Headed For A Fast-Laned Growth & Development

Edited Version of the Address by Chief Guest, Major Gen. B.C. Khanduri, Union Minister of Road Transport and Highways, at Auto Summit 2004 on 17th January 2004 at Hotel Taj Palace, New Delhi

Mr Kasliwal, President, FADA, Mr Khattar, Mr Nevatia, Dr Mitra, Mr Agarwal, Mr Jain, distinguished delegates and friends from media.

It is indeed a privilege to be amongst you all. I am thankful to FADA for inviting me here this morning.

In the major economies of the world, auto industry is both a driver as well as a reflector of the general economic growth of country. In the Indian scenario, the auto industry is on the upswing, the like of which has not been witnessed for a long time. In line with the general upswing in the economy, Indian auto industry is benefiting from the surging economic growth and in turn boosting that growth. All segments of the industry are benefiting from this, starting from 2- wheelers to the commercial vehicles. Exports are also surging.

This is really a time for optimism because what we are seeing could only be tip of the iceberg as far as the general growth is concerned. The macro economic environment could not be rosier. We have just had the privilege of hearing a very thought provoking address by Mr Khattar, who speaks from personal experience and, with a great deal of success along with that experience. I am quite sure this august gathering will take care of what he has suggested and said. You also had the privilege of listening to Dr Mitra who has given the macro view and also given a few suggestions, I am sure, we will look into all those.

I would like to touch on the developmental activities taking place in the road sector in a little more detail since I happen to be handling that sector for over three years now. It has been a major factor not only for the overall growth but also for instilling a sense of confidence that has been generated in the country - a change in the mental make-up or mindset and, if I may use the word "inferiority complex" into a feeling that we can do anything and everything better than anyone else in the world.

In 1998, when our Hon'ble Prime Minister took the reins of the country he had desired to rapidly develop the infrastructure of our country. In that process, one of the sectors that he gave priority was the road sector. By end of 1998, he had given a programme to the nation, which consisted of about 1400 kms of national highways to be converted into modern state-of-the-art highways - four, six and eight lane roads. This was a part of 58, 112 kilometres of national highways. Out of 33,00,000 kms of roads, we have just 58,112 kms of national highway, which is supposed to be of the highest quality.

The quality of these roads as it existed is well known. Even now, in some parts of the country as the national highways exist, one cannot but feel sorry for the state of our roads.

The Prime Minister gave priority to roads because he had his own experience of sorry state of roads that existed in early' 90s. When I look back, it needed a tremendous amount of courage apart from wisdom and vision to give to a country a project of rupees 58,000 crores at that time in 1998 for development of roads.

▪	Auto industry is on the upswing, the like of which has not been witnessed for a long time.
▪	Indian auto industry is benefiting from the surging economic growth and in turn boosting that growth.
▪	NHDP has been a major factor for bringing about a change in the mental make-up or mindset, from "inferiority complex" into a feeling that we can do anything and everything better than anyone else in the world.
▪	It required great amount of courage apart from wisdom and vision to give to a country a project of rupees 58,000 crores 1998 for development of roads, considering that roads had no priority in our plans in the past fifty years.

 
Roads had no priority in our scheme of things in the past fifty years before 1998. To give a programme of that dimension and magnitude in the financial conditions obtaining in 1998-99, was brushed aside as a political stunt. People thought how can a country spend Rs. 58,000 crores on roads, when it doesn't even have Rs. 58 crores in its kitty? But that programme was given, and, more importantly, it was made into a workable programme because the sincerity of purpose was there.

Thereafter followed structuring - re-organising the set-up, finding out the finances and implementing agency. All the three requirements were tied up and I am happy to say that today this programme does not look back for money or for decisions. Authority has been delegated to NHAI, for taking all types of decisions. One doesn't have to go to the cabinet or any senior babu for taking decisions. This thought process, which evolved at that time, is paying rich dividends now. Massive 14,000 kilometres of roads with which we started tells the magnitude of the project considering that from 1947 to 1997, i.e. in fifty years of our independence, this country made 556 kilometres of 4-lane roads, which works out to eleven kilometres per year.

Under this programme, the time schedule given was to do 5.5 kilometres or six kilometres of road per day. That is the type of mental change that was introduced. There are constraints which will naturally be there in such a project particularly in our type of country, where there are variety of problems starting from land acquisition to law and order, and so on. But the fact is that in spite of all constraints, this programme is making headway and creating a sense of confidence among the people. We used to say that we could never make such roads. Today, our own people are building 80-90 per cent of these roads. Out of about 130 contracts that are going on, hardly ten to twelve are with foreigners; the rest are with Indians or as joint ventures.

The success of this project is so great that the Government was requested to take some more projects. That is another challenge. Initially, we decided to spend Rs. 54,000 crores. We took ten ports for connectivity of similar type, which involved additional Rs. 4,000 crores. In this year's Budget, the Finance Minister announced that the Government would take up another ten thousand kilometres. This additional 10,000 kilometres is again a courageous programme involving a cost of around rupees forty thousand crores.

Twenty four thousand kilometers of roads have to be completed by the year 2008 or so at a whopping cost of Rs. 98,000 crores, to be precise. Today, my Ministry is required to construct eleven kilometres of four-lane road per day - a decision, which was called foolhardy in 1998. On this project alone, we are required to spend rupees forty to fifty crores per day, if we have to achieve the target. Yet, the money is flowing in. It is being taken care of. Unpleasant and politically unwise decisions have been taken, such as, levying cess on diesel and petrol. Yet, people are hailing this levy today what was being talked about as an unfair and sadistic decision by the government. Now people are saying "you impose more cess but give us better roads". This is the kind of mental change that is taking place in the country where people are willing to make sacrifices for better facilities.

FADA President spoke about the spare parts and some problems about the huge inventory. I am quite sure, we are going to create more and more problems for inventories with this type of roads. There is a flipside of the developmental activities. There were people who had flourishing business because of bad roads. After these roads have been constructed, there are no failures on the roads, tyre & tubes don't get damaged, there are no breakdowns or accidents. So, there are people who may have become unemployed. Our inventories are also going to get affected the same way. But, as Mr Khattar suggested, you have to open up avenues to see that your inventory does not get reduced, it gets increased.

World Bank says that once Golden Quadrilateral gets completed, the users after paying the entire user charges that we call toll, will be saving Rs. 8,000 crores. If you save eight thousand crore rupees and we charge toll to the tune of Rs. 1,200 to 1,500 crores, user is still saving about Rs. 6,500 crores. Even with user charges, the nation is benefiting and the user is benefiting. So, this type of thought process is also now being accepted and is catching up.

Earlier, I told you about NHDP, the National Highways Development Project of 24,000 kms including ten ports. We have started Pradhan Mantri Gramin Sadak Yojana. These roads are not earlier concept of "gramin sadak" where you saw some narrow, dusty road, where you might manipulate a jeep but nothing more. These roads which are to be connected to all villages having population of over five hundred in plains and two hundred & fifty in hilly regions & tribal areas will be proper, motorable, 7-metre wide, black top roads.

▪	From 1947 to 1997, i.e. in fifty years of our independence, this country built 556 kilometres of 4-lane roads, which works out to 11 kilometers per year, while under NHDP, we are now required to construct 11 kilometres of roads per day.
▪	24,000 kilometers of roads pave to be completed by the year 2008 or so at a whopping cost of Rs. 98,000 crores.

 
We are giving money for improvement of State roads as well at the rate of Rs. 2,500 crores per year. The Central Government would have given to the States, Rs. 10,000 crores by the end of this financial year. In addition, Rs. 1,000 crores per year is being given to the State Governments under the Central Road Fund scheme for improving their State roads.

There will naturally be more demand for vehicles. The amount of cement and steel that is being used on these roads is fabulous. During 2004, the anticipated requirement of cement is thirty to forty lakh metric tonnes & three lakh tonnes of steel. The growth of steel and cement sectors during the period Apr-Sep. 2003 was between seven to ten per cent.

Commercial vehicles have seen the growth of 32 per cent. Did we ever have such type of growth? Why is it happening? Because, the infrastructure that is being created is encouraging people to make use of faster mode of travel for their own economic benefits.

I give another example. An NGO, a cooperative society in Maharashtra by the name of Vanun, which produces milk have informed that the cost of milk produced by them has been reduced by twenty per cent in the last one year because now they are using the 4-lane road as against the two-lane road which was existing earlier. In one year, this small organisation gained rupees one crore and twenty lakh purely because of the roads. This is the type of benefit that is accruing. So, there are tremendous all-round benefits.

Now we come back to automotive industry. The fact that automotive sector is benefited a great deal is quite obvious. How you can contribute to nation building in this environment is a question to be addressed. Earlier, Mr Nevatia talked about huge profits and human values, etc. It is quite understandable that nobody invests for incurring loss; profit has to be there. How do you make yourselves profitable certainly needs to be discussed and thought of. My only suggestion to those in automotive business is that there is tremendous scope of profit and, side-by-side, there is tremendous scope for national service and your contribution to the nation's development. If the two can he harmonized, it will be an ideal situation and, I think, there should be no difficulty in harmonising the two.

We have received requests about excise duty and other issues affecting the automotive industry. The Government is committed to simplify all procedures and to remove the inspector raj. We have been working on various things. But, as you would also appreciate, you cannot move from bullock age to a jet age overnight. There are stages. Everybody is doing his best and, if, we all do our best, there can be nothing better than your best. Therefore, we have to do our best keeping in mind what is good for the nation and that when the nation benefits, along with the nation you also get benefited. It is as simple as that if there are better facilities of electricity, travel, water, health, then as a common citizen we all get benefited. All this means harmonisation of various interests and sacrifices for the common good.

Mr Khattar has given a very thought provoking address. He talked of low volume of car users. He has also made some suggestions about why it is low. Could we increase the volume? For a user, the cost aspect is important. We have a burgeoning middleclass who could be used for increasing the volumes.

Another problem for a user is the expenditure on maintenance of vehicles. The cost of maintenance should be made such that the common middle class persons can afford it. Reliability and confidence in our maintenance and quality will also encourage the common user to go in for the product.

Mr Khattar also made a mention about manufacturing hub. I think the future of the country lies in manufacturing sector. If we can develop and become leaders in manufacturing sector, then all our problems of employment, foreign exchange and foreign reserves would be addressed.

Another point which I would very much like to add and make a suggestion is that the manufacturers, dealers, financiers, insurance companies & other like interests should adopt a joint work approach, because if you work jointly you will come to a better solution, cheaper arrangement and more user friendly approach. And, therefore if you could synergise your efforts, I am quite sure, there will be tremendous benefits to all of you, which individually you may not be able to reap.

▪	Need for harmonization of national and business interests.
▪	There are tremendous all-round benefits of infrastructure development.
▪	We have a burgeoning middleclass who could be used for increasing the volumes.
▪	Reliability and confidence in our maintenance & quality will also encourage the common user to go in for the product.
▪	Manufacturers, dealers, financiers, insurers and other like interests should adopt a joint work approach, because if you work jointly, you will come to a better solution, cheaper arrangement and more user-friendly approach.

 
FADA President had mentioned about a few issues, such as, registration at dealer's location, uniformity in all State taxes, life of vehicles, etc. In our set up, there are many areas, which are left to the States for implementation. Regarding vehicles, the Central Government governs and administers the Motor Vehicles Act and the rules made thereunder, but the implementation is totally with the States, and there are difficulties in some of these matters. These are some of the areas, including life of vehicles and uniformity in registration fees, which we have tried discussing with the transport ministers, but States have their own view, and probably their own interest, and sometimes we cannot bring them round to the common structure. Every time we meet the Transport Ministers, we have this point as an item of discussion. We come to some conclusions, they agree here in the meetings. However, when they go back they find difficulties in implementation. This is one area, which certainly needs attention, and whatever specific suggestions you have I would like to have them and try to do whatever is possible at the central level.

As far as life of vehicle is concerned, gentlemen, it is again a State subject and there are a lot of problems. Courts are now fixing life of vehicles in some States including my own State. At the moment, the users' views have been accepted. However, as far as the Central Government is concerned, the view is that the pollution level has to be within the permissible limits. If the vehicle life is one year and it is not fit as per pollution norms, it cannot be on road. If the vehicle is fifteen year old and is still fit within the emission norms, we have no objection. But this is an issue, which is now with the courts, and we have to wait for their judgement.

Finally friends, I have traveled, of late, on various types of vehicles, particularly on the new 4-lane highways, which are very smooth. So far the roads were not fit for vehicles and our vehicles got damaged. Now it has become the other way round. The vehicles are not fit for our roads. The vehicles need to be designed to attain speed on the roads that we are going to have. My Ministry is willing to look into rules & regulations or guidelines, if any.

Thank you very much ladies and gentlemen, good luck to you.

▪	The vehicles now need to be designed to attain speed on the roads that we are going to have.