 lakh drivers in the country presently. Now we are opening 2,000 driving training centres. We don’t open centres in Delhi, Mumbai, Kolkata — we want to open in rural areas, tribal areas, giving employment to youth of those areas. And we already have a report from an IIT — when there is a Rs 1,000 crore of investment in the road sector, it is going to create direct and indirect jobs for 100,000 people.
This is like computers. There was an opposition to computers, that it was going to make you lose your jobs, but today software engineers are going all over the world, and they are getting foreign exchange income.
So basically we can expect more automation in the coming days…
But not driverless car — that I’m not going to allow. We have to find the way out — which type of technology we can select. The technology should be cost-effective, import-substitute, pollution-free and useful for the people — that is important — and we have to create employment potential. We should not accept any technology which is going to kill our employment potential.
What is the state of the Ganga mission? There are lots of complaints regarding this mission — that it is not moving ahead as fast as it was supposed to?
My problem is — communication is a problem. I don’t have any liaison officer and public relations officer — I don’t want that also.
We have 189 projects. Nirmal Ganga is one mission, out of 189. Forty-seven have already been completed. We are going to allot all the projects very soon. Then we are also making 40 new projects where the nalas and tributaries are there — for recycling of water. I’m planning to sell the recycled water to power projects and railway stations. From this water, we can get methane and from methane get bio CNG. We can run at least 8,000-10,000 buses with that bio CNG. My promise is that by March 2019, 80 per cent of Ganga will be cleaned. We are working on collecting Rs 10,000 crore worth of sponsorships for making ghats, mokshadhams and light-and-sound shows, gardens, improvement of lakes, roads and parking systems. We have already received promises of Rs 3,000 crore. Now we are trying to get money from people — Ganga Mission, Namami Gange. My idea is to raise money from at least one crore people — it may be Rs 10, Rs 20, Rs 100 for Ganga.
We are developing 4,500 Ganga Gram villages. We are trying to give them to good social organisations — Ramdev Baba, Sri Sri Ravi Shankar, corporate, educational institutions, NGOs that can take a village and develop a Ganga Gram. Do integrated development of the area. We are planning for plantation of 10 crore trees. I’m confident that by March 2019 at least, we are going to complete all these things.
We are spending Rs 5,500 crore on jalmarg. We are making four multimodal hubs — Varanasi, Haldia, Sahibganj and Gazipur. We are making 60 river ports. We have inaugurated the system of river traffic control, just like air traffic control, from Haldia to Patna. We are starting eight ferry services, nine rural services. We are starting dredging in Brahmaputra. We have already given contracts of Rs 1,600 crore for maintaining of three metre of drop in Ganga. From Ganga they can go to Bengal Sagar and they can go to Brahmaputra, and we are dredging in Barak and also in Bangladesh, spending Rs 2,050 crore on that. So it is going to start a good economic transformation in that area. You can go and see. We are starting catamarans, we are preparing the rules and regulations for seaplane. Within the next six months, we will start seaplane service. So everything is going on. We already have five-star, seven-star cruises on the Ganga.
Problem is that we are not presenting all this properly to the people, for their knowledge.