In an exclusive interview with Moneycontrol, Nitin Gadkari, Union Minister for Road Transport & Highways and MSMEs, spoke on a range of issues from woes of MSMEs, scrappage policy, electric vehicles to dealing with COVID-19 outbreak.
Gadkari says an integrated approach needed to ease problems of MSMEs. Nearly 70-80 percent MSMEs are slowly restarting their operations and also reiterated that the preventive measures taken by the government were in the best interests of the migrant labourers.
Q: Welcome to a special conversation with Nitin Gadkari. First of all, I would like to ask you what is the progress of the three lakh crore credit guarantee package that was announced as part of the Atmanirbhar Bharat package for the MSME industry because the MSME industry is still facing problems. Banks are also reluctant to lend to MSMEs. What feedback have you got?
A: My feedback is good. Particularly in Nagpur a delegation of the Chamber of Commerce met me and thanked me. Now, the bank manager is coming to the industrialists and they are helping them.
We have already started the web portal - CHAMPIONS. Whenever there is a problem as far as the government policy is concerned, my humble suggestion to them kindly put it on the web portal and we will resolve the issue. Prime Minister has also appointed a committee under the Chairmanship of Rajnath Singh to take the review of complete package. So, I feel that as a government, we will take the responsibility to implement it.
Q: Many MSMEs have told us that banks have actually asked them to clear outstanding loans before any new loan can be sanctioned from the freshly announced package. have you got any particular feedback on this aspect?
A: My suggestion is they should approach us and post their grievances on the portal. We will go into the details of every individual case and then take the decision.
Q: Another problem MSMEs are facing outstanding dues from public sector undertakings. Now, there is a rule that all PSUs have to clear MSME dues within 45 days. Is that being adhered to?
A: Actually, frankly speaking, you understand what exactly this problem is. There are dues of MSME with central government, central government ministries, and public undertaking belongs to Bharat Sarkar. That is Part A.
Part B is state government, state government ministers and their undertakings. And part C deals with major industries. So, actually the Indian government side Prime Minister has taken a decision, Finance Minister has also conducted a review meeting and already issued order.
Now regarding state government, I have requested all Chief Ministers that please conduct review of all these cases and kindly issue the order to respective ministries and undertakings. Regarding major industries, I had interactions with many their representatives in my review conferences and requested them that they give first priority to MSMEs.
In the Samadhan portal, we have received the complaints and out of which some problems have been solved. We are also trying to find out some mechanism for that. We are in the process of that with the help of a bank. We can raise the money of that dues payment on the name of the company's raw material supply. But it is in the process. So, there are a lot of things we are trying.
Presently a lot of people are expecting that we should take some hard decisions regarding the payments. But this is not the appropriate time. After there is improvement in the situation, we can think about it. But presently, everyone is in problem and we need to find out an integrated approach and that is exactly the policy which government is now implementing. So, this is not the time for taking any harsh and hard decisions.
Q: So what could these hard decisions be as far as PSU payments are concerned?
A: Well, we are not taking the decision. So, what is the point of discussion on this? Okay, it will be only after this period. There are a lot of suggestions from the MSME sector, from the different stakeholders - Finance Ministry, Law Ministry and MSME Ministry. We have already started a dialogue on this issue. When the situation will improve, we will take the decision.
Q: That's right. What would be the total amount of outstanding dues from PSU to MSMEs as of now? Can you give us a ballpark figure?
A: I don't have exact figures but approximately it is Rs 5 lakh crore. For three criteria, some people are politically misinterpreted, actually when I declare it from Bharat Sarkar, Bharat Sarkar undertaking and ministries, then state governments, state government undertakings and their ministers then private industry. I am confident and I am very positive about it that MSMEs will get their payments and we will resolve the issue.
There are some disputes and we need to find out some ways to address them. After this coronavirus period, we will find out some long-term resolutions.
Q: So, just to understand, about Rs 5 lakh crore is the total amount outstanding….
A: It is not official, again I am telling you. Unofficially, I take the report from MSMEs. Presently in India, there are approximately 6 crore 50 lakh MSMEs. In the road construction segment also, there are plenty contactors.
They are also registered MSMEs. So, at NHAI, we have taken a decision that when we terminate any contracts and we are supposed to view whatever the construction has been executed by the contractor, we will take all the list of creditors, particularly of MSMEs and will issue payments to the small MSMEs first. This is the policy that we will follow.
So, there are various types of problems - irrigation, road construction, railway, then ports, everywhere there are small companies involved. We are very positive about resolving this issue.
Q: Another issue which MSMEs have pointed out is the outstanding GST refunds, which amounts to around Rs 18,000 crore. I understand you have taken it up with the Finance Minister. What is the progress on that?
A: I don't know the exact amount but the Finance Ministry and GST authorities have taken cognizance and are making some schedule fort hat people are getting their refunds.
Q: To what extent has the unlocking taking place among MSME. Is it safe to say that about 50 percent of MSMEs have resumed normal operations?
A: Not 50 percent as far as the feedback I have received. According to my knowledge, 70-80 percent of MSMEs have already started oprations.
Q: In full capacity?
A: Not full capacity. Some of them, their speed is is increasing day by day. Some of the hair-cutting saloons, malls, restaurants, wellness centres, beauty parlours are also registered under MSMEs. Some of them are finding ways out on how to start. But that is equally important because employment of many people depend on these activities and we need to find out a way for that.
Q: One of the biggest problems that MSMEs are facing while resuming operations is the availability of labour and we have seen people going back and walking hundreds of kilometres back to their villages. Has the process of labour coming back to MSMEs to work started?
A: Actually frankly speaking, when I listen about this problem in the media, there is an apprehension in the minds of people that our whole industry is dependent on migrant labourers. That is not the fact. It is in the range of 10 to 20 percent of migrant labourers. The situation is changing and they are now ready to come again back to rejoin work. For that purpose, we need coordination between the two district collectors and take preventive measures.
One of the important thing is that wearing a mask is mandatory. Maintain the distance between two person more than one meter and third use of sanitiser every time. So, we had to take the preventive measures regarding the health of the labourers.
Q: And what about highway construction activity? To what extent has highway construction activity started?
A: More than 80 percent has started. There is no problem.
Q: And there is no shortage of labour there also?
A: Already labourers are coming and what I'm telling you is that the entire labourforce is not made up of migrant labourers. Highway construction is a mechanised process. So you need drivers for trucks, rollers, etc. I have got the information that somewhere they are paying more money for getting all this technical and skilled manpower because their rates are comparatively high.
But those who are coming from different states, their wages are comparatively less. It may be a problem but presently all are looking forward to restart work. There is positivity in their attitude and approach and lot of work has already started.
Q: Due to lockdown, to what extent has highway construction got affected? What is the kind of time overruns you are looking at?
A: Already we have given special packages to all contractors regarding this period and we are already supporting them. I feel that for this period, we need to help them. We have discussed the situation with Secretary, NHAI Chairman and there is no problem.
They have now resumed their activities and are moving very fast and they are trying to now increase the speed of construction.
Q: And what would be the average pace of highway construction now? About how many kilometres of highways are we constructing now?
A: It is difficult for me to tell you because before March 8, it was 29-30 kilometre per day. But now, April, May and June, there have been a lot of difficulties. Probably these three months because of coronavirus and then rainy season there will be problems. So, we are not expecting too much speed in the six months. But the next six months after rainy season, we will get good results and again we will maintain the same record of the previous year or even more than that if we keep trying.
Q: So, what is the target that you are setting after six months?
A: My target is already set up for 40 kilometres per day.
Q: And you think we can achieve that after October?
A: God knows. I will try my level best for that and that is only promise I can make.
Q: Also there were few very iconic projects that you had started, for instance, the New Delhi-Mumbai expressway. To what extent will it get delayed?
A: Actually the land acquisition is completed. Out of 62, 32 contracts have already been awarded and others are in process. We will try to maintain the same schedule and increase the speed of construction.
Q: Also there are a lot of challenges related to the HAM (Hybrid Annuity Model) model. Is the government going to rethink on it because last time the total project commissioning was about 28 percent. So, this time, do you think that a fewer projects will be given under this model?
A. That is not a problem. Problem is with the financial institution. Actually they are also under stress. When the contractor does not get payment month after month, how can they work on the site? That is the problem. We are actually trying part of some PPP project on BOT mode.
Then we are also trying for making an EPC mode and now we are developing the land across the road. So now on the EPC mode we can complete the project. The banks are ready to finance.
Just 8 or 10 days before, we have got sanction from a foreign bank also for infrastructure. So now is a time for NHAI because it has triple-A rating by the world class institution. So I'm confident that we can get support of foreign banks, ADB, World Bank, KfW, etc.
So, first time we are trying hard to get foreign investment. The most important thing in Indian economy is now that is my feeling that we need to increase liquidity and without liquidity, we cannot accelerate the wheel of economy. Now, our budget size of Rs 200 lakh crore, out of which Rs 20 lakh crore is already given. Economic experts feel that there will be budgetary shortage of Rs 10 lakh crore in state and central levels. So, we need more liquidity.
Today I had a video conference with the industry representatives from Dubai. I requested them to invest in Indian MSMEs. We are giving special ratings for those who are having good turnovers, good GST record and good tax records. On the basis of that, we will fix up the rating and if we can invest in such type of MSME, our idea is there will be MSME stock exchange like a national stock exchange. It can be a good opportunity for foreign investors to get good returns from it.
Foreign investment is going to be helpful for the economy of our country. It is going to increase the liquidity in the market, which is going to create more employment potential.
Q: You talked about creating an MSME stock exchange. Is it going to be within the BSE-NSE framework or is it going to be separate?
A: It is not a separate stock exchange. Our experts are working on this thing. Now I am going to call a meeting of all concerning stock exchanges and in due course, we will take the decision. An idea is that MSME we have 50, 000 crore and we will add first at least up to 15 percent equity in the MSME and then MSME will go to capital market.
They will get equity and in the 2-3 years, our Rs 10 share will increase by 3-4 times and we will sell the equity. We will give that equity to other MSMEs. This is the idea we are now discussing this.
Q: One big tending policy that has remained unresolved since the last several years and which you always wanted to do is the scrappage policy. When does it see the light of the day?
A: We are now in position to take a decision. We are expecting some support from Finance Ministry, state finance ministries and from manufacturers. But two years after trying our level best, we are not getting much concession from them. So we have decided now that we are going to formulate the policy and declare it as early as possible.
Q: Do you think there is a lobby working against scrappage policy within the automobile industry?
A: I don't feel so.
Q: The other question that I wanted to ask you is on electric vehicles. You had once set a deadline of 2030. Is there are change there?
A: I never set any type of roadmap and any type of date or limit. It is a natural spreading of e-vehicles. Now, TVS, Bajaj have electric bikes and scooters in India. You don't need to make any date for that as it is cost-effective, pollution-free and indigenous and people are going to take it. I will give you an example. In some of the corporations, they are running buses.
In Nagpur, we have ethanol buses - air-conditioned and good quality. Our rate is Rs 78 per kilometre. Then electric bus, the tender is coming in Pune is Rs 50 per kilometre. So, it is cost-effective. Even the corporations can reduce the ticket rates and they can offer air-conditioned buses. It is going to resolve the problem of air pollution also.
The only problem is price. The capital cost is on a higher side but the fuel cost is very negligible. It is the choice of the people. Suppose if you have a car and spending Rs 6,000 per month on your diesel or petrol vehicle. When you take electric car, your per year expense is Rs 1,000. If you want to take it, you are going to take it.
Q: The big challenge in electric car obviously is their charging infrastructure but I would assume that we have come a long way once the public transport mostly…
A: Now new technology has come in. You can charge your car in your house.
Q: The Prime Minister has also talked about turning infra in the manufacturing hotspot and there is a lot of talk going around that lot of companies are moving out of China, including in the medium and small industries space. Have you been receiving any queries from companies?
A: Yes, there is a very positive response. We know the whole world economic situation. Majority countries now don't want to deal with China and India has got its own strength. We have young talented manpower, raw materials and technology. Our labour cost is comparatively very cheaper and so now we are now promoting foreign investment and we are getting good response. It is an opportunity for the industry for upgradation of the technology and to get foreign investment I am confident that we will get good response.
Q: Two of India’s biggest markets from a consumption point of view - Delhi and Mumbai - are suffering the worst due to the COVID-19 pandemic. When do you see things getting better?
A: I am not a scientist. So, I cannot predict. But it is true that Delhi and Mumbai are facing serious problems. Delhi is the capital of India and Mumbai is the commercial capital of India. It is really, really very important for Indian economy to resolve the problems but it is not in our hand.
The whole world is facing the problem because of COVID-19. Now, the only option is we should get a vaccine. The whole world is working towards that and I am confident in due course, we will get the vaccine. Our scientists, health ministry, research institutes in India and scientists are all working hard and I am positive that within a month, we will get a solution.
But when the vaccine is not there, people of the country have to live with coronavirus. We need to understand art of living with coronavirus to protect ourselves. There is no any other option and no shortcut. The ground reality is that we have to take the preventive measures. Lastly, I will tell you one thing. When I discuss with the people, there is negativity and fear. We need to create positivity and bring back self-confidence. Otherwise, the negativity and fear is going to create lot of problem.
So all stakeholders - media, government, political parties -this is a national problem. We are facing a very acute and complicated problem and we should think above caste, religion, creed and politics. For the national interest, we need to increase the self-confidence of our citizens and then only we can win the war against coronavirus and at at the same time, we will 100 percent win the economic war and fulfil the dream of Prime Minister to make India a 5 trillion economy.
