Government concentrating on reducing road transport costs: Gen V K Singh

MANGALURU: The central government is working on several initiatives that would reduce the cost of road transport thereby lowering the cost of goods and services benefiting the common man, stated General V K Singh (retd), minister of state, union ministry of road transport and highways (MoRTH), at the Global Virtual Summit 2020-Leasing and Hire Purchase: Procuring Assets @Ease of Finance organised by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
The minister explained that the government is working on linking all the major ports with an intention of reducing the roadblocks and making road transport much smoother and efficient. "We would be witnessing around 220 million kms of roads in the near future linking all the major ports of India. Road transport which is the fastest mode of transport would be made cost effective due to the same," he said.
Dr Singh revealed that the government is working on several things at the moment to save lives. "As you are aware of the new transport policy, a lot of things would be coming which would benefit the people. We are also working on an accident fund for offering cashless treatment in the golden hour to save lives," he explained.
He stated that most accidents caused are due to over-speeding involving youngsters. "We are working on ways to remove the roadblocks which would reduce accidents and at the same time would ensure faster treatment of the accident victims," he added.
According to Dr Singh, under the Bharatmala Pariyojana, the government's aim is to better linkages amongst the different corridors. "The Delhi-Mumbai-Vadodara work is in full swing.

The Delhi- Amritsar link work has also started. This would reduce the travel time to just around 3-3.5 hours between Delhi and Amritsar by road," he informed.
He further explained that the government is keen on increasing connectivity between Uttarakhand and Delhi so the work on Dehradun-Delhi road connectivity will start soon. "This would reduce the travel time to just around 2.5- 3 hours between these two places," he pointed out.
Dr Singh explained that due to digitalisation and new technology coming in, the government would be able to monetise a lot more. "We are expecting around Rs 1 lakh crore to come from toll collection in the next five years, the same would be utilised in creating more roads," he said.
Giving the example of the London Bus Transport model, he also stated that the public transport system needs to take lead from them by following their Leasing and Hire Purchase model. "In London, buses are operated on lease where a certain part of the profits are shared with the bus owner. The system is working fine as it benefits everyone," he said. "Leasing as a concept which is not yet popularised in India and ASSOCHAM needs to take this forward to educate people", said Dr Singh.
Dr Singh expressed his satisfaction that the infrastructure development work which had witnessed some slowdown on account of the COVID situation has come back to the earlier level. "We believe that the Coronavirus situation is here to stay.

We need to devise ways to coexist and operate in the given situation," he added.
Dr Niranjan Hiranandani, president, ASSOCHAM said that the Bharatmala Pariyojana is expected to bring a paradigm change in the road transport sector. "The project is expected to connect around 550 districts in the country. The total road construction in this project would be 66100 kms. This would reduce the travel time by at least 25 percent and bring down the supply chain cost by 5-6 per cent," he said.
He explained that the GST simplified the taxation policy for the leasing sector. "Earlier there were a lot of barriers in the way for the leasing sector but with the introduction of GST, it removed most of the barriers," he pointed out.
Dr Hiranandani added that any country that is in recession needs inputs from roads, housing and infrastructure sectors to deal with the situation. "Leasing is a model that will work like a paradigm in terms of funding where financials are the concern," he explained.
He stated that the BOT (Build, operate, and transfer) model to raise funds is a step in the right direction and should be encouraged to build infrastructure.
Vineet Agarwal, senior vice president, ASSOCHAM said these are challenging times for all sectors and making capital investments has become all the more difficult.
"In this changed scenario, the option of leasing has become more attractive as compared to the past as it reduces capital cost and helps in asset creation at such a difficult time," said Mr Agarwal.
He mentioned that the introduction of Goods and Services Tax (GST) has helped in giving assurance to the companies in leasing as they can apply for input credit to offset certain costs.
"Though the leasing segment has found its space during the pandemic, there are certain irritants that need to be addressed by the government such as the tedious paperwork that is involved in the hiring and leasing segment," added Mr Agarwal. "Digitization of all the paperwork and allowing e-signature are some of the plausible solutions that we should look at," he explained.
Stating that leasing in India is at the infant stage currently, efforts should be made by the government to encourage a vibrant leasing environment in the country, he added.
Amitabh Banerjee, CMD of the state-run largest leasing company, Indian Railway Finance Corporation (IRFC), stated the significant role played by IRFC in augmenting the plan funding needs of Indian Railways since its inception in 1986.
"Consistently funding more than a quarter of the annual CAPEX Programme of Indian Railways, IRFC has become strategically important for the growth and development of the Rail System in the country.

The Company has funded more than Rs 3.39 lakh crore to the Rail Sector through market borrowings both from domestic and international financial markets from diversified sources. The Company has adopted 'Financial Leasing Model' for meeting Indian Railway's requirements to overcome the constraint of 'Allocation of Business Rules' which does not permit any Ministry other than the Ministry of Finance to borrow from financial markets," said Mr Banerjee.
He added, "Out of the total rolling stock asset fleet of IR, more than 75 per cent has been funded by IRFC. Highest Possible domestic credit rating from domestic credit rating agencies and credit rating at par with that of the sovereign from the International credit rating agencies, enable the Company to mobilize funds at the most competitive rates and terms.

The papers issued by IRFC are the benchmark papers for pricing by other entities."
Banerjee further said that the ministry of railways has set a target of investment to the tune of Rs 25 lakh crore till 2025. "The Company is expected to disburse at least Rs 5-6 lakh crore during this period. The Capital Adequacy Ratio (CAR) of IRFC is an astounding 404 per cent as against the prescribed limit of 15 per cent for Infrastructure Finance Company. The Company has remained a profit-making company since its inception and its cumulative dividend pay-out to GoI has crossed Rs 4,000 crore.

Using the expertise developed over the years, the Company will be making selective forays into the areas having forward and backward linkages with IR.

The Company will be entering the market with the Initial Public Offer, which would help unlock and monetize its true intrinsic value."

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