Q&A: If I fall short on any promise, you can change my name – Nitin Gadkari

September 2, 2015

By Rajesh Kumar Singh and Nidhi Verma

Nitin Gadkari is the man Prime Minister Narendra Modi has assigned to launch a China-style infrastructure boom. Modi drafted in the 58-year-old former president of his Hindu nationalist Bharatiya Janata Party as transport, highways and shipping minister after winning last year’s general election, betting on his reputation for getting the job done.

As construction minister of Maharashtra between 1995 and 1999, Gadkari built India’s first high-speed concrete highway, from Mumbai to Pune, earning another nickname: ‘flyover minister’.

Speaking to Reuters in a six-seater charter plane to Nagpur, his first interview to foreign media since taking office, Gadkari called himself a “bulldozer” and promised to add two percentage points to India’s economic growth in two years.

Below are excerpts from his interview: (For main story, click here )

Q: It’s been a year since you took charge of the road transport and highways ministry. How challenging has the job been?
A: Actually, before I took charge, the situation was very challenging. Projects worth more than 3 lakh 80 thousand crore rupees ($57 billion) were stuck, and the basic reason was land acquisition problems, forest and environment clearance problems, and railway-over-bridges problems. And because of delays there were financial constraints. Banks were not in a good position.

After taking charge of the ministry, I organised a meeting of contractors, concerned officials and MPs. We started looking at each and every project located in different states. Sometimes it took four days of non-stop meetings to identify the problems and arrive at a solution. The meetings would start at 10 in the morning and go on until 11 at night.

After those meetings, we decided to terminate 44 projects of 80,000 crore rupees ($12 billion) and cleared 144 projects.

Before I took charge of the ministry, the environment ministry had not cleared a single project in two and a half years. We had similar problems with railways regarding railroad bridges. Now we have cleared projects of over 2 lakh 40 thousand crore rupees ($36 billion). And work has started on these projects. Still, there are 24 projects of around 60,000 crore rupees ($9 billion) that are facing problems. But we have already discussed the issue with the PMO (Prime Minister’s office) and the cabinet secretary. Now we are going to float a cabinet note detailing the problems and solutions.

Q: What are you doing to revive these projects?
A: I am confident that by the end of December not even a single project will remain stuck. We have already signed contracts for projects over 1 lakh crore rupees ($15 billion) for new projects. And the projects have started.

We have launched a hybrid model, where 40 percent of the cost of the project will be borne by the ministry, 30 percent by the corporate and remainder by the banks. And the project will be on annuity basis. Projects are being awarded only after securing environment clearance and 80 percent of land.

We have issued tenders for 17 road projects under the hybrid model. Some projects we have decided to give on EPC basis (engineering, procurement and construction). Within 15 days, we will give the work order for the eastern express highway and the work will start for this 7,000 crore rupee ($1 billion) project.

We will receive the tender in 15 days for the New Delhi-Meerut express highway. It’s a project of 10,000 crore rupees ($1.5 billion) and the work will start in a month.

Last year, we managed to award only 3 PPP (Public Private Partnership) projects, but this year after March we have already awarded nine projects and by the end of the year, I expect to award more than 25 such projects. This is the first time in last seven years that there has been such a good response for the PPP projects.

Q: What’s the problem with the PPP model? You have spoken of changing the structure.
A: There is no problem with the model. The problem was with land acquisition, forest and environment clearance, railway over bridges and the government’s decision-making process.

In UPA, nobody was able to take a decision, and time is an important factor. The problem with the government officers is that very few understand the value of time. If you delay clearing a project, it raises the cost for the developer. As a result the project suffers. We need transparency, time-bound decision-making process and lower and affordable and better quality of construction.

We have now decided to make all roads of cement and concrete. When we decided to build cement and concrete roads, cement companies increased the prices up to 300-350 rupees per bag but today we have a portal where we put 9.5 million tonnes of cement with the cost of 120-130-140 rupees per bag with tax and transport cost extra but system is cash and carry. Now 37 companies from 108 factories are selling cement through the portal. Now we have decided to set up a similar portal for steel and other material that are required for road construction.

Our idea is to improve the quality and reduce the cost, speed up decision-making and make the whole process transparent. Now the approach is before awarding a project gets all approvals in place and have at least 80 percent of the land.

You have an example of Larsen & Toubro (L&T) which passed a resolution few years back of not bidding for any road projects. But after the change in the government and the steps that we have taken, confidence is back. Companies are again in investing in projects. L&T has again started bidding for road projects. They have now got nine new projects worth 15,000 crore rupees ($2.3 billion). In fact, for one of the projects in Madhya Pradesh, they had bid 25 percent below the EPC (engineering, procurement and construction). So, the situation has changed.

Q: After the setback on the land bill, how difficult will it be to execute infrastructure projects?
A: There will be no difficulty in acquiring land for infrastructure projects. Land is a subject in the concurrent list of the constitution. So, those states, which are interested in development, have all the rights to make changes in the Act. Tamil Nadu, Maharashtra, Jharkhand and Haryana have already finalized changes in the land act.

Since the Congress party is creating a problem, we have decided to give states the right to make changes in the land act. All the states that want growth and development will make amendments and those who don’t want development will face the consequences.

As far as we are concerned, we are getting the land. Land acquisition is not a problem. Because of good rates that farmers are getting for their land, people are ready to give away their land because they are also getting employment. However, my land acquisition cost has gone up from 80,000 crore rupees ($12 billion) to 1 lakh 80 thousand crore rupees ($27 billion).

Q: Are you worried about such a massive escalation in land acquisition costs? Will it make projects unviable?
A: The escalation in cost for land acquisition is not a major worry because we are reducing the cost arising out of delays and court cases. You are saying that higher cost of land acquisition is making projects unviable but you compare it with the cost because of delays and litigation, it is still far more cost effective. As it is land acquisition is not more than 10 percent of the total project cost.

Q: Some developers are complaining of problems with the “special intervention” policy to provide financial support for 16 stuck projects that cannot be completed because the developers have run out of money. They say banks are opposing the financial assistance because the government has said it wants to get the money back first once the project is up and running. What’s your response to them?
A: But out of these 16, eight projects are already cleared. I have arranged a meeting with bankers of these projects. Four or five companies are still facing problems, but hopefully by December all these issues will be resolved, or we will terminate the projects. We will acquire the projects, we will fix up the value from other independent agencies, we will return (banks) their money, and we will complete the projects.

Q: There was a plan to resell some of the stalled projects. What has happened to that plan?
A: There is a huge market. Already, we have decided to give 101 projects to pension and insurance funds. Today money is not my problem.

Q: You have set up an ambitious target for road building. You want road construction to accelerate to 30 km a day by next year from 12 km at present. How would you ensure that? How do you plan to fund this plan?
A: Our toll income is 9000 crore rupees ($1.4 billion) per year. If we securitize that for 15 years, I will get 1 lakh 25 thousand crore rupees ($19 billion). I have an option of raising 70,000 crore rupees ($11 billion) through tax saving bonds. The projects that are getting completed will also start giving us toll revenue. We will complete projects of 5 lakh crore rupees ($76 billion) in five years. You can calculate the income these projects will generate. So, money is not a problem.

Now that confidence in the sector is back and the credibility of projects has improved, banks are slowly but surely coming forward to fund the projects. If the banks are confident of getting their money back, they are more than willing to fund the projects. Wherever projects are delayed due to central or state government or due to litigation, we are planning to allow affected developers to compensate their loss through toll revenues. We have sent a note to the cabinet on this. Wherever projects are delayed, we will give developers more time to collect road tolls. The cabinet is soon expected to decide on this.

When I took charge of the ministry, the pace of road construction had come down to 2 kms a day but by the end of March it went up to 14 kms a day and by next March, I am confident it will be more than 30 kms a day.

Q: What are the consequences if your performance falls short?
A: There is no question of failure. So far, I rate my performance 30 out of 100. Still, everybody is praising my work and my department is considered to be the best-performing department. The PM and the finance minister are constantly supporting me.

I am a bulldozer. I am not weighed down by expectations or the enormity of challenges.

Earlier even the prime minister was worried that we were raising hopes with too many promises. He would ask me questions like how would we deliver and what if we failed. But, recently, he told a public rally in Bihar that whatever I say, I do that. He called me a “flyover” minister.

Within 2 years, I will bring this economy back on track. I will alone add 2 percentage points to the country’s economic growth. And I will generate 5 million jobs in 5 years.

I am a man of my word. Please note down each and every word of mine. After a year, you please evaluate my performance against my promises. If I fail fall short on any of the promises, you can change my name. But I am telling you, I will complete all these projects before time. I will deliver all my promises before time.

(Editing by Robert MacMillan; Follow Rajesh on Twitter @rajeshkumarsgh, Nidhi @Nidhi712 and Robert @bobbymacReports; This article is website-exclusive and cannot be reproduced without permission)

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How often we have seen such a minister sitting in Indian cabinet!
Kudos to Gadkari. His name literally means ‘fort-builder’. He is making a infrastructure fort for future India!!

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