Viewpoint:Does India need bullet trains?

17 December 2015

From the section India

Indiahas agreed to buy a high-speed bullet train from Japan, in an attempt totransform its creaking rail system. Mohan Guruswamy wonders whether it makessense.

Last week Indian Prime Minister NarendraModi's cabinet cleared a $14.7bn (£9.6bn), 650km (403 miles) long bullet trainsystem linking the western Indian cities of Mumbai and Ahmedabad, which willcut travel time on the route from eight hours to two.

"This enterprise will launch arevolution in Indian railways and speed up India's journey into the future. Itwill become an engine of economic transformation in India," Mr Modi said.

But will it?

To be sure the BJP's election manifestoreleased in April 2014 promised a 5,846km (3632 miles) "high speed trainnetwork (bullet train)" linking Delhi, Chennai (Madras), Kolkata(Calcutta) and Mumbai. Interestingly, it didn't include Ahmedabad, the capitalof Mr Modi's native state, Gujarat.

Creakyinfrastructure

Indian Railways is the third largestrailway network in the world. It has come a long way since its first passengertrain service began on 16th April 1853, when 14 carriages carrying about 400guests left Bori Bunder in Mumbai.

More than anything, the railways typifiesthe vast, creaking and dilapidated nature of the country's infrastructure.

At the root of this is that the railwayshardly earns enough to pay for itself, let alone invest in modernisation andsafety.

It is cash strapped mainly due to therecurring losses - last year it lost $5bn - in the passenger segment of itsoperations. The network has surplus cash of only $115m.

Its top managers have frequently warnedabout the crisis.

A top official said: 'In the finalanalysis, the performance of the organisation would be just at the bottom lineand unless we are in a position to control the expenditure and increase theearnings on a sustained basis, survival for the organisation becomes a verydifficult proposition."

But the railways get by every year withhuge dollops of government funding and increasingly by postponing vitalinvestments.

For instance important decisions such asthe filling of tens of thousands of safety-related posts, including trackmaintenance and signalling workers, keep getting postponed.

The consequences of this are seen in theincreasing number of railways related accidents and deaths.

Since 2000 there have been 89 majoraccidents - almost two thirds of them since 2010.

It is estimated is that almost 15,000people die crossing the tracks every year - some 6,000 on the busy Mumbaisuburban network alone.

Challenge

Last year, according to the government,more than 25,000 people died and 3,882 were injured in 28,360 railway accidentsacross the country.

The challenge has been clear for manyyears.

In 2012 a government committee said thecondition of the tracks and bridges was a cause of concern and made severalrecommendations:

●Modernise 19,000km (11,806 miles) ofexisting tracks comprising nearly 40% of the total network and carrying about80% of the traffic.

●Eliminate level crossings and provide fencingalongside tracks. To eliminate level crossings by building rail over and underbridges.

●Strengthen 11,250 bridges to sustain higher loads athigher speeds, noting that about a quarter of out of 131,000 bridges are over100 years old.

●Provide 100% mechanised track maintenance on the mainroutes to provide for superior quality of track laying and maintenance.

But neither the railways nor the governmenthas so far been able to rustle up even a fraction of the $130bn outlay forthis.

Shouldn't the focus be on modernising andupgrading the entire system?

The question therefore must be, how does abullet train joining Mumbai and Ahmedabad address any of these urgent needs?

On the face of it the Japanese offer isvery attractive.

Japan has offered to meet 80% of theMumbai-Ahmedabad project cost, on the condition that India buys 30% of its equipmentincluding coaches and locomotives from Japanese firms. In the coming years, upto 70-80% of the components could be manufactured in India.

The Japanese government has offered cheaploans, technical support and is willing to drive the local manufacturing andtechnology transfer initiative within a specified period, said sources. Theseterms cannot be scoffed at.

Questions

But questions will persist.

Can this be the most competitive offer? Didthe government even consider or invite other offers? How much are the Japanesegoing to make out of this?

The purpose of competitive offers is toeliminate all these. But this due process was given a go by.

Finally, the big question that will not goaway is whether the same investment on upgrading the entire railway networkwould be more economically beneficial than a single high cost project?

India adds a million young people to itswork force every month. There is little disagreement that revamping the entirenetwork would entail the creation of many more new jobs than a single capitaland import intensive project.

How does this tie in with Prime MinisterModi's hope that "it will become an engine of economic transformation inIndia?"

Mohan Guruswamy is an economic andpolitical analyst

Indian Railways

●Operates 19,000 trains every day,comprising 12,000 passenger trains and 7,000 freight trains

●Transports 23 million passengers every day

●Carries 2.65 million tonnes of freight every day

●Earns about $20bn annually

●Owns 7,083 railway stations and 131,205 railwaybridges

●Runs 51,030 passenger coaches and 219,931 freight cars

●Employs 1.36 million people.