Interview: Nitin Gadkari Minister of MSMEs and Road & Transport in conversation with Shereen Bhan on CNBC-TV18

Q: Expectation has been building for several weeks now that a package will be released by the government specially a package to provide some relief to the MSME sector. What is the timeline, what is the realistic timeline that we should expect the package to be revealed?

A: Presently we are facing very critical problem. The Indian industry is facing the problem, but it is not only India, the whole world economy is facing the problem. Government is with the business and the industry. Regarding MSME, they are also facing the problem. So, first of all government has already taken some decisions that upto March end the banks have already restructured 6 lakh MSMEs and we are giving permission to them upto December 31. We are expecting that they can complete the restructuring of upto 25 lakh MSMEs. At the same time 3 months deferred payment is there and additional working capital of 20 percent is also sanctioned and that can be again really a strength for MSME. The corona war is continuing but now we are in position that we need to understand how to fight with corona and at the same time we have to start our daily life. This is the way in which we are trying to find out our way out.
Now the national highway road construction we have already started, 65-70 percent traffic is on the road and at the same time export, import has started, banking operations are going on and now we are trying to start small scale industries work also. In many green areas it has already started and in some of the area by taking preventive measures and guidelines given by the government, now we are giving the permission to start it. I am confident that it is a problem but it is a blessing in disguise also. As far as the reaction from the western world particularly the reaction of European countries, USA and reaction from the Prime Minister of Japan, that whatever the investment and industry of the Japanese people in China, the Japan government has declared a special package and that is the reason that those who are ready to come out of China, the Japanese government is giving them the package. So, this is an opportunity. China is in a position to be a very sound in economy in the world and now because there is hatred about China, it is an opportunity for Indian economy, Indian industry and Indian entrepreneurs to take the advantage of it and we will definitely take the advantage of it and we should be positive about it.

Government is with all businessmen, all industry and at the same time with all MSMEs. Already I have had interaction with different type of people by video conferencing and we have received lot of good suggestions and we have already forwarded all suggestions to finance ministry and Prime Minister’s office. I am confident that in due course of time, presently I am in Nagpur but definitely the government is seriously working on all these proposals and whatever is possible for the government, government will do it.

Q: You said that your ministry has forwarded recommendations to the finance ministry and a decision will be taken in due course but the feedback from MSME is that this is no longer a question of when, it is a solvency crisis now for a lot of the MSMEs who have seen zero cash flows at least in the last 40 odd days. So what have you suggested, have suggested that there be a fund, we have been hearing reports that there could be a corpus of Rs 40000 crore which can be extended to provide line of credit to the tune of Rs 3 lakh crore, give me some specifics of what we should expect for this sector?

A: Presently the working capital of the MSMEs is already increased. I also found some problems in it when Nagpur Chamber of Commerce people meet me, they tell me that government, state government office for stamp and registry are closed and without making the documentation it will be difficult for bank to issue the 20 percent additional working capital. I spoke with the State Bank of India chairman and he said that we need to complete the legal formality but he asked me whether government is ready to give the promise that they will not compound it and then we can think about it but after that the chief secretary of Maharashtra, I have discussed with him and he issued an order and now in Nagpur State Bank of India has released additional working capital. In the whole country the process is going on. So it is the time for the country and all stakeholders, they need to understand that the state government is also in problem, they have no money to give salary for next month, the revenue of central government is also reduced, banks are also in a challenging position, so we need an integrated approach. Everyone is in problem and we cannot compare our economy with Japan’s economy and US’s economy. Still our government is very clear that whatever is best possible for us to give support to the MSME industry we will do it. I am confident that we have to save everybody, we have to protect everybody and we are taking all stakeholders together and we need to march ahead and the government is also seriously thinking on it.

Q: Are you suggesting that there isn’t enough room available for the government to provide any big-ticket relief. So, MSMEs should be happy with the working capital extensions that they are being given with the moratorium that is being given but this assumption that there could be a large package, that assumption should perhaps be put on the backburner for now?

A: There is a serious thinking in the government, we are trying our level best, we are already consulting with all stakeholders and all the time different departments are consulting each other and we are trying our level best to get a good package to MSME where the problem is serious and we are supporting them. I am expecting that as early as possible the package will be declared by the government.

Q: Have you recommended because the feedback from bankers that we have got is that there needs to be a credit guarantee provided by the government, is that part of your recommendations to the ministry of finance?

A: Whatever the scheme which are launched by MSME, we are ensuring that fund with the Financial Insurance Trust we have deposited. Rs 1 lakh crore we have given MSME loan from the banks side where Rs 1500 crore as a premium we have already deposited into insurance and 75 percent loan there is a guarantee. Only for 25 percent the banks need to take the collateral. All type of loans which banks are giving the MSMEs, they are secured and they are insured. At the same time banks are also liberal, 5-6 schemes are there. We are also thinking with some immediate decisions and for long term policy decision by which we can strengthen MSME, where we can increase the productivity, increase the export, the import substitute whatever thing we should find out. We have decided to publish a book within a month that from last year what are our exports and what are our imports and how our MSME will get through that they can also be in position to making of the products which are imported.

Q: I want to link this to the comment that you made that this is in fact a blessing in disguise for the Indian economy because we can make use of the advantage and the opportunity that this throws up because people are trying to move business out of China. So, what will be the specific measures that the government will announce or is likely to announce to ensure that we can make use of this opportunity, please try and give me some specific that the government is now focusing on and when we should expect those to be announced?

A: We have economic corridors, from NHAI now we are planning to move to make industrial clusters, logistic parks which are connected to ports, airports and railway stations. I will give you the example of Mumbai-Delhi Express Highway. This new express highway 12 lane cement concrete road is going to reduce the distance between Mumbai to Delhi by 220 kilometers. The most important thing is the land acquisition cost is coming to Rs 10-15 lakh per acre. There is centralization of industry into Noida, Gurgaon, Mumbai, Pune, Chennai and Bangalore, so this is the time that 115 aspirant districts, the rural agriculture tribal areas where we can make some forest based raw material available, so I am confident that we have appointed a special joint secretary and he will make the coordination with the state governments and all foreign companies which want to invest in India they will get all type of clearances within 3 months and they will get red carpet treatment, transparency, time bound decision making process, corruption free system and at the same time it is a friendly for development and investment. There are lot of concessions already available for different type of industries, we will give the same concessions also for foreign investment also. So, we are thinking that which are the major concessions which we can offer to foreign investment in the country.

Already we have increased the limits, in infrastructure 100 percent foreign investment is possible, there is no problem, so for majority industry already government is taking lot of decisions and I am confident that this is the time because the whole world has got lot of hatred for Chinese. So, as they want to shift from China, the most available place where the skilled manpower is available and where ports are available, infrastructure is available, water, power, transport and communication is available, so most ideal place after China is India and that is the reason behind my argument.

Q: If the government has done an examination of why we have actually seen a move out of China to countries like Vietnam, Cambodia etc., in fact large chunk of the manufacturing opportunity has gone to the South East Asian countries, it hasn’t come to India, has there been an assessment on why and what is the government’s plan to course correct?

A: When I have interaction by video conference, in one of the program, I interacted with 6000 scholars from 15 universities from around the world, even they are giving me the feedback that there is a mind change now and majority investors, particularly the good industries which are having good rating, they are now keenly interested to establish their establishment in India. So, after all it is depending upon our approach also. Government is very friendly, we are developing good infrastructure – water, power, transport and communication four important things which are very important for industry and now they are available in India. Our ports are good, efficiency has increased, from export import point of view it is also an ideal place and I am confident that we will get the advantage of all these situations. So, we should be positive, we should think positive with full confidence. This is the time that all stakeholders, we should encourage people, encourage industry, create confidence in their mind for the future.

Q: Have you suggested that the moratorium that has been granted by the RBI which is a 3-month moratorium, that be extended? Do you believe that, that will need to be extended, do you also believe that the advisory that the government has issued saying that all companies must continue to pay salaries even through the lockdown process and a lot of the MSMEs have moved court saying that we are unable to pay. Is the government thinking about helping MSMEs from a salary perspective to create a salary support fund especially as far as the MSME sector is concerned?

A: These are all genuine and legitimate problems. However, as a MSME minister it is not possible for me to declare anything about it. It is a confidential thing. We are already had interaction with all stakeholders, all associations, all chambers, FICCI, CII, everything and now on the basis of that, our department is already making the research and study of all these proposals and we are already sending it to the finance ministry.

Q: I just want to ask you whether you believe that salary support fund is a legitimate ask of the MSMEs and whether the government is at all considering that?

A: We are considering many different things but, in this position, to give any indication as to what my department has recommended to finance ministry will not be appropriate. I will assure you and all the MSMEs that we are very serious, sensitive, we understand the situation and we will try our level best, whatever best is possible for the government we will do it for the MSMEs.

Q: Can there be any relaxation on the government advisory asking people to pay salaries through the lockdown period because the lockdown has now been extended even though some relaxations have come in, but a lot of MSMEs as I pointed out have expressed their inability to pay salaries, some have even moved court, is there any thinking within the government to provide some relaxation so that these businesses remain solvent?

A: We are considering all type of problems which our MSMEs are facing. We are already in communication with different stakeholders, we have already discussed the problems within, we are talking with the Reserve Bank of India, nationalized banks and other banks, we are also now talking with the finance ministry and already we have collected all the things but this is a matter which will not be appropriate for me to declare anything but we are very positive and we need to do something and that is the reason we are serious and as early as possible we are expecting good decision.

Q: You also said that infrastructure spending will be big part of the government’s strategy, what is the target for the NHAI for 2021? In 2019-20 you completed about 3979 kilometers. If I look at the delays, 819 projects worth Rs 3 lakh crore are currently delayed, what should we now realistically expect given the revenue position of the government and its spending capacity in terms of pushing infrastructure?

A: When I took charge as minister it was close to 2 kilometer per day but in this situation, we are 30 kilometer per day. However, this is the time because of corona crisis and economic crisis we need liquidity into the market and infrastructure is the appropriate sector where we need to create more liquidity. For the ministry we have decided that we will make at least road construction double. It is a target, it is not a commitment, it is a target for next two years, we will try to complete the projects more than Rs 15 lakh crore. NHAI is AAA rating, we have good support from the government, we have already the budget of approximately Rs 1 lakh crore. At the same time our toll income for the end of this year it will come to Rs 40000 crore per year. So, in 5 years we want to make it Rs 1 lakh crore. So, we are going for TOT, we also have lot of new schemes, BOT, hybrid annuity. Indian bankers also are ready to support. We have 480 projects which are economically viable by considering the land acquisition cost also. RBI has already given us a permission for 30 years for financing for infrastructure. So, the Indian bankers are ready to support it. Now, first time we are seriously thinking that how we can get more insurance funds, more pension funds and particularly the funds in foreign exchange from abroad. We are going to appoint a special agency or a capable person who will look after foreign investment. NHAIs reputation is very good, our track record is very good, our projects are economically viable, internal rate of return is good, traffic density is good and on the basis of that 100 percent we will get the foreign investment and we will complete our target. So, our duty is now how to increase the liquidity into the market because without infrastructure it is not going to be possible. So, NHAI will take a very important role in it and we will increase the capability and we will increase the road construction and we will increase the liquidity into the market.

Q: Has there been an assessment that NHAI has done on what this lockdown period has meant in terms of loss, has there been a calculation that the NHAI and the ministry have undertaken?

A: Already we have taken a decision to start the road construction work and my information is 60-70 percent work has now started. Most important thing is we need, steel, cement etc., in some places there are problems, the other problem is in some road construction we need to take permission from the district collector, the state government guidelines are already there. We are also planning for making of 2000 logistic parks, 2000 road side amenities and also, we are now trying to develop bus port in the big cities. Also, we are now requesting government to give us a mandate for making of ropeway, cable car in the hill area because the cost of road is very high.

Q: I also want to get in a quick word from you on the auto sector. Something that I know you have been pushing for very long, is the scrappage policy. Should we give up on that? Should the auto sector give up on the scrappage policy given the government’s fiscal constraint or do you believe that that policy is likely to see the light of the day? Will scrappage policy see the light of day?

A: Scrappage policy already we have completed. We have already taken the opinion of different departments and as early as possible we will immediately implement the policy. I understand the importance of it, there is delay but we are very much committed for that and after lockdown I am going to Delhi and definitely we will start the working on this policy.

Q: When you say you will start working on the policy, will you incentivize scrappage because the draft policy so far has been to disincentives the used old cars but will you incentivize and are fiscal incentives even possible as of today given the situation that the government finds itself in?

A: We are discussing issues of incentivizing with the finance ministry and with the approval of the finance ministry only I will be able to give you an exact answer. We are trying our level best to see what are the benefits and incentives we can offer for this and that is the reason that the policy is delayed.

Q: There must be an assessment, as you have put your recommendations to the finance ministry together for the MSME sector, there must be an assessment that the government has done on what the pain is in the MSME sector, how many MSMEs are likely to be faced with a solvency problem, what has been the impact of COVID on the MSME sector, can you share that with us at least?

A: We understand the problems MSMEs are facing, what type of help they need, what type of defer payment and in which sector they need, at the same time what is the problem with the working capital. There is also a big problem, the MSME what they supply to state government undertaking, central government undertaking and major industries, they are not getting their payments and that is one of the crucial issues in MSME. So, we need to find out some way out on that. When I discuss this with FICCI, CII, I request all the major industries that you do one thing, whatever the small payments of the small people, the MSME people, please issue the main thing. We are also trying to make some scheme for that, wherein we can create some fund and give guarantee to the banks and whether that fund can be used as a rolling fund for that, that is also one of the schemes we are thinking and we are trying for that. We are now talking with the finance ministry, talking with the public undertaking ministry, we are talking with the state chief ministers that we need some mechanism that how the MSME will get their payment within a month because in some case for more than 3 months the payment is delayed and that is one of the reason that MSMEs are facing the problem.

Q: What is the current outstanding as of today?

A: It is a big amount. It will not be appropriate for me to declare that amount but it is a big amount. So, it is very important for MSME to get their payment as early as possible.

Q: The issue of labour is going to be a critical one for all industries – MSMEs as well as large industries. Do you believe that the issue with migrant labours ought to have been handled better, with more sensitivity and care? Especially now we are seeing stranded labour going back or wanting to go back to their villages and even the labour minister himself said that he is worried about when the labour will return and what the impact will be on the economy, do you share that concern?

A: Yes there is lot of labour migration from one city to another city, one state to another state, it is really a crucial issue. We are facing this problem in national highway. All the toll operators and other people I suggested them to take all the preventive measures that you can make for them – food, shelter, water, everything. It is really a big problem, thousands of people are going back to their home but at the same time the most important thing in the solution is to start small scale industry, to start industries, start the government contract work under the guideline of government for protecting the people from coronavirus, that is very important. Now it is the time for the country, we need to understand, we need to train that corona is there, lockdown is there and we need to take the industry, business and run that. So, we need to make more than 1-meter distance – social distance between two people, use masks mandatorily everywhere out of house or whenever you are moving on the road. Third important thing is using sanitizer. So, these are important that things that we need to take the preventive measure and industry should take the preventive measure of food and shelter and ensure that it is not going to create spreading of corona. So, after taking these preventive measures we need to understand how we can survive in this time and this is where we have to find a way out for both the things. This is not contradiction but we need to understand this and we have to go ahead. The district collectors are now giving lot of permissions, I am expecting positively that the future time period we will be out of this problem and we will resolve it and we will go ahead.