The Japanese are looking for more than one bullet train routes in India.
An agreement on the Rs 97, 636 cr bullet train between Mumbai and Ahmedabad was one of the highlights of Japanese Prime Minister Shinzo Abe’s visit to India in the second week of December. The project will be financed with a Japanese yen loan of Rs 79,000 cr at 0.1 percent interest to be repaid over fifty years, which includes a moratorium on interest payments for the first fifteen years.
Railway Minister Suresh Prabhu’s aides say the train will be viable with rates that are one-and-a-half times the current AC first class fares or nearly Rs 3,000. That is Rs 6 per kilometre.
Viability will depend on traffic and frequency of service. Rail officials say there is enough between the two cities: trains are chockfull and planes are packed. At 300-350 kmph, the distance should be licked in less than two hours. This will create additional demand. With quick visits possible, more people will travel. Supply, as they say, creates its own demand.
The Japanese International Cooperation Agency (JICA), the aides say, has estimated the financial rate of return at 4.4 percent a year. This is less than the yield on government bonds. But the economic rate of return – or the impact on the economy – is estimated at 13 percent annually.
Fares alone will not be enough. Japanese bullet trains are cross-subsidized by revenue from property development. India’s bullet train corporation should be able to skim the increased land value it will create along the route through industrial enclaves and townships.
The project will be implemented in seven years, a railway ministry press release said. Railway Minister Suresh Prabhu has told a business daily that 85 percent of the bullet train would be manufactured domestically, boosting ‘Make in India.’ Clearly, the Japanese are looking are more than one bullet train routes. The Mumbai-Ahmedabad project will give them a foothold in the Indian high-speed rail (HSR) market, just as Delhi Metro, also financed with low interest Japanese Overseas Development Assistance (ODA), has done.
A pre-feasibility study of the Delhi-Mumbai route in 2012 sponsored by Japan’s Ministry of Economy, Trade and Industry or METI, said India would need massive investment in rapid mass rail transport between cities. This would be an opportunity for Japan to increase railway car exports beyond ¥100 billion it did annually, then.
HSRs were proposed in the 2010 railway budget. Six routes were identified:
Delhi– Chandigarh-Amritsar (450 Km)
Pune- Mumbai-Ahmedabad (650 km)
Hyderabad-Dornakal-Vijaywada-Chennai (664 km)
Chennai-Bangalore-Combatore-Ernakulam (649 km)
Howrah-Haldia (135 km)
Delhi1-Agra-Lucknow-Varanasi-Patna (991 km)
In August 2011, a cabinet note was moved for a high speed railway authority with legislative backing. The note said HSRs were recognized internationally as necessary to bring economic growth to hinterlands. The International Union of Railways defined HSRs as a new line with a speed of at least 250 kmph and upgraded lines capable of 200 kmph. Their use worldwide was increasing and a trans-European high speed train network by 2025 was being planned, the note said.
Bullet trains would de-congest the highways. They would address climate change concerns. According to the European Commission’s 2011 white paper on transport, high-speed railways are 14 times less carbon intensive than cars or 15 times more frugal in emissions than air travel. A high-speed train releases 11 grams of carbon dioxide while moving a passenger between Valence and Marseille in southeast France, against 151 grams by car and 164 grams by air.
High speed trains were faster and less expensive than planes over medium distances of 500 km to 700 km, the note said. They were also the safest modes of transport. It cited Japanese and European experiences.
By reducing commute time, tier II and tier III cities would grow, taking pressure off the metros. New cities around high speed train terminals would lead to planned urbanization. The industrial and services economy would get a boost.
The draft High Speed Rail Authority Bill, 2011 envisaged a body that would construct, operate and regulate high speed railways, and also undertake commercial activities to make the system viable. It would not do this directly but through special purpose companies in which it would have equity stakes along with private partners. The authority would fix fares, fees, rentals, royalties and other tariffs. By 2025, at least 2,000 km of high speed railroads would be awarded going up to 15,000 km by 2050.
If funds were finite and India had to choose between rail services that would give the biggest bang for money, it would opt for 160-200 kmph semi-high speed trains connecting the metros with satellite cities that would make quick getaways possible. If one could cover the distance between Delhi and say, Agra, or Alwar in about one hour, it would make sense to live there and work in the capital. Such services would decongest the metros, bring down the cost of living, improve the quality of life and spread economic development around.
The Japanese had themselves recommended semi-high speed for the Delhi-Mumbai route when the western freight corridor became operational. The study for METI mentioned earlier estimated the cost of a semi-high speed line with journey time of twelve hours to be $6.85 billion (Rs 45,900 cr). This would jump to $16.34 billion (Rs 109,500 cr) for a ten-hour journey route, at an average speed of 140 kmph. Overnight journeys between the two metros would be possible compared to sixteen-hour journeys by the Rajdhani at the current average speed of 87 kmph. There would be at least six round trips compared to two now, and more frequent trips between Mumbai-Vadodara and Mumbai-Ahmedabad. The fares would be one-and-a-half-times the current fares. Business travelers would be the main patrons.
The Japanese were interested in the Delhi-Mumbai route, because it passes through six states contributing 40 percent of GDP, and some of the most industrialized parts of the country. The Delhi-Mumbai industrial corridor and manufacturing enclaves in them would keeps the line busy.
The study assumed that 60 percent of the traffic on the current route between Delhi and Godhra would shift to the freight-only corridor, now set for completion by December 2018. On the remaining stretch to Mumbai, 90 percent of the freight would shift.
The track would have to be upgraded, fenced or elevated. Electric multiple units capable of quick acceleration and deceleration, tilting technology for speeding on curves, and automatic block signaling of European standards, would have to be introduced.
Though Japanese financial terms seem fetching, they may not actually be so. Former railway official Ved Mani Tiwari who, until August, was director of Kochi Metro Rail, found the dollar to be the most stable over a forty-year period with annualised volatility of 4.5 percent. The currencies constituting the Euro (it was born in 1999) yo-yoed by 6.5 percent while the yen swung the most at 9.5 percent annually.
If the Japanese loan for the bullet train is ‘tied’ and India can only buy Japanese equipment it might pay more than it should. Japanese electric engines for the Japanese-financed Western freight corridor cost more than Rs 50 cr each. Alstom India has undertaken to supply higher capacity (12,000 hp) electrical engines with maintenance thrown in from its Madhepura plant for Rs 24 cr each.
If he had Rs one lakh cr to play around with, Bharat Salhotra, managing director of Alstom India and a former railway official, says he would spend it on more freight-only rail corridors and upgrade the existing routes to semi-high speed. India, he says requires quick mass transport before rapid transport.
But money need not be finite. There is nothing preventing India from investing in bullet trains and semi-high speed rail between cities and also expanding metro rail within cities at the same time. International capital is searching for profitable opportunities. The Mumbai-Ahmedabad bullet train might seem like an ego trip. It need not be just that.
(Vivian Fernandes is a Delhi-based journalist from Mangaluru. He is editor of www.smartindianagriculture.in but takes a keen interest in the railways)