Economy

The High Speed Rail Project Could Turn Out To Be An Expensive Mistake

A lineup of JR East Shinkansen High-speed trains, Japan. Credit: Wikipedia Commons

A lineup of JR East Shinkansen High-speed trains, Japan. Credit: Wikipedia Commons

The highlight of the three-day visit of Japanese Prime Minister Shinzo Abe is the signing of a pact for the the Mumbai-Ahmedabad High-speed rail corridor, a massive project involving a cost of 98000 crore rupees. Both sides have invested time, energy and diplomatic resources in this showpiece project for which the Japanese are committed to advancing a loan of 8 billion dollars.

But before Railway Minister Suresh Prabhu borrows money for the project, there is an urgent need to review the faulty model that his ministry has prepared. If not, this expensive mistake will haunt India for a long time.

Japan has offered to participate in the California High-speed rail project by forming the Japan-California HSR Consortium which comprises of  Kawasaki Heavy Industries, East Japan Railway Company, Hitachi Ltd, Mitsubishi Heavy Industries, Nippon Sharyo Ltd, Sumitomo Corporation etc to satisfy the Buy America laws. It is possible that a similar consortium may make an offer for an HSR system in India, and manufacture train-sets here, even though there is no compulsory ‘Make in India’ law, despite the Prime Minister’s call for it.

It must however be pointed out that the US has not sought any funding from Japan, even though many American states have not been able to tie-up funding arrangements for their HSR projects. The US also does not seek transfer of technology through these firms because General Electric has already formed a partnership with Chinese HSR train set manufacturers. It is only a matter of time before GE absorbs the technology and innovates on it.

India’s case is different. We are seeking loans to build the HSR but are ambivalent in our approach to acquiring technology and indigenous manufacture of high-end components in the traction chain. Essentially, India’s Ministry of Railways projects the image of a buyer of rolling stock rather than that of a technology seeker.

A country that needs low-cost loans, with a mix of treasury and commercial loans, will never hold vantage position when it comes to technology acquisition. A nation holding advanced rail technology is unlikely to offer more than low-tech and low value items like car bodies. It is unlikely to offer critical components in the traction chain. Even though the media releases and speculative reports contain HSR technology transfer, it is very doubtful that any hard bargain has been done about acquisition of HSR technology like what the South Koreans have done in the past. Korea could pull off complete technology transfer after nearly seven rounds of tough negotiations, because they bought technology with their own money. With a resident technology, Korea is able to produce almost all critical high tech and high value components of HSR train sets within their country and even compete against Germany, France and Japan. Even if we invite HSR technology holding nations to set up shop in India, the loan repayment liability and lack of control on high prices of rolling stock, signaling equipment and spares will adversely impact HSR’s operational success in India.

HSR idea began in 2001-2002

In India, the history of HSR started with an announcement made in the Rail Budget of 2000-2001 about high speed railways, which resulted in a general feasibility study done by Rail India Technical and Economic Service (RITES).

Serious efforts however were made in 2005-2007 by the Railway Board to get the project moving. Files were initiated for the first time in 2006 about one medium rail line route length (around 450 – 500 km) each in the Northern, Eastern, Western and Southern regions of India, in consultation with State Governments. This was not accepted by Lalu Yadav, the then Railway Minister who did not want to encourage High-speed rail projects, as he felt that these were infrastructure projects meant for the elite and middle-class passengers. In those days, the Prime Minister used to be given a presentation by the Railway Board on the broad outlines of the Railway Budget. In  January 2007, a separate presentation about HSR was made along with this budget presentation to Prime Minister Manmohan Singh. In that presentation, a strategy for mobilising resources for HSR with a near zero net cost to the government was included.

The presentation was appreciated and accordingly another proposal was moved by the Board to include a formal announcement about HSR proposed routes in the Rail Budget of February 2007. This was resisted by the Railway Minister but the Board stood firm and insisted on including this announcement in the Budget. Finally an announcement was made about a proposal to prepare a pre-feasibilty study. In those days the Railway Boards in general showed a tough sense of professionalism.

The Board then started consultation process with the States and presentations about the HSR were given to Chief Secretaries and Principal Secretaries. Gujarat was the first State Government to offer support and offered to finance the study. Some States like Punjab, Kerala and Maharashtra too wanted to know about HSR and gave very valuable guidance. For example, the then Maharashtra Chief Minister was unhappy about the proposed Mumbai-Ahmedabad HSR not covering important cities like Pune and Nasik and also Mumbai -Nagpur. Punjab supported an elevated alignment but expressed concern at land acquisitions by the National Highways Authority of India. Karnataka did not favour the proposed Chennai-Bangalore link but wanted a corridor to extend to Hubli-Dharwad to support their industrial expansion plans.

A proposal to create a National High Speed Rail Commission of India (NHSRCI) was unanimously approved by the Board for seeking clearance of the Council of Ministers. However, the Railway Minister did not clear the proposal.

Having shared this chequered history of roadblocks that the then Railway Board faced, I, as part of that Railway Board, must admit that we made a mistake in randomly choosing four regional HSR corridors of 450-500 km, instead of a national network as Prime Minister Narendra Modi has envisaged. His plan of a HSR Diamond Corridor is perhaps the most suitable intercity network model. This was exactly what India’s most illustrious railway expert, E Sreedharan advised when Dedicated Freight Corridors were being planned—he had suggested that India should opt for a Dedicated Higher Speed Passenger Corridor rather than a freight one.

A baffling change

What is baffling therefore is that the Ministry of Railways is now deviating from the Prime Minister’s Diamond Corridor concept. Instead, it is still clinging on to a regionally anchored but fragmented HSR  Network Model originally proposed in the Railway Budget of February 2007.

The proposed Mumbai-Ahmedabad HSR Corridor, which will involve huge borrowings from the Japanese, is going to be sandwiched between the existing conventional speed rail (CSR) corridor and the Dedicated Freight Corridor running through Gujarat to Mumbai. To confuse matters further, the Railway Ministry is preparing an expensive upgrade of the Conventional Speed Rail corridor from the present 130 KMPH to 160-180 KMPH, which will be in direct competition to the new HSR corridor, that too on the same alignment. The conventional speed rail corridor will lose its premium passenger segment to HSR, and its freight to DFC. It will be left with nothing but low revenue commuter passenger services. In addition, more competition can also be expected from the expressways and coastal passenger ferries also being promoted alongside. The Ministry could have avoided these multiple investments in parallel corridors.

One excellent alternative would have been to re-fix the alignment of the HSR from Ahmedabad to the upcoming super city Dholera in Gujarat and from there to Surat, using the proposed Kalpasar project on the Gulf of Khambat. From Surat it can use one of the narrow gauge corridors and reach Nasik, Thane and Navi-Mumbai before reaching across to Mumbai.

The purpose of creating an HSR Corridor is not to simply showcase speedy travel. The main takeaway must be stringing in 10 other cities and ushering in development along the way. If the Ministry goes ahead with its plan, this faulty rail network planning model – reminiscent of the “Railway Mania” in the US in the early 20th century — is going to be an albatross.

States planning their own networks

The need of the hour is to create a regulatory authority to independently plan an HSR Diamond Corridor network, which will draft a policy and also set standards. Otherwise, the creation of fragmented medium-distance HSR corridors will trigger demands from other regions and States. The Kerala HSR Corporation has already gone far ahead with its own corridor with a feasibility report, which has envisaged a total investment of Rs 65000 crore, which, at Rs 151 crore per km, is lower than the Mumbai-Ahmedabad figure of Rs 200 crore per annum.

The government should shun the diffidence and tokenism of showcasing one medium distance HSR corridor, built almost entirely on borrowed money as a tiny piece of modern infrastructure. Go the whole hog for a HSR passenger corridor network.

The government should also source funding from within India. Funding can be sourced from India. Make it the common man’s cherished project and raise funds from within India—several innovation methods can be used for this. The most critical issue is making the HSR affordable for the common man. There is a big gap between the yield per seat/km sold by low cost airlines and that of the Indian Railways; this gap can be filled by the High-speed rail.

If giant HSR projects, backed by external commercial borrowings are pushed through Cabinet decisions, without consulting the states, without doing extensive ground work, and without going for simple and straightforward open public consultation, they will certainly end up facing public resistance.

Raghavan Sivadasan is a former member of the Railway Board

  • Raj Rao

    I do not agree with the assessment…
    (a) It will take 15 years for this project to be operational. In 2030, India will have much more affordable population than now. Look at the timeline for Dedicated Freight corridor…
    (b) HSR will reduce the time-cost in the Indian economy drastically and result will be visible when more and more HSR become operational.
    (c) 6-hours per person for an air-travel will be saved (2-hour in airport and 1-hour travel to airport outside the city — both directions).. look at the saving in a day or a decade.
    (d) But, I like India to embrace 600-km/hr Japanese Railway than the current decision on the 300 km/hr Railway technology…
    (e) Cities in-between Mumbai-Ahmadabad can also get the High Speed travel option, which is not possible Airline industry, which is point to point
    (f) Start has to be made… Hopefully India will have major cities connected by High Speed by 2060, if we start now..

  • abhi

    Please don’t pour your intellect here !

  • Arun Ohri

    I agree that we need to consult the states, do extensive ground work and also ensure that this pilot project becomes useful as part of national project

    We have seen debates on metro gauge (broad gauge versus standard gauge). We lost a lot (I don’t know the extent) by insisting that Kolkata and Delhi Metro (initial parts) be on Indian broad gauge as opposed to standard gauge for which more suppliers exists

  • ashok759

    It would also help if the financial position of Indian Railways is improved. Its Operating Ratio has climbed to 97.8, may touch 110 with the burden of the seventh pay commission. Such stretched finances will constrain both borrowing and inviting private partners for PPP. Unless demand for high speed travel between two points 400 – 450 kilometres apart is phenomenal and budget air teavel is not meeting that need, creating four disconnected stretches for bullet trains may be a suboptimal solution.

  • JonnyG

    With an average income of less than US$ 2000 per year, lower than some Sub-Saharan African countries, will there be enough Indians riding this train to make this project feasible? In the end, as many experts believe, this line will only be wasted on the few who are rich and can afford this luxury, while people of average or lower means(vast majority of Indians) will once again be denied the needed funds for basic heath and social services.

  • shanx

    why is he not discussing the gauge for the high speed rail?

    • criticalobserver

      Any idea whether this line will be built using standard gauge ?

  • papaba

    A big step has been taken, nitty gritty forward planning should involve experts & stake holder’s view

  • criticalobserver

    Siemens built high speed rail in Germany is also based on standard gauge. In general standard gauge is much cheaper than gauge dedicated for India only.

    • lukebc

      The entire German rail network is – and has always been – standard gauge so the German HS network being standard gauge is a no brainer.

  • lukebc

    ANY high speed network built in india should ALL be indian gauge.

    The only reason the Japanese are pushing standard gauge is because all Japanese HS trains use standard gauge and if india goes with indian gauge then that means that the Japanese will HAVE to modify their existing models of high speed trainsets WHICH COSTS MONEY.

    By pushing india to use standard gauge means that Japan can just take their “off the shelf” standard high speed trainsets and transpose them into india without any additional costs to the Japanese.

    • criticalobserver

      “ANY high speed network built in india should ALL be indian gauge.”
      Now the Japanese has been given the contract for the construction of the Mumbai-Ahmedabad HSR line, it appears that the standard gauge will be used. Am I correct ?