Winning elections is one thing. Running a government is another. While Prime Minister Narendra Modi is seen to be good at both, the same can’t be said about his ministerial colleagues. The cocktail circuit developed its own epithets. ‘Light weight’ ministers and ‘rubber stamps’ are some of the terms used to describe the team. Some interestingly have been dubbed ‘call-drop’ minister or ‘Manu-Smriti’.
It was, in fact, getting lonely at the top for the PM, when the trio of Nitin Gadkari, Piyush Goyal and Suresh Prabhu began to catch the public eye as performers. It was about time too.
History has a way of repeating itself in interesting ways. In 2003, Prabhu spent sleepless nights preparing the historic Electricity Act, 2003 as power minister in the Atal Bihari Vajpayee government. He was a Shiv Sena member and a ‘technocrat’. By the time you read this, Prabhu would have delivered his third Railway Budget. In 2003, Ved Prakash Goyal was Union shipping minister. He was a lifelong BJP man and a Rajya Sabha MP. Today, his son Piyush is rated as one of the star performers in the cabinet of PM Modi as Union minister for coal, power and renewable energy.
The third, Gadkari, was little known outside Maharashtra in 2003. In the state, he had become famous as the BJP minister who could build highways, expressways and flyovers in Nagpur at breakneck speed. Today, he is refurbishing that reputation as Union minister for road transport, highways and shipping. All three belong to Maharashtra. And many Modi supporters now perceive them as the triumvirate that can save the Modi regime.
Why The Trio MattersWhat makes the three so important and crucial for the Modi government? Two reasons. The first is based on speculation; the second on fact. Even within the BJP and the larger Sangh Parivaar, there is deep disappointment with other ministers holding crucial portfolios like Arun Jaitley (finance), Ravi Shankar Prasad (telecom), Rajiv Pratap Rudy (skill development) and Radha Mohan Singh (agriculture) to name a few. Against this backdrop, Prabhu, Goyal and Gadkari are perceived to be delivering what Modi wants.
The second reason, based on facts, is more important. Between them, the three are in charge of ministries overseeing infrastructure projects with a potential investment of more than $500 billion by 2022. If the three succeed, it will power an explosive 8 per cent growth the government is fervently searching for. Moreover, the positive multiplier effects of regular and reliable power supply, high quality highways, ports and shipping lanes and an efficient railway network tends to transform local economies, apart from creating hundreds and thousands of new jobs. If they fail to deliver, it could well and truly mean the end of the Achhe Din dreams.
For the moment, the ‘Trimurti’ is generating hope and optimism. FICCI president Harshavardhan Neotia feels that these three ministries have “a real potential of delivering an 8 per cent plus growth” in the coming years. Former Janata Dal (United) Rajya Sabha MP and now a BJP member, N. K. Singh, says if the reforms agendas in the three ministries take off, the country can attain double-digit growth. “Growth in these sectors will have multiplier effect; but we need some urgent measures — like stranded assets need to be cleaned up, and Railways decisions’ implementation needs to be expedited,” he points out.
Slow StartWhile Goyal is the quintessential back room boy, his senior Gadkari loves the hurly burly of politics; and he doesn’t mince his words. Soon after Modi took over in May 2014, BJP insiders knew that Gopinath Munde would be BJP’s chief ministerial candidate in the Maharashtra assembly elections. But then, Munde died in a tragic road accident in Delhi. Since then, Gadkari made no secret of becoming the regional satrap in Maharashtra. He even challenged the Prime Minister’s choice for chief minister, Devendra Fadnavis, by gathering a flock of MLAs to exert pressure on the party leadership. There were whispers of Modi not being happy with the games Gadkari was playing, and most political observers expected the Nagpur man would be slowly marginalised. But since October 2014, when fellow politician from Nagpur and his junior, Fadnavis, became the Maharashtra chief minister, Gadkari put his head down to concentrate on Delhi and on delivering results.
The most talked about and most visibly successful of the three undisputedly is 51-year-old Goyal, a born BJP man like his father. Those who followed Modi’s run up to power know how crucial a role Goyal played from behind the scenes. It was obvious after the elections that Goyal would be given an important responsibility, but few guessed that he would be so high up on Modi’s list. Modi delivered an out-of-the-box solution and combined coal, power and renewable energy into a single portfolio and asked Goyal to take over.
The dapperly dressed Mumbaikar hasn’t looked back since. In fact, he has been so “successful” that Modi supporters have been clamouring for Goyal to be given charge of the finance portfolio!
Prabhu on the other hand has had a chequered history as a ‘technocrat’ minister. He started with the Shiv Sena. In 2003, even as he was being hailed as a bold reformer of the power sector, his party supremo, the late Bal Thackeray, asked then Prime Minister Atal Bihari Vajpayee to drop him from the cabinet. Prabhu was in the political wilderness for a decade. His break came when Modi, in the hunt for talent, asked Prabhu to take charge of the railways portfolio. Prabhu joined the BJP overnight, signing up as a member with a missed call, and he was back in the mainstream. But he faced initial challenges and was even perceived a failure in the early part of his tenure. There was talk too of being shunted out for his non-performance. But Prabhu seems to have bounced back. Along with external affairs minister Sushma Swaraj, Prabhu is rated as the most proactive minister on Twitter responding to complaints and pleas on social media. But his more substantive work lies in raising and channeling funds.
Making An ImpactWhen Goyal assumed charge in May 2014, the power and coal sector was in a mess. People still remembered how the entire Northern Grid had collapsed in 2012 (incidentally, another Maharashtra politician Sushil Kumar Shinde was the power minister then). The coal sector was paralysed in the aftermath of “coalgate”, with the Supreme Court having cancelled all coal mining allocations made by the UPA regime. It was estimated that peak hour shortages would exceed 15 per cent and India, despite holding some of the largest reserves of coal in the world, would suffer the ignominy of importing 250 million tonnes of coal in financial year 2014-15. An open and transparent bidding process for coal mines was his first success. There have been many more.
Former power secretary Anil Razdan says the integration of coal with power has helped immensely, and the fuel supply situation has improved tremendously. Says R.V. Shahi, former power secretary: “A negligible growth in coal production during the last four years of UPA II, when new generation capacity kept increasing, led to a serious crisis in the power sector — stranded capacity, huge coal import at excessive cost, financial stress. Goyal’s biggest contribution is in setting right the coal production — almost 10 per cent growth in the last two years. Our power generation capacity has crossed 2,80,000 mw.”
During his speech from the Red Fort on August 15, 2015, Prime Minister Modi had promised that “in 1,000 days there will be no village in this country without electricity”. A pro-active power ministry under Goyal now says that each of 18,452 villages will be electrified in 730 days not 1,000. One-third of work is already done and 5,279 villages have been electrified over the last 10 months.
The most surprising success has been in the field of renewable energy, particularly solar power. There were sniggers when the Goyal-led ministry announced that India will create 100,000 mw of solar power capacity by 2022. Some even suspected the beginning of a scam. And yet, in a record of sorts, 5,000 mw of solar power was actually installed in the calendar year 2015. Even more significant, the per unit cost has dropped from Rs 15 to around Rs 5. This has transformed renewable energy from the realm of fantasy to viability.
Gadkari too has always fashioned himself as a doer. Having cut his teeth building roads and flyovers in Nagpur, he is now experimenting on the national scale claiming the departments of roads and highways under him will add 2 per cent to the country’s gross domestic product (GDP). He also sees his ministry as a job generator. He estimates that an investment of Rs 1 crore generates employment for 800 people. For Gadkari, this translates into 50 lakh jobs in the next two years, thereby adding 2 per cent to the GDP growth in the process.
Gadkari has laid a lot of emphasis on highways. It’s not surprising why. Only 2 per cent of the road network is made up of national highways, but they cater to 40 per cent of road traffic in the country. He has often claimed that in the UPA era, the pace of highways construction had dipped to 2 km per day, which is up to 18 km a day now. The minister aims to make it 21 km a day in the current fiscal.
Upfront land acquisition, approvals and larger proportion of engineering, procurement and construction (EPC) contracts have increased the interest of developers and contractors in road projects. This is reflected in the 69 per cent increase in project awards by the National Highways Authority of India (NHAI) during the first 8-month period in FY16 to 2,649 km from 1,572 km during the same period in FY15, notes an ICRA report.
Of the 101 projects that the ministry under Gadkari has undertaken so far with government funds, they come up to Rs.1.2 lakh. Gadkari’s initial target was Rs 5 lakh crore, which was revised to Rs 7 lakh crore and then again to a humongous Rs 10 lakh crore. The minister has been assured by the Prime Minister that shortage of funds wouldn’t hamper the sector’s growth.
For the technocrat Prabhu, it was never playing to the gallery by announcing new trains and straining a financially creaking network even further. For him, the task was to strengthen the existing railway network through an ambitious Rs 8.6 lakh crore investment plan.
Says Rajaji Meshram, director, Infrastructure and Government Services, KPMG India: “The railway sector in India has suffered from chronic under-investment and this has been a key reason for the decline in modal share of the Railways. The railway minister has therefore, very rightly, focused on increasing the capital expenditure in last year’s budget by 52 per cent compared to the year before. The minister has also brought in new sources of finance.”
Today, Prabhu believes the Railways can help push India’s GDP by 2.5 per cent. Indian Railways has set a target of increasing freight haulage by 85 million tonnes (mt) against the annual average of 50mt. This is directly linked to the growth push projections, and Prabhu estimates freight traffic would grow from 1,101mt in 2014-15 to 1,186mt in 2015-16.
This is, however, easier said than done. The Railways has lost out on freight to roads because more investments have gone into roads. Rail transportation is more expensive too. The Railways plans to match the investment in its infrastructure. In the next five years, Prabhu plans to spend about Rs 8.6 lakh crore in sprucing up the railway infrastructure, including laying new railway lines.
Pillars Of GrowthWith Prabhu’s investment plans in motion, the Indian Railways is fast emerging as one of the biggest participants in the Make in India initiative. After the government allowed 100 per cent foreign direct investment (FDI) in railways, the ministry has awarded contracts to global giants General Electric and Alstom for setting up electric and diesel locomotive factories, with an investment of nearly Rs 40,000 crore. Prabhu also plans to monetise various resources — data in association with Google and real estate assets by commercial development above and around railway stations.
Plans are in the works to invest $16 billion in developing a high speed rail network (including for the Mumbai-Ahmedabad bullet train), 85 per cent of which will be sourced from within India. Prabhu recently said that the ecosystem which will be developed because of these investments “will be unimaginable”.
Former Indian Railways board member Vinoo Mathur says Prabhu’s priorities are right, and he’s on course to modernising the Railways’ infrastructure. “As much as 2,500 km of new line has been laid; alternate sources of funding for various projects have been sought and now the challenge would be to implement the projects at a faster pace to kick-start the economy,” he says. Mathur however acknowledges, “Passenger traffic is not growing, but that perhaps shows overall economic slowdown; customer satisfaction, on the other hand, due to better passenger amenities is a big plus”.
Arguably the biggest achievement of Prabhu has been a concerted effort to change the mindset of Indian Railways. For decades, the ministry has been used and abused by politicians to dole out largesse and patronage in the name of populism. Prabhu is trying hard to transform it into a professional and commercial organisation. But then, it is too early to say if he has succeeded.
India will spend around Rs 65 lakh crore on the power sector in the next 15 years to meet growing demands and to provide clean, affordable electricity round-the-clock to its citizens. Goyal says that 25 new solar parks will be added in the country as part of the thrust on renewable sources of energy. He has set an ambitious target of 175 gigawatts (gw) of power from renewable sources — 100 gw from solar, 60 gw from wind, 10 gw from biomass and 5 gw from hydroelectric power. Goyal is also working with Gadkari to push bio-fuels. These targets have to be seen against the background of India having a total installed capacity today of just 288 gw.
Energy efficiency is another thrust area where the ministry hopes to push the momentum. The ministry has already distributed 6 crore LED bulbs, thereby bringing down the price of the product by as much as 40 per cent.
However, the biggest challenge that Goyal faces is the mess in power distribution. Most state electricity boards (SEBs) are virtually bankrupt. It is a piquant situation. There is adequate and surplus power available, but no money with the SEBs to buy and distribute it. To tackle this, the ministry has launched the ambitious UDAY scheme that seeks to overhaul state electricity boards along with a financial rescue package. The plan will work only if state governments cooperate and all the states join the bandwagon. It is too early to assess if UDAY is a success or a failure. So far, only two non-NDA states have come on board.
Overall, analysts give Goyal the thumbs up but it comes with some criticism. Says, Anish De, partner, KPMG India: “The power minister has done admirably well in steering the ministry. The direction is right even though the issue is complex. Much has to be done at the state level, and yet the minister has managed to mobilise forces and forge a consensus on measures like UDAY. In renewables, too, the direction is broadly correct. The only challenge is that the coal auction could have perhaps been designed in a better way.”
Gadkari too has ambitious targets. His ministry has approved the construction and widening of 1.52 lakh km falling under the national highway category. The target for 2015-16 is 2 lakh km, and Gadkari claims it will be achieved by March end.
Going futuristic, the highwayman has got NHAI to team up with ICICI Bank and Axis Bank for e-tolling. Gadkari is also pushing industry to focus on electric cars in a big way, and to ensure that BS VI fuel is available, especially in the choking metro cities.
Pushing lazy bureaucrats seem to have produced results. An ICRA report released recently said the Indian road sector is showing signs of revival drawing on several policy measures announced by the government over the last 18 months. “Long hindered by execution delays, project cancellations, stalled projects, loss of lender confidence, leveraged balance sheets of developers and sluggish traffic growth, the sector now appears to be on the path to regain its lost sheen,” the report says.
Award of projects only after 80 per cent right of way (RoW) has been secured; focus on quick resolution of stalled projects; delegation of power to regional offices to grant forest clearances; and allowance to file online applications to construct rail under- and over-bridges are some of the major policy changes brought in by Nitin Gadkari, believes ICRA. Confederation of Indian Industry president Sumit Mazumder agrees that Gadkari has “extremely ambitious plans”, adding: “In the past, stressed balance-sheets were a problem, where builders were required to acquire land, go for environmental clearances, etc.; the process is being changed, and the results would be visible from the coming year,” he says.
While highways have hogged the limelight, dramatic developments are also being seen in the shipping arena. Recently, history of sorts was created when a ship loaded with 600 cars sailed from Chennai towards Kandla. This process is called trans-shipment and will provide a big boost to shipping, apart from cutting freight costs.
Political Reshuffle?Expectedly, opposition parties are not too enamoured by the heaps of praise coming the way of the three ministers. Congress spokesperson Randeep Singh Surjewala punches holes in the claims of all the three ministries.
“The power and coal minister cannot claim much credit as coal production has actually come down. Power generation has remained static and demand dormant. The transport minister has completely bypassed the BOT model and in the present system, states have to pay more. The railway minister seems to be focused on the Ahmedabad-Mumbai bullet train, at the cost of basics. Clearly, the Modi government completely lacks in planning and vision on economic matters,” says Surjewala.
But within the government and the BJP opinion makers, the trio is in command. For months, there has been speculation about a cabinet reshuffle. Will it finally happen after the Budget session of Parliament? And will the trio continue to be Modi’s Trimurti?
Political sources say Gadkari’s work has caught the PM’s eye and after the Budget session, he may be elevated. In effect, it means that he could get the charge of an additional ministry. For some time, after the passing away of Munde, he had looked after the rural development ministry. The chances are that he could get an additional infrastructure ministry.
There has also been a buzz in Delhi that Goyal could be the next finance minster; but now the same sources say that the highly-rated minister would continue to steer power-sector reforms. Meanwhile, Prabhu, who because of his ideology-neutral approach was being side-lined, has now consolidated his position. He is all set to continue to helm the railway ministry.
Whichever way ministry making goes, Narendra Modi is not destined to plough a lonely furrow. He has got talent to help him through.
suman@businessworld.in; sutanu@businessworld.in;
BW Reporters
Suman K Jha was the deputy editor with BW Businessworld