November 14, 2017

Speaking at 20th CLSA India Forum: Transforming Indian Railways, in Gurugram, Haryana

Thank you Mahesh, a very good morning to all of you. I don’t know, is it the first day of this..? It’s the second day. So, you have already given them enough Gyaan. And, this goes on for? 3 days, wow! So lovely to be at the CLSA India Conference once again. Do I miss somebody in the room? Is Chris there? Or he isn’t? No!

That’s one feature that has been constant as much as I have been for the last many years, and always a delight to share notes, to exchange ideas with this gathering. I have, in fact, attended your conference before I became a Minister also, and I had laid out some thoughts about what the vision of the new government would be like. And, since then, for the last 3 years or so, 3 and a half years now, we have consistently focused on maintaining that long term vision with which we had set out in 2014, without getting into what we inherited in 2014, which is a matter of record, the mood of the nation, the kind of overall investor appetite in 2014 is all well known.

Post that as I had mentioned on an earlier occasion, this government took the path of much more long-term and sustainable change or reform or transformation if you may, so that we prepare India for the long haul. We don’t look at India in the perspective of tomorrow, but in the perspective of years and decades ahead of us. In some sense, not the most favourite of analogies to take for any of us here, and I don’t mean any offence. But, in some sense, that’s what China did, post 1979, when they focused their first few years – I think it was the 1979 to ’84 period – where they focused on preparing the nation through a framework, through a ecosystem that would take the nation into the orbit of growth, continuing growth, sustainable development, sustainable not possibly in the sense of sustainability and the environment, but certainly, consistent growth.

And as we set out to look at the India story, largely, our effort has also been on the changing mindset of the nation, the changing technologies across the world, the way businesses were evolving in the aftermath of the last decade, which certainly was not one of the most glorious decades, particularly, for the financial world. And in that sense, our transformation journey focused largely on, as the Prime Minister often says, to Reform, Perform and Transform the India story. We have been engaging with experts from across the world to understand what would be the best path forward. We have tried to maintain very strong macro-economic indicators, be it our effort to bring down deficits, to look at controlling inflation or bringing down inflation, seeing what efforts can be done, so that interest rates and investor expectations remain moderate in the country.

We have also been able to reasonably keep on the path of growth, save and except, the changes that we are seeing in the last 6 months or so where uncertainties associated with the impending GST and then the first few transition months of GST gave a little cause of concern, more to the outside world than to the government.

We have tried to clean up the banking system, some hits, some misses along the way. We have tried to change the image of the country from one where India was traditionally associated with corruption at the highest levels, with irregularities in government functioning, difficulties in doing business, an uncompetitive environment in which to progress, very little concern for sustainability or climate change, or engaging with the world. And, in some sense, even on our geo-political relations or activities, India was a little bit of a loner, isolated from many parts of the world.

A lot of that has changed in the last three and a half years. I don’t think anybody can allege any corruption at high levels in the government today. Of course, you will come up with instances of a traffic cop indulging in some corruption or a local government official, maybe even a local tax official not showing the highest levels of integrity, but we very sincerely believe that change has to start from the top.

I remember a very telling incident that happened to my wife in a taxi, where he was overcharging her for a short journey. And she said, ‘but this journey costs only so much, why you asking for more?’ And his answer was a very-very telling comment on how corruption at high levels impacts the nation where he said, ‘ma’m I have only asked for a 10 bucks more, I have not asked for a coal block.’ Of course, he said it in Hindi, so while there are lot of people from abroad, the Hindi version gives a far greater sense of his agony I may say, ki maine to 10 rupye hi zyada maange hain, koi koyle ki dalaali thode hi ki hai.’

And, to my mind, this is something the people of India always wanted. The 1.2 billion people in India are super smart. Let’s not at all be under any wrong impression that they don’t understand what’s good for them, what’s good for the nation. It’s not as if they only get carried away by the immediate actions or by the immediate impact on anybody’s lives. They also understand who is good and what is good for the country, and in that sense, the fact that the Bhartiya Janta Party and its allies which had only 6 state governments in 2014 when we went into the general election, today is running 18 state governments out of 29, 6 has become 18 in the last three and a half years. Possibly, by 18th December, 18 will become 19.

And I am not saying it with any arrogance, it’s the general sense that one gets after visiting Himachal Pradesh and the levels of discontentment with corruption, particularly, in that state. And I am only saying this to reflect that even politically it has not been bad for the government. Every rating or national survey that has come out over the last three and a half years, save and except, an occasional slight dip has consistently seen Prime Minister Modi’s popularity go up.

We have, by and large, in local body elections across the country, even in states where the BJP was in very poor shape until a few years ago, or even as recently as three or four years ago. The people have supported Prime Minister Modi and his team and endorsed the work that they have done.

And I say this all this because I think it is important to understand that in a mature democracy like India, unless we did these changes we would have lost the trust of the people of India in government, in processes, in the very political establishment that we have in the country. Because for years, they have been looking and wanting to see a government that can put economics or good governance above mere politics.

I was just now talking to Sonal and Mahesh before I came in and I got this piece of paper just as I landed in Delhi half an hour back. I just sought this information out of curiosity, but I was sharing with Mahesh and Sonal, I was doing an assessment of the Pradhan Mantri Mudra Yojana, the programme by which we give loans, as low as $800, it could even be lower than that, it could be $200 to a max of about $15,000 – 10 lakh Indian rupees. So, anything from $200-300-500 to $15,000 small loans, small business, small entrepreneurs, and these are not agricultural loans, this is other than agriculture.

And you will be amazed at the fact that there have been about 21 million accounts which have borrowed under this Mudra Yojana – 21 million accounts only in the last 7 months. Overall, over the last 2 years or 2.5 years of the programme, it’s about 90 million accounts. Some of them maybe second-time, third-time borrowers; some have done well in life and taken larger loans after repaying the old loan. Maybe if one was to look at unique borrowers, the 90 million may come down to 60 million or thereabouts, 50 or 60 million.

The amount that has been lent to these 20 million borrowers at an average is about $800 – 48,428 Indian rupees, and the amount lent is about $15 billion in the aggregate, logically 20 million and 800 dollars – 97,697 crores until 3rd November, in the current fiscal year, April to 3rd November. But now, let’s look at the important aspect of it… and I will come to the railways, I am not doing away with the railways, but I thought the context setting is important what the people of India really want and what is reflective of the changing story on the ground, in the villages in rural India at the bottom of the pyramid.

There is no reservation in these loans. It’s not as if we have told them we have to give so many loans to a particular section of society or to another. We have not said there is any backward classes here, there’s any scheduled caste, scheduled tribe, none of that, which often has been seen or assumed to be the bane of Indian society. Out of the 21 million borrowers, the scheduled castes, people who have been deprived on caste lines for centuries now in India, are 18.79% of the borrowers. The scheduled tribes are about 5.34% of the borrowers, together being about 24 point something.

And on a national average, we find that scheduled castes and scheduled tribes make up for about 21 odd percent of the population. The backward classes, again people who been deprived of many of the advantages or benefits that many of us have but were not available for people who are persecuted for many years. The other backward classes have got about 34.6% of the loans – borrowers are 34.6% OBC. The population census broadly categorises them at about 27 to 35% in different states, different percentages. And, the other general categories about 41.27% of the loans.

Now why I am saying this is very often a lot of people misunderstand that because of reservation, because of government interference in many ways country has not been able to progress. But the fact is even without any reservation, this is the demographic mix at which these loans were given out, reflecting that a programme for the first time is giving financial inclusion and ability to stand on their own feet, entrepreneurial ability, an ability to truly stand up for what they want to do to the common man, to the man at the bottom of the pyramid, enabling him to transform his life.

And it has happened on this demographic basis with no compulsion, it’s a natural loan mix. It’s by coincidence that these statistics reflect in country’s population, only suggesting how this spreads, how good projects, good programmes have a natural spread in the country. And in some sense, the railways also in one organisation that without any doubt impacts and reaches the last man at the bottom of the pyramid. It’s an organisation which can truly change the lives of the people of India. It can truly impact businesses, particularly, with the logistics cost in India I think in most of your analysts report I find being much higher than our neighbouring countries, probably, in some cases twice as high as many of our competing neighbours or competitors in the global landscape.

And, therefore, it was very important for the railways also to look at big ticket changes to have an impactful new look that we have tried to do over the last three and a half years. In fact, statistically if one was to see, the amount that has been invested in the railways in the last three years/three and a half years, about $65 billion, is 50% of the amount spent since independence before that on the Indian railways. That’s the scale up in terms of modernising and improving the railways that the Modi government has sought to do in three and a half years.

I was seeing the figures between 2009 and 2014, the Indian railways spent in five years about $40 billion. In the last year alone, the years that’s currently on, 2017-18, which will end in April, we would have spent about $20 billion in one year alone. So, in every respect, there is a sense of urgency in the change we are trying to bring in the Indian railways. But the first and most important ingredient for that change was the change in mindset. And I think doing things differently, doing things faster, doing things better, doing things more creatively, doing things more effectively, doing things more economically, that was something which was very alien to the railway infrastructure as it exists. It was a carry-on business story that we got.

But I can see a sense of urgency creeping in when I talk to my team at Railtel, about a month ago I gave them a task and about 4-5 days back they came up with a credible programme in which we are trying to see how we can take Wi-Fi to about 1500 important stations across the country and at least some hotspots on every station through the length and breadth of the country.

You know, we have number of stations, for example, we have 2000 or the 8400 stations where we don’t have any paraphernalia or infrastructure, maybe one or two trains stop in a day. So, we don’t have a stationery infrastructure, a station master or a booking officer, any of that, just a station, the guy comes in when the train is expected to come in and otherwise it’s just a empty platform. But I am planning to put in a Wi-Fi hotspot over there also. Of course, it may sound very silly and stupid to do that, but it is not for those 50-100 passengers that may possibly or alight.

The idea is that there may be 30-40 villages around that area, and in India every village and every child literally born in the village knows the nearest railway station. The idea is to help them catch up, help them get connected to what’s happening in the world, so we will ask somebody in the nearby vicinity. And we have industry all across the country, I am looking at a public-private partnership. I will get any plant, cement plant or a steel plant or a power plant or a power substation, there will be somebody around who will adopt that, run a computer class through the day on that platform, making good use of that platform.

We already have a Railtel infrastructure or broadband optic fibre which is being laid across the length and breadth of the rail network. So, it’s not a very great incremental cost. I will have a Wi-Fi hotspot there. I will have some equipment. First I was thinking of computers, then I am struggling with the thought of how to protect those computers. So, finally one of the guys in the team, a younger person suggested, sir just give a slightly larger smart phone, something between a phone and an iPad, so the teacher can just put it in a briefcase and go away with that and come back the next day and set up the whole infrastructure for children to learn with a small briefcase-help computer and a printer.

But it’s these small changes in the thinking of the people that will then help them to think big. So, now from a situation where we were very satisfied that Good and the Indian Railways has partnered to do 400 railway stations, Wi-Fi on 400 important railway stations, which of course, was to happen by the end of 2018, but we are trying to see if we can do it by June, 2018.

But can we in the next 15 months take Wi-Fi to 8400 stations and what an impact that can have to the man or to that child who would otherwise never get a chance to learn about computers, learn about what’s happening in the rest of the world, let his mind explore. I am only trying to reflect on the changed thinking with which we are running government programmes as things change.

In fact, one of the first decisions I took when I took charge was that every piece of rail – and we have a shortage of rail sadly for many years – to be diverted for track renewal, so we bring safety into the rail system. Safety is a matter of serious concern across the nation after a series of unfortunate accidents. And I can’t tell you the enthusiasm that I found everywhere when I went in the railways review in different zones, just by the simple decision to divert every piece of track that we had to provide for safety and renew tracks where they are worn out. And in the meantime, we are now looking at importing maybe a million and a half or 2 million tonnes of rail, 700,000 tonnes of rail tenders are already out, I think by December they will be finalized and we hope to import that rail and supplement the effort to fast-track both track renewal and the expansion of the railway network.

But a small decision like that for the employees, for the people working in the railways was hugely exciting, because, after all, when that man goes out on the street and meets people on the street and says, I work for the Indian railways, the first thought that comes to the mind of the person who meets him is one of an organisation which is very insensitive, there are accidents happening all the time, possibly an organisation which has a lot of irregularities or corruption, a lethargic organisation. It was a imagine that unfortunately made the railways slide further over several decades.

I still remember, in my childhood when we would meet a railway official, it would be a matter of pride to say that, oh, I work for the Indian Railways, and others would look up to him. But, over a period of time, I think a combination of factors where we politicized the Indian Railways, where we did not allow it to modernize and, therefore, remained with backward technology, a period of time where we did not allow the freight and passenger charges to truly reflect the market dynamics, has caused the railways to get into a little bit of a despair, which is all that needs to be changed. You change the mindset, the ideas come from them.

I mean, one way to stop accidents resulting in fatalities was only to employ a LHP coach; it’s some German designed coach, which is far more stable in the event of an accident. It has a better coupler technology. I am not an engineer, so pardon me for my lack of knowledge of the technicalities of it, but it has a better coupler technology. It’s far more stable in the event of an accident, has not had any fatalities even if there was an accident so far. It’s a technology which is still 30 years old, by the way, but not yet fully used in the railways.

And we continue to produce coaches which are prone to accidents and very risky, we still continue to produce them. I am hoping that by June of 2018, the railways will completely stop producing the ICF coaches. We are trying to ramp up LHP coaches to about 6 or 8 times what are being produced today, so that in the next 5 years we can have a 100% secure and safe railway, all of the passenger trains using only these German technology LHP coaches. And in the meantime, we are looking at what more can we bring in, can we bring in trains sets into the system, can we bring in better, more light weight trains which may give us faster speeds yet give us safety, and all of that.

A lot of criticism was there around the bullet train which we are trying to introduce, saying that look at safety first, why the bullet train? It’s that mentality, that mindset which has kept the railways backward. I am told even when the Rajdhani, which is the last modern train to come into India in 1969, 48 years ago, when that was introduced in 1969 there was a lot of criticism across the country,  including the chairman of the railway board was opposed to it.

But when we take these decisions, whether to bring in the bullet train, whether to balance our social obligations with our economic interests of the railways, whether to expand but expand sensibly, whether to electrify the entire rail network so that we can save a billion and a half dollars every year in fuel bills, also bringing down our import dependency on petroleum products, whether it’s our effort to modernise the passenger amenities, bring in what is top of the line in terms of passenger comfort on the train, on the platforms; all of these things cumulatively and collectively can help transform the Indian railways into truly an engine of growth, truly an organisation which holds the customer as its central focus, both passenger and freight, which maintains price points to affordable levels and doesn’t lose traffic on premium trains to the airlines, or freight traffic to road transport, which is happening by the way. The railways which used to run almost 60-65% of our freight traffic is down to probably 45-48% now.

We need to get that mojo back into the railways freight business. We are having dedicated freight corridors come up, a number of metro projects have come up, we are now looking at indigenising that, though it doesn’t come under my Ministry. It’s another Ministry, but we are looking how we can bring down cost so that more and more metros can transport passengers in the cities. With the bullet train being introduced, we are looking at making the entire infrastructure in India, so that we can bring down costs and expand the bullet train story to about at least the 10-12,000 kms of premium traffic.

All of these things put together will I think help us once again make the railways a profit-making entity, which it has slid over the last 15-20 years, once again bring back efficiency, punctuality, a different way of working. It’s more again the attitude and approach of each railway man that has to be tuned to change. Whether it’s in the testing equipment; you will be amazed, we still have testing which is literally checking the track with a instrument to see its stability. All we need is 500 spur cars or testing locomotives to go through the length and breadth of the railways and improve the predictability of tracks or track failure.

So, in conclusion, if one was to say as Prime Minister Modi once said, what we really needed in the railways was a small man making large changes, which ultimately impact again the small man of the country. And the railways being the lifeline of the country, I think all of these small changes, the changes in attitude, the changes in public delivery, the changes in investing smart, the changes in making it more environmentally-friendly, the changes which hopefully at some day will make passengers reach destinations much faster, safer, allow freight to reach much faster at affordable prices through dedicated freight corridors, more better efficient management of freight trains, time-tabled freight trains, improving our processes through better use of OR, looking at more efficient ways to have freight or passenger bookings done, innovating on our construction contracts to make them more transparent, to give them larger scale, to make them much more attractive for larger companies to work in, bring in better rolling stock, bring in better quality of tracks.

The other day a British company was saying, they can bring in good galvanising and coating so that all the rail lines along the coastal region we can almost double or even better their working life, therefore, reducing the amount of traffic blocks required for maintenance.

All of these things put together will cumulatively impact the working of the railways, the profitability of the railways and I think help the railways once again serve the common man with a far-far better system, focused on safety, focused on customer satisfaction, bringing in private investments at more attractive prices. I looked at the station development model, the model where private people invest in the companies; the railways would only allow us 6% return for private investment. I think that’s ridiculous, nobody is going to invest for a 6% return with the railways, equity return.

So, we are looking at rewriting all of these age-old policies and theories. Yesterday, I was reviewing  a project the Chhattisgarh state government and the Indian railways, some of the conditions were very-very onerous, which I hope to liberalize, so we can get much more investments in this joint venture model. We are going to use IT in a big way, so we can actually try and get technology focus into the railways and let technology help us expand smarter.

All of these efforts are possible, are possible both in the short-run and in the medium term, I am quite confident that as the nation moves towards a new India by 2022, Indian railways will move towards a new railway and there cannot be new India, without a new Indian railway serving the people of India.

Thank you.

Thank you Mr Goyal for sharing your insights and sharing your vision on how to make railways more competitive and a growth engine for the country as a whole. So, we will open the floor for Q&A, but just to start off if I can ask a couple of questions of my own.

Q: Sir, you have talked about almost a $150 billion of investments in railways over the next sort of 5 years or so. And while you rightly mentioned that there has already been a big step up in railways investment over the last few years already. But given the fact that at the central government we are looking at some fiscal (inaudible) and the fiscal consolidation, how are you looking at going about funding such a large infrastructure capex (inaudible) just for railways alone of $150 billion?

A: Well, I think financing is one thing which has never been a deterrent for me in any of my role so far. If you structure the project well, financing can never be a constraint. A simple thing like monetising our railway assets and we have huge assets across the country. Earlier, we were allowing only 45-year leases and we were not allowing investors to mortgage the property or create sub-leases, and we found a lukewarm response. We are now moving that to a 99-year lease. We are allowing mortgage of that property and we are going to allow unlimited number of times you can lease or sub-lease or sub-sub-lease or whatever. And you suddenly find a lot of interest coming in to use the railway properties and exploit them for commercial purposes while giving revenue to the railways.

Similarly, electrification – now we need maybe $6 or $7 billion more to electrify the entire Indian railway network. I was just sitting in my office and somebody came in the other day and said we are willing to fund the entire thing 100%, and you pay us out of the savings, when you are saving a billion and a half dollars after that, you can pay us out of the savings over 20 years. So, the savings need not all go towards repaying that money, but partly towards that the rest be again be reinvested into the railways.

And like that as I am seeing each and every one of the items, I am finding that there is always a better way to do the project. For example, we are investing nearly $4 or $5 billion with Chhattisgarh government. Yesterday, when I saw the contract which said you cannot mortgage the rail line, because railways doesn’t allow it to. And, therefore, that joint venture was going to borrow at 9.1%, but my limited knowledge of finance, whatever is left now, tells me that it makes no sense. If the banker is investing, we should allow him to mortgage the asset. We should give him some comfort on a potential revenue stream. And moment we were to do that, I think that joint venture will borrow at probably 7% or thereabouts. So, you will bring down 2% cost, make the project more viable, give better returns faster, attract more investment.

So, my idea is not that the government of India will have to fund this $150 billion. Frankly, I feel that even the 10 billion or 9 billion that is slated to be invested by government of India in the current year in the Indian railways should not be required. We should look at more innovative ways of self-financing that will bring discipline into our working also, and that will make us more conscious about return on our investment. And that is the only way we can improve passenger service, we can improve our freight service, we can expand both of them and yet do a good job in terms of financial management. So, I think till we remain almost like parasites on the national exchequer, we will not be able to be effective and efficient in our working.

Q: One more question is, you mentioned as a part of your presentation that there are several ways you are using to make the railways operations more efficient, save cost on fuel and variety of other things. Sir, do you think that is going to be enough to achieve your goal of making railways more profitable or do you think there will be some revenue enhancements also that will be needed to be taken?

A: No, I don’t need any revenue enhancement measures. You are putting it very mildly. You are asking me whether I will increase the freight rates or passenger rates, I am not going to do that. My approach, and you saw that in power, you saw that in coal, my approach is that a customer is willing to pay if you give him good service and you give him a good product. How can the inefficiency of your operations be charged to the consumer?

In fact, I remember I think in your forum I have used this example. Suppose, Mahesh and I were both making bottles of water, and I use 20% more plastic, I waste 30% more water, I engage 30% more labour, and therefore, my bottle costs maybe 20%, I am not going to get 20% more from madam just because I am more inefficient. But I go to her and I say, look, I am an inefficient guy, please pay me 20% more for the same bottle of water than you will pay to Mahesh and pay for my inefficiency. Nobody is going to do that.

So, I think the focus and approach will have to be on – and I tell you it’s possible with simple things. Many of you, at least, the Indian lot here would have probably travelled some time or the other on a Rajdhani – it goes from Mumbai to Delhi and many other places. Now a Mumbai-Delhi Rajdhani is slated to travel at about 130 km at peak. The distance is about 1200 kms. My own sense is, even factoring in the 2 or 3 stops that it originally started with, it should have done the journey in 11 hours. We added some stops and, therefore, made it more and more inefficient.

Also, along the years, tracks quality deteriorated, so you had certain sections of the track where speeds had to slow down. I remember there used to be a bridge for many years which was in disrepair, so speed had to come down to 15 km on that bridge near Virar, which would kill almost one hour, slowing down the Rajdhani, running that bridge of a kilometre or so at 15 km and then picking up speed.

So, therefore, we have a Rajdhani taking 16 hours today. I have just experimented with a Rajdhani with 14 hours, brought it down by 2 hours. Small changes, little speed enhancement and a couple of stops reduced. It’s only a first step. My target is still that 11 hours, because if we were to do it in 11 hours, I could use half an hour to go, send 20 teams into each of those coaches for maintenance, for cleaning or whatever else, and do a second journey that same day, using that train and almost double the utilization of my asset, reducing the strain and blockage on the route also. Otherwise I am blocking that route in some sense, because it’s a premium train for so many more hours.

Alternately, assuming it still takes 16 hours, can I use the 6-7 hours more, other than maintenance and cleaning time, to do a short journey to Pune and back or Nasik and back. Utilization of railway assets alone can literally help railways expand their revenues, if not double by at least 50 or 60%, just better and smarter utilization of our assets.

Look at a freight train coming from Jawarlal Nehru Port Trust around Mumbai to let’s say Punjab. Ideally, it should do that journey in under a day or at best 28-29 hours. Today, I don’t think it reaches there in less than 3 or 4 days. The entire various impediments along the way. Now, the customer is unhappy. He has taken 3 days to take the goods to his factory. It adds to his working capital. It adds to his operating cost. It also adds to possible pilferage, because the train stops at too many locations along the way. And there is an uncertainty, because we don’t have time-tabled freight trains, too many of them at least.

Now, suppose I was able to have all of these freight trains committed to a time table, the customer would be happy, customer would save costs. He would be willing to expand his business with me. I would have that same rake probably do another journey in that much time, even if it had to go back empty. There are many routes where we have to send back empties, while we are trying to see how we can use them in other alternate ways, but even if it was to go back empty I could do a second journey in the same amount of time.

Q: Piyush ji, thank you for taking my question and thank you for being here. It was very informative. You talked about mindset change, and for me, this is a huge change that whatever numbers you give, either you are pulling forward the timelines or you are almost saying that budget is not a constraint, so that is very encouraging and definitely very new. So, given all of this, given the push from the top, the tone from the top, budget not being a constraint, what do you see are the biggest bottlenecks today, and what are the timelines? You mentioned 2022, I don’t know why you think of that timeline because elections are in 2019, so how does the time table work from here?

A: Let me answer that election part. This is something I am sharing with you as an insight into the thinking of the Prime Minister Modi and this cabinet. There are many occasions when a decision has to be taken which is politically incorrect. And I know there are so many times some of us or at occasions all of us have requested the honourable Prime Minister that can we differ this decision, there is an election round the corner. And every single one of the time, and I am saying this without exception, every single one of the times his question has been, ‘is it good for the people? Is it good for the nation? If yes, on these two criteria, then we will do it now, here and now, elections will not determine the time of a good decision.’

And I am saying this to help you understand his thinking. He is absolutely clear about it. And I remember one decision we had taken just before the UP election, and almost unanimously the cabinet was saying, it was something to do with farmers. And the entire cabinet said, I mean ‘UP election, farmers? We can just push it off by 3 months.’ And these two questions were asked in the cabinet, everybody had no argument against these two questions. In Hindi, he said ‘Janhit mein hai, desh hit mein hai?’ Is it in the interests of the people, is it in the interest of the country? Done, passed, approved.

And you saw the result, we got 325 out of 430 seats in UP, not because of that decision certainly. But if you stay the course, you are bound to succeed. Your question about 2022 is India turns 75, independence in 1947. We will turn 75 in 2022. We do believe the nation has waited far too long for a better quality of life. And we believe that it is imperative that we set a timeline to our commitment by when we will rid this country of casteism, of communalism, of corruption, by when we will ensure every citizen in this country has a shelter on his head, has a toilet in his home, has 24 hours electricity flowing at affordable prices in his home, has cleaning drinking water in his home, has good education and healthcare available for his family near his home.

We believe that India will have to develop the villages, will have to – as I think, was it President Abdul Kalam who had said, India will have to go global or look at taking good amenities and development to the last man at the bottom of the pyramid in the villages. That’s the only way we can really have a developed India. And, therefore, the 2022 timeline gives us about 5 years from now to focus our energies to impacting lives. And I certainly am very conscious of 2019, so therefore, if you saw I spoke about transforming the mindset in the next 15 months, making a impactful change in the next 15 months.

Undoubtedly, I am in politics. I have to get re-elected and I will focus on that. But decisions will not be tailor-made on that, decisions will be taken for the longer term, effort will be to expedite whatever I can in the shorter term.

Q: And the biggest impediments that you see to the implementation…?

A: No roadblock at all. If at all the roadblock is, if you lose faith in me that will be my biggest roadblock. As long as the people of India continue to trust this government, as long as all the analysts continue to give us the kind of trust which you have consistently, which is why I was looking for you Chris – one person who believes in India, one person who has consistently believed in us. And I am grateful to you that. And I am sure it’s not because he likes me or anybody else, it’s because of the hard numbers present themselves.

Even take the demonetization move, it was 3 months before UP election. At that point of time, everybody thought the heavens have fallen on us, or the sky has fallen on our head as (inaudible) would have probably said. But, he took the decision. He believed that it was one in a series of steps which are necessary to give a strong message against corruption, against black money, against irregular and informal economy, which somehow seemed to be growing in the country. And I think these series of steps will cumulatively result in India’s image of a nation of honest people, a nation where you can do business without fear, a nation where you don’t have to worry after your investment that your coal block can be cancelled or your spectrum can be cancelled.

Q: This is a  little bit regarding the bullet train project. Since we understand it’s an expenditure of 1.1 lakh crores, about 88,000 crores of which  is coming from Japan, and it’s going to be yen denominated loan. You have seen that the yen has appreciated about 64% in the last 10 years, given potentiality of its appreciation going forward, do you think that that could wipe away the gains that we could have gotten from the lower .1 financing rate?

A: Well, it’s the first time in India’s history that we have got a 50-year loan, 50-year moratorium at .1%. Second – rupee has depreciated between 3-3.5% over the last 30 years, in the long term, there may have been ebbs and spikes or whatever. But in the long term that’s been the range of depreciation. I personally believe, and I think I have said that also on this forum that India should look at stronger currency and this age-old thinking of supporting exports or ensuring growth through depreciating your currency is something at least I don’t believe in.

To my mind, we have seen a reasonably stable rupee in the last 3 years, 3 and a half years. I believe that with the strong macro-economic parameters and with the way we are looking at growth going forward, India will continue to hold steady in terms of our fiscal situation and our exchange rates. But even if we were to factor in a 3-3.5% depreciation, assuming the worst, I still think India needs to engage with modern technology, India needs to give better deal to its people. And we can’t say that for lack of funds, we are going to let the people of India literally suffer to remain underdeveloped and backward for generations in the future.

As I said, the Rajdhani in ’69, and it’s no great shakes, it’s no great train really. I said the best we have in terms of coaches is a 30-year old German design. The Shinkansen is also introduced in Japan in the year of my birth, 1964. We are 53 years late in getting that. Now, are we always going to keep arguing and we are argumentative Indians, so we have to keep arguing, that do we need a bullet train in a poor country or no. But our idea is this will kick-start economic development. This 500 km is not the end. It’s the beginning. But along with that they are committed to giving us technology, they are committed to helping us make in India. We want India to start producing trains for the rest of the world at competitive prices.

So, our idea is this 1 lakh crores – 1,10,000 crores or $18 billion is only the beginning of a larger story. It’s like our electric vehicle push. There has been some criticism, particularly, from one or two companies that why are we promoting electric vehicles. Of course, it’s a different matter that they are not giving a disclaimer of their conflict of interest that they don’t produce electric cars and, therefore, they are opposing electric cars, irrespective of what good it can do for the environment or for climate change.

But, we genuinely believe that it is India’s time to promote and be the leader in electric vehicle technology, so that India produces electric vehicles for the rest of the world. We don’t remain perpetually dependent on imports and we can become the laboratory of new technology, new developments and we will provide electric vehicles to the rest of the people while doing good for our people.

After all, you have all been I am sure in Delhi, but very concerned about your health with what’s going on around here. Of course, not entirely because of automobiles, a cumulative number of factors which we all have to address all of them. But certainly, in the cities, diesel and petrol fumes are certainly impacting our health, and with renewable energy, cheaper batteries, more attractive pricing on batteries, electric vehicles becoming more affordable – unlike Elon Musk’s Tesla, we still have affordable electric vehicles coming in now. My own sense is on a lifecycle basis which you all love to work on, electric vehicles is the only way forward, operating costs are down, particularly, after our honest solar and all the renewable auctions that we had for renewable energy which has brought down the prices steeply.

Today, it’s a perfect mix for India. You have renewable energy in a big way, store it in batteries in the car, so it becomes a natural (inaudible), in your language, because we don’t have 24 hours renewable generation, so the batteries in the vehicles become natural (inaudible) and help us save billions of dollars in import of petroleum products. So, we are thinking all our programmes very holistically and very sustainably in the long run.

Q: Since you have talked about power sector, and you have been obviously a very successful Minister. So, about 2 years back, you had announced the power sector, or should I say the ACB distribution reforms – UDAY exactly. So, there were obviously two steps, one was the financial restructuring of the debt and second was the operational efficiency improvement. Sir, how satisfied are you with the progress that we have made on that so far and what more needs to be done?

A: Well, I am personally very satisfied, because it has impacted the workings of the DISCOMs, it has given them a consciousness that they have to pay for what they consume. And therefore, they are becoming more responsive in terms of right-sizing their tariffs, in terms of more efficient purchase of power, in terms  of being conscious that they don’t allow inefficiencies to continue perpetually in their system. But there are, the outcomes are different between different states. So, there are some states like Rajasthan who did exceeding well, Tamil Nadu did exceedingly well, Andhra Pradesh, Telangana did exceedingly well,  Haryana is half way there, another year or so it will turn into profits.

We have had some challenge in Uttar Pradesh, because the earlier government because it wasn’t an election year allowed the entire story to slip out of control. Yogi Adityanath who has now come into government in March this year is seriously working to correct some of the historical legacy that he inherited. One big challenge was power theft which they are going hammer and tongs on. Of course, sometimes they are going overboard, so literally renegotiating old PPAs also, which is I think inappropriate and I hope that part of it can be quickly settled.

So, at least it gives the comfort and consciousness to everybody that people are worried about losses, knowing full well that in the future no bank is going to finance those losses, they have to fend for themselves. That consciousness by itself will make all these DISCOMs efficient and profitable. I really don’t have to worry too much, some may do it faster, like Rajasthan or Tamil Nadu, some may take a little longer, that’s about all. But they will have to set right their systems. They have no other option left now.

Q: Just about the previous weekend, in fact, we travelled to Varanasi with a group of investors, just last Saturday and Sunday, we also visited some of the smaller villages as well. And one of the very uniform feedback that we received from the villagers and from the city people is that the power availability has definitely gone up.

A: That was a big election issue if you recall. In fact, during the election the then Chief Minister tried to say that in Benaras, in Varanasi everybody gets 24 hours electricity and it became a huge political issue across the state, but now they certainly do get it.

Q: So, on that positive and optimistic note, let me bring this presentation to a close. Thank you very much Mr Goyal for your insightful and energetic presentation and all the best!




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