…..you can’t say no to. So, once Nanik Bhai has invited you for a programme, howsoever difficult it may be you have to come. So, this is my first public engagement after becoming Railway Minister.
Mr Srinivasan, Mr Thakur, Mr Arvind Singh, Chandanji, Sunil, Shailendra, I have so many distinguished friends in the audience, ladies and gentlemen. Ideally, I should have addressed the people on the railway network, not on the energy situation, but aamchi Mumbai has such a driving force that you want to come back to Mumbai every single opportunity you get. So, while as he rightly said, we have cancelled all engagements, because I am still a student getting a grip on this new and quite a challenging new assignment, challenging yet full of opportunities, not at all difficult, let me tell you that.
I thought I must come and meet my friends and, suddenly the Indo-American Chamber of Commerce is an organisation with whom, personally, and as a government we have been engaging quite a bit. You are entering your 50th year this year, so it’s going to be a very special year and I wish you and your organisation well. I hope this effort to expand the Indo-US Economic relations to the next level is very successful. In fact, even the Prime Minister’s visit on the 17th of June marked 70 years of US-India relations.
And, in some sense, irrespective of what the political dimension of the issue is, the fact that America talks about making America Great Again, and India talks of the New India or talks of Make in India, while it may seem that both of these are positions contrary to each other or not supportive of each other, I think in many ways they are very supportive, they are in sync with what is in the interest of the people of both countries and of the world.
America has a lot of technologies to offer, America has a lot of innovation to offer, something in which our country has, I think, missed the boat on more occasion than one. India gives you the opportunity to leverage on our huge manpower skills and manpower strength. And I am sure, if both work together, we can actually make in India, we can actually look at New India, the world’s biggest opportunity: a billion people aspiring for a better quality of life; help make America great again.
So, it’s truly something where we need to work with each other as partners, as friends and I am sure it can help take this engagement truly to the $500 billion level that you have envisaged under the IACC plans. Of course, if you see the last 15-16 years, our trade with America, bilateral trade, has grown from about $14.8 billion to current day $119 billion last year. It’s a glass half full or a glass half empty. One can take satisfaction from the fact that it’s now about 8 times what it was, or one can once again think whether two great democracies, two countries with large economic potential should be satisfied with even 8 times growth in 16 years, or whether we have really been able to reach our true potential.
And, to my mind, there’s even now a lot that can be done, really a lot that can be done between the two countries, both in terms of investment, both in terms of supporting each other for a better quality of life, in terms of promoting clean energy and addressing environmental concerns, in terms of geo-strategic or issues of international importance, particularly, in our common fight against terrorism. And, in that sense, I think this relationship with America over the last three and a half years, both with President Obama and now with President Trump, has grown from strength to strength and I see this only getting better in the years ahead.
Railways is a new department, it’s a department, which has its own I would say charm, in some sense, many of us and most of us here are in the wrong side of 50, except for a few youngsters that I see. But for most of us, the railways had a quintessential charm about itself in the good days. I still recall, breakfast in the railways when they used to serve, probably, much more tastier cutlets and toast, was truly a delight in our young days. Things have changed, as have things changed in so many other areas. And, I think they need to change again. We need to re-establish that old glory. And I must say that what Suresh Prabhu Ji did over the last 3 years was truly remarkable. It’s almost as if खिचड़ी पूरी पकी हुई है, मुझे सिर्फ उसमें थोड़ा मिर्च-मसाला डालकर उसको आग से बाहर उठाना है|
He’s really thought of very innovative financing models to help finance the big thrust that the railways is giving to developing its age-old infrastructure. I don’t know if you are aware, over the last 3 years, nearly 3.5 lakh crores worth of new investments took place in the railways, giving you a, literally a 2x on what was being invested in the earlier 3 years. So, that’s the kind of scale-up that we have seen.
And going forward, we would like to scale this up even faster, ramp it up even much more aggressively, because I do see the railways as a catalyst for economic growth in the country, particularly, when the global situation is so challenging. And, overall, if one was to see what’s happening across the world the situation is quite fluid, most major economies are not showing significant growth or progress. Within that, India is like an oasis, still continuing to grow, not as much as one would have liked to, but still on the growth path.
India is moving from the informal sector to the formal sector. India is moving from a nation known for many wrong reasons to a nation, which is respected worldwide now as a country where processes are followed, where regulation and law prevails, where honesty has a premium. And in that situation, I have no doubt in my mind that both industry exporters and government companies like the railways will come up to speed, will really be able to push the economy on that growth trajectory that we are all waiting and wanting to see.
Before I talk a little more about what we are doing, what we did in the power sector, and what we are now proposing in the railway sector, broadly related to energy, since that’s the subject of today’s discussion. I will address the 3 issues that Mr Srinivasan flagged off.
He spoke about coal supplied to power stations. I am actually delighted to have this problem on my hand, because for the last 18 months, we have been regulating coal production, actually, reducing coal production in a country, which had ability to produce more, because power plants were not lifting coal.
March 2017 – the country’s coal stock at the pithead, the coal mines that we have in the country have shot up to 68 million tonnes, 68 million tonnes, which is an all time record. Because stocks were inching up so fast, and there is always the fear, in fact, two mines we actually had small fires and this being a combustible material, you can’t stock beyond a level. Literally, for the last, if we can leave August, from February of 2016 till July of 2017, we have had to regulate coal production, continuously bring it down. And from growth of 8.9 or 9% in 2015-16, we had to bring it down in 2016-17 to sub-3%, because stocks were just piling up.
Power plants, in the meantime, realized that they have easy access to coal whenever they wanted, so they stopped stocking the requisite amount of coal that the Central Electricity Authority or good business practices demand that power plants need to stock. So, there is a whole format. A plant which is in the vicinity of the coal mine can have, probably, 7 or 10 days stock Arvind? A plant which is slightly far away is required to have 22 days stock, and a plant, maybe, in Maharashtra, Solapur, which should never have been there in the first place, of course, but for the fact that we had a Power Minister from that city. That kind of a plant, which transportation is a big challenge, should have 30 days of stock.
The Coal Ministry, saddled with so much stock, kept engaging with the power plants, with the state governments and the state bureaucracy, urging them to stock up coal, and then towards the end of June we actually even wrote to the Chief Ministers, to the Chief Secretaries, rather. My Coal Secretary wrote to the Chief Secretaries, warning them that the impending monsoon will slow down supplies. In the monsoon, you have flooding in many mines, you have many railway lines and we in Mumbai are quite familiar with all of that, you have many railway lines that don’t give as much transportation capability. And, please stock up to the CEA desired level quickly, before it becomes a precarious situation.
So, all through the first quarter of this year, we kept talking to the states to stock up coal, but the reality is that while all of 16-17, very few states really picked up the coal they were supposed to, because of which we had to cut down production, even in the first quarter of 2017-18 – April to June – the power plants did not stock up.
And, then I am sure you are familiar with the amount of flooding we have had in Odisha, amount of flooding we have had in Jharkhand, in that belt, the flooding we have had in certain parts of Nagpur and that region Chandrapur where the mines are, because of which during the monsoon period, as is the case every time, you saw ability to transport coal becoming difficult. And this is borne out by the fact that when now that the demand came in and you suddenly had power stations running behind the coal companies for a change after two years. It was not possible to really meet the increasing needs.
Of course, there were two other issues, which were probably beyond the coal of the power companies. There was a problem in one of the nuclear plants, so nuclear generation fell by about 30%, and because of monsoon being erratic in different parts of the country many hydro plants also did not supply power. In fact, Maharashtra had to run Koyna despite its desire not to use precious Koyna water for power generation. They wanted to conserve it for the future.
So, you had a situation where nuclear and hydro unexpectedly fell, hydro by 12%, nuclear by 36%. Because Tamil Nadu didn’t get enough rain, the windy days didn’t happen, so wind generation fell in certain parts of the country. Coupled with that the fact that power companies had not maintained enough stocks, again, despite continuous prodding, for whatever reasons, I mean I am not getting into the reasons of that. And they needed to expand their power generation to peak levels, against their normative consumption they started consuming twice as much coal. So even if they had 20 days or 15 day stock, it became technically only 7 or 8 day stock, because they were generating twice the amount of energy that they were otherwise generating.
And why I started by saying I am delighted because all of this are good science for the country. We may have had a short blip for a few days where maybe you had some power shortage or you saw some power price go up. But this is once again bringing back the vigour into the both the coal sector and the power sector and will reignite investments into this sector, which over the last year-year and a half were kind of sluggish.
So, I don’t see this problem lasting too long. You will be happy to know that over August, 2016, the dispatch of coal from the coal mines was up by about 17% in the last month. And that only shows that earlier last year, they were actually not picking up the coal they should have. It’s not as if we did some magic or something in dispatch 17% more coal only in one month, September would be similar numbers. And I think by the end of September or 1st week of October, we will start seeing the coal-based thermal power plants once again having adequate coal stocks and getting back to normal. But it will also help them to plan for the future a little more smarter and not let their stocks ….to such low levels, and not to expect that coal companies like a magic wand can immediately supply us much coal as they want overnight. There is a process, you have to get your transport corridor, your wagons back from the old supply, through long distances. So, it’s a whole cycle that one has to plan and provide for.
You spoke about the shift to renewable energy by the railways. There are some hits and some misses. For example, we experiment and rightly so, to put solar panels on the train rooftop. That didn’t work out too well, because it added a lot of weight to the train and further load on the axle, further energy consumption. It was my idea and I take responsibility for it. It didn’t work out so well, which is all right. It’s only a pilot that was done, didn’t work out well. But we have not given up, now we are looking at flexible solar panels. The gentlemen here may know about it. So, we will look at flexible solar panels which are light weight, almost like the flex you have used for the backdrop of the stage. And we will continue the working on that.
Stations are being rapidly ramped up to become generators of energy on the roof, but the big one here is the effort to convert the entire Indian railways to 100% electricity-driven railway. Today, the cost of diesel alone is about 16,000 crores that the Indian railways is consuming. So, you have 16,000 crores of foreign exchange, or whatever the amount, technically net amount is going out of the country to bring that diesel. So, we are importing pollution into the country, adding to the woes of our economy in terms of current account deficit, and we are adding to the cost.
Very often we speak about the fact that passenger traffic subsidizes some 35-40,000 crores of the Indian railways cost. Mumbai Suburban is also considered to be quite an expensive proposition compared to the revenue that it gives. Similarly, on freight rates there is criticism that because the freight rates have become expensive, a lot of freight has moved to the roads, and after the advent of GST, I would think freight on the roads will become even cheaper with the travel time reducing and all the check posts, and all the blockages being eliminated.
So, railways will have to compete in this situation. We will have to compete with low-cost air fares when it comes to our luxury trains or whatever, the better trains out of the lot. We will have to compete with road, another means of freight transport. In that scenario, spending 16,000 crores on diesel every year is something that is certainly not acceptable to this government. And while already a plan was made to add about 17,000 kms of electrified railway track over the next 4 or 5 years, we are now trying to see if we can convert the entire 35,000 kms of balance railway network irrespective of the traffic.
My own sense is traffic will come, will grow, we can’t have this twin diesel plus electricity continue for long. So, ideally we should look at saving that 16,000 crores of an imported commodity, and electricity is something we generate in India and that’s where we can then use large amounts of railway track land to put up solar panels, generate solar energy, and hopefully become a net zero company in the years ahead, completely firing our requirements by renewable energy. And in the process, our own back of the envelope calculations, they are of course working it out in more detail; show that we will actually save anywhere between 8 or 9000 crores annually on the consumption of diesel. So, again 16,000 of diesel, we may actually use 6 or 7000 crores of electricity, of which we have sufficient available and we can even ramp up even faster.
So, the thinking is how to prepare India for a more long term, sustainable and self-reliant future, which is in the best interests of the people of India and which is in the best interests of the country. I gave you this entire story in detail only to reflect how this government thinks, what is the thought process by which we do our planning for the future. Last night, as Nanik Bhai just mentioned, I was with the honorable Chief Minister of Maharashtra and all my railway colleagues and his colleagues from government of Maharashtra were there. And we were working on what we can do to expand the suburban network in terms of available supply.
After all, I recall, I don’t know how bad it is now, but I suspect couldn’t be much better that when I used to go to college and I studied in all the colleges with which Nanik Bhai is closely associated. I used to come from Sion to Dadar in central railway, change at Dadar into western railway and come to Church Gate, and I am talking 1979 to almost 1987, a full 8 years. And for my factory, I used to go by train either to Thane or to Vashi. So, in some sense, I don’t know why I was given this rail portfolio, maybe somebody must have told the Prime Minister that I used to travel by train, so I know the woes of the train travelers.
But we have yesterday had very serious engagement to see how we can rapidly scale up the number of available supply of facility for local suburban consumers. A number of ideas have been discussed both in Delhi over the last two weeks, I am actually only exactly two weeks into the job this morning. I took charge Monday two weeks ago. But I promise you that Mumbai has been on the top of my agenda, it’s been my priority. And you will hear some good things over the next few days as each plan unfurls, and I do hope that some of those plans will also encourage many of you here to travel even Delhi-Mumbai by train, rather than the rigour of airline stress, you go all the way up to the airport over there from central Delhi, wait in queues, check-in, wait for an hour over there, fly and circle for one hour in the plane, then get into an airport from where it takes one and a half or two hours of driving time to your home.
We will actually bring you from New Delhi station to Mumbai central in much faster and more efficient time, hopefully, in the near future, even without waiting for the bullet train, which hopefully as we go along will not only remain between Mumbai and Ahmedabad, which is only the first project, but will expand through the length and breadth of the country. Because we do believe that getting technology and getting India connected with what is the best in class in the world is equally important, because ultimately, I am sure you are all happy that you are not in travelling in Ambassadors and Fiats anymore. Just like we had the engagement with Suzuki in 1984-85, and look at the transformation we have had in the country since then.
I still remember a lot of criticism when mobiles came in into the country, Rs 16.80 or something per minute – Rs 16 a minute. Any new thing which comes in, which is at small scale, which is pilots, which takes time to ramp up, where technology innovation has yet to come in, Make in India programme is yet to kick in, may sound expensive at the first programme, first project. But as you scale it up, you provide lakhs of jobs, you bring international world-class technology to India, then you use that technology to see how you can improve the existing network, rail network, how can you speed up the existing railways, how can you give better service to the consumers leveraging on what you learn from newer technologies.
So, it’s a whole ecosystem that’s being brought to India, not just the bullet train. And, that’s the future vision that Prime Minister Modi has for the people of India nothing but the best should be enjoyed by the people of India. We should provide for the best of facilities which can help India get into the comity of developed nations, get into the world where technology, innovation, growth work to serve the people of India better.
Similarly, of course, some people have sought to make it a little bit of a controversial issue, but the reality is India will have to leapfrog into the electric vehicle age. It’s something that is in the interests of the people of India. I am sure all of you are stressed about pollution levels in our city. Ever since I have moved to Delhi, unfortunately, I have had to put air purifiers in my home there. And I don’t understand how the people of India or the businesses in India cannot respect and understand that we will have to move into the new age which the whole world is moving into, and India has a great advantage, unlike the west where they will have to literally replace the vehicles that each one of them owns gradually to a e-vehicle.
In India, we probably still have 90% of the people who still don’t use a vehicle, a 4-wheeler or a car. So, we have an opportunity to do it first time right. And, my own sense is, and I actually visited a BMW factory where electric cars were being made and diesel cars were being made in Germany, and believe me, the electric car factory was like a toy factory – so simple 4-stage manufacturing, no complications, engine is much better, it has 20 moving parts compared to a conventional engine which has 2000 moving parts, maintenance becomes so much cheaper, our import dependence on fuel comes down.
And it truly is a game-changer where we should be ahead of the curve. We don’t have to first continue to only be inefficient and after 30 years when the world has already become efficient, then India wakes up and starts planning for efficiency. Sadly, there is 2 or 3 companies which are trying to oppose electric vehicles, and it’s only 2 or 3. I won’t take the names, but it can be very easily found out. And those 2 or 3 companies also are opposing it, in fact, writing articles in Economic Times for that matter, because they don’t make electric cars.
Now, till when are we going to have our personal interest or our corporate interest prevail over the country’s interest, that is the question that I would urge all of you to reflect on. And I think it’s time that the nation started keeping the nation first, and not our own personal or corporate interest ahead of national interest.
Similarly, when it comes to the railways, another big area of concern has been safety. That’s an area where for many years, we have kept on neglecting the requirements of track renewal, the requirements of strict safety standards being imposed. And, ultimately, you will all, many of you here are engineers, businessmen, you will all appreciate that tracks fractured or tracks being wearing out and all is not something that happens overnight, it’s something that has happened over years. And because of neglect from years and years, the situation has come to an alarming proportion. Despite that, what Mr Prabhu did in the last 3 years is truly remarkable for the fact that India invested more on safety related measures and track renewals and better safety related technologies coming into India in the last 3 years than possibly we did in 10 or 12 years before that. Maybe in the last 30 years what we invested, we invested in the last 3 years. That’s the kind of scale-up that Mr Prabhu did.
Going forward, it’s going to be a further focus to make Indian Railways more safe. Of course, statistics speak the story. The number of accidents in the last 3 years has drastically reduced from earlier days. In the age of 24×7 television, of course, everyone of them will, and rightly so, will catch the people’s attention. And I don’t know how many of you are aware, I am one of those who believes everything should be scrutinized by the people of India, by the media of India to hold all of us accountable for better performance. You are the reason for us to perform better, and the more you demand for us, the better we will be able to work, which is why we have been trying to transparently share whatever we are doing. All those mobile apps that I used to come out with were intended to educate the people and the media about what’s happening, so that you can tell us where we go wrong, you can help us do our job better.
And, similarly, while statistics show that safety has been, or the track record of accidents is far better in the last 3 years – we are not resting on those statistics. Mr Prabhu had the moral courage of conviction to even offer his resignation, where would you find a man of that kind of character and that kind of mettle in today’s political world, despite doing a wonderful job on every parameter, everything that I see.
And the point that I am trying to make is only this that safety is something where a lot of backlog of several decades is being sought to be corrected. We have put in all the due and necessary and correct focus that is required for safer travel in the railways, and I am quite confident that we will see a significant improvement going forward. Certainly, it’s going to take its time in terms of the ability to improve a 65,000 km network, large parts of which, as most of you may be aware, were made pre-independence. The amount of expansion that again we have done in the last 3 years is also a record of sorts, what expansion happened in 20 or 30 years has been done in 3 years. Going forward, we will try to do even more than that.
So, it’s a situation where we are working on different tracks to bring about significant change in terms of the passenger experience in the railways, and I will continue to share with you both through engagement and through, maybe, another set of apps about what is happening, what you can look forward to.
The third question you raised was about the coal cess. The coal cess certainly was brought in with a twin objective to support the renewable energy sector in two ways. One – through the collection of the cess we were able to bring in affirmative action or subsidies and support to the renewable energy sector. Second – also to bring in parity between the thermal power generation and the renewable power generation, while we were trying to reduce renewable power cost, we thought that we must have a more fair pricing of coal also, more relevant to its true cost of production and cost to the economy.
But I am delighted that thanks to the transparent way in which renewable power was purchased by the government and its agencies and the states. And thanks to the large ramp up in purchase, the economies of scale that we got in coupled with better technologies, we have been able to significantly bring down the cost of renewable energy. So, today, renewable energy sector does not require that kind of affirmative support and action that was possibly envisaged 2 or 3 years ago. And now, without that money also, we can very comfortably look at a rapid roll-up of the renewable energy sector. We will need some funds which are available in the coal cess collected so far with the government of India.
But the need of the hour today for the nation was to bring in GST, was to bring in one tax in this one big market, was to bring in opportunity to formalize large parts of the Indian economy, which continued to be informal, was the need to bring some kind of equilibrium and equal opportunity for all parts of India to progress. And I don’t think anybody in this audience would have a doubt that GST is going to be good for the country, and to make GST happen, we needed a pool of capital to support those producing states which may lose out with the advent or with the introduction of GST. You are all aware that producing states may lose out the consuming state’s …. benefit, now there needed to be a mechanism to support these producing states, so they don’t lose out on their own compulsions or requirements of funds.
And in that situation, I volunteered that we could use the coal cess to act as a compensation, GST compensation cess, without which we would never have been able to make GST successful. So, again an example of the larger national interest prevailing over departmental or individual ministerial interest. That is the thinking of this government.
In fact, in conclusion, I will tell you a small interaction I had once had with the honorable Prime Minister. We were discussing the performance of Coal India Limited. When I had just become a Minister, almost 2/3rd of the power plants were facing coal shortages and on the other hand, Coal India was doing large amounts of e-auction of coal. So, power plants were forced to buy coal through e-auction at a Rs 700-800-1000 premium per tonne of coal, which was going to the bottom-line or the profits of Coal India. I drastically reduced the e-auction and started supplying power at the notified price to all the power companies and which has helped to bring down the cost of power in the country significantly across the country, save and except, for this last month, a few windows in which the price went up – 15-minute windows when there was peak demand.
Somebody in the press complained that I had caused a loss to Coal India Ltd. because of this policy of not doing e-auction, but supplying coal at the notified price to the power plants, most of which are government, and to make sure that people of India get electricity 24×7 at affordable prices. So, since it came in the newspaper it got flagged off, so I sought time, went and met the Prime Minister and explained my logic why I reduced e-auction to supply more coal to the people of India indirectly, so that they get power. Appreciating the point very quickly, the Prime Minister turned to me and asked me a question, and I would urge each one of you in this room to reflect on what he said. In our own work, in our own demands of the government, in our own requirements when we pay our tax and the feelings that we have when we feel that something that’s happening is not good for us, bear in mind what the Prime Minister asked me. He turned to me and he said, and I will say it in Hindi, so he get the sense of what he said, “पीयूष, कब तक इस देश में हम एक कंपनी के प्रॉफिट और लॉस को देखते रहेंगे, कभी किसी ने इस देश के प्रॉफिट एंड लॉस की चिंता की है क्या?
Thank you very much.
September 17, 2017 Speaking at Medical Camp, Sewa Diwas, Chennai