The union minister also said that investors need not worry about projects getting stuck.
Union Minister Nitin Gadkari on Friday told investors not to worry about returns on investments in infrastructure projects or them getting stalled. The minister for road transport and highways was speaking at the "National Conference on Investment Opportunities in Highway, Transport, and Logistics" in Mumbai.
"Today's conference in Mumbai reminds me of my time as state minister in 1995, when I rejected a tender by Reliance for the Mumbai-Pune express highway. Dhirubhai (Ambani) was there at that time, and he was very upset with me. My chief minister was also upset and so was Balasaheb Thackeray. They asked me why did you do it? I said we will raise money from the public for that project and other projects like Bandra-Worli Sea link; everyone was laughing at me," Mr Gadkari told the gathering.
"Manohar Joshi (then chief minister of Maharashtra) told me to do what I was saying I could do. We set up the MSRDC (Maharashtra State Roads Development Corporation). At that time, I was the founder chairman. We went to the chambers of commerce to make presentations with laptop computers and get people to invest. Laptop computers were new at that time. I remembered this because at that time we went to investors, now investors come to us," Mr Gadkari added.
Talking about the returns from monetising infrastructure projects, the minister said, "I want to share this example to talk about investor confidence. Reliance had quoted Rs 3,600 crore. We rejected it and completed the project through the MSRDC at a cost of Rs 1,600 crore. We saved Rs 2,000 crore. The Maharashtra Government monetised the project and we received Rs 3,000 crore. We monetised it again a year and a half ago and the Maharashtra government got Rs 8,000 crore. So, you can see that a Rs 1,600 crore road was once monetised for Rs 3,000 crore and the second time for Rs 8,000 crore. So, in infrastructure projects, stop worrying about internal rate of return and economic viability."
Talking about the experience of raising funds from the market for infrastructure projects, Mr Gadkari said, "For Rs 500 crore, we went to the capital markets for the first time and raised Rs 1,160 crore. It was oversubscribed. The second time we went for Rs 650 crore and raised Rs 1,100 crore again. Ratan Tata told me you are smarter than us because none of us expected that money for infrastructure can be raised from the market."
The union minister also added that investors need not worry about projects getting stuck. "Earlier, before 2014, projects used to get stalled due to land acquisition issues, but we decided that projects will not be awarded before completing 90 per cent land acquisition and without environmental clearances, so most of the problem of stalled projects has been solved."
Mr Gadkari recalled how an electric goods shop in Malabar Hill gave him inspiration for the BOT (Build Operate Transfer) policies. The lack of a colour TV and fridge in his house as he was not entitled to it under the government's rules while judges who stayed in the same building were eligible for these appliances made him approach a local shop.
"I asked him if I could buy a TV on installment but the moment he knew I was a minister, he said he would send it to me when a new piece arrived. That never happened as the shopkeeper must have thought that this fellow is a minister and he wasn't sure of recovering the money," Mr Gadkari joked with investors.
The Ministry of Road Transport and Highways under Mr Gadkari is looking at three key areas in terms of raising funds from the market. These are Bharatmala, asset monetisation, and the new vehicle scrapping policy. According to the government, the vehicle scrapping policy will reduce pollution, improve tax revenues, grow the automobile sector, boost exports, and create jobs. He feels it's a win-win situation that can draw high scale investment.
To allay concerns of investors, Mr Gadkari joked, "There is no doubt about two things in India, population growth and automobile growth."