Does India need a bullet train? – D. Raghunandan

Narendra Modi & Shinzo Abe

D. RaghunandanThe bullet train is a wasteful project which only serves to deliver an illusory feel-good perception among the wealthy. – D. Raghunandan

The Mumbai-Ahmedabad bullet train is a vanity project which has little or no justification on the grounds of economic viability or public service. Even the vanity angle—looking to position India among the ranks of developed countries—is a huge overreach. Only a handful of high-income countries with specific demographics have high-speed rail (HSR), while many have failed in their efforts, others have abandoned it after studying it. The main problem is viability, given the huge costs involved.

Failed and struggling projects

Japan’s pioneering Shinkansen, which connects Tokyo to Osaka, passes through the biggest industrial and commercial centres, caters to almost 50% of Japan’s population, and carries more than 150 million passengers annually. South Korea’s Seoul-Busan HSR caters to almost 70% of the population, yet struggles with viability. France’s fabled Paris-Lyon HSR service has had to periodically receive substantial subsidies. Taiwan’s $14 billion HSR service between Taipei and Tainan virtually became bankrupt after losses of over $1 billion. It realised only 50% of the projected ridership and required government bailout. Argentina gave up on HSR ambitions on cost grounds, deciding instead to upgrade its entire railway system to medium-speed infrastructure, an option India should seriously consider. Even the U.S. is tentatively initiating a San Francisco-Los Angeles corridor, and is still unsure about the densely populated industrial-commercial Philadelphia-Boston-New York-Washington DC corridor. Turkey’s Ankara-Istanbul HSR line is the only example from a middle-income country, and the jury is still out on its viability.

China is, of course, an exception, as it is in most things. While reliable data are hard to come by about its 20,000 km of HSR, it is known that fares have been revised downwards many times to match passenger pockets, and that the railways has run up an internal debt of over $300 billion. Is India ready for such an eventuality?

For the rich

The Mumbai-Ahmedabad HSR costs around ₹1 lakh crore. Estimates in the project report by the Indian Institute of Management, Ahmedabad show that at least 1 lakh passengers at fares of ₹4,000-₹5,000 would be required daily for the project to break even. The tariff is too high—air fares between the two cities are around ₹2,500. Subsidies appear inevitable. Subsidies for agriculture, education and healthcare are taboo, but subsidies for the rich seem unproblematic.

Should India spend over ₹1 lakh crore for a 508-km HSR used by well-heeled passengers when over 90% of rail passengers in India travel by sleeper class or lower class for thousands of kilometres? Project supporters argue that one should not view these as either-or propositions. Unfortunately, one is only seeing expensive projects for the upper classes so far, such as the misleadingly named ‘smart cities’. When will the Railways see investment for new tracks and upgrading services for 90% of the travelling public?

A myth being propagated is that this project will have knock-on effects on technology absorption by India through future HSR projects. Can anyone imagine India spending 15 times the present project cost for the pipe dream of 6,000 km of a “golden quadrilateral” of even less viable HSR tracks, as promised in the BJP’s 2014 election manifesto? Another myth is that the Japanese funding at 0.1% interest with a 15-year moratorium is “almost free.” Many business analysts have pointed out that the repayment amount will amount to ₹1.5 lakh crore over 20 years allowing for exchange rates and comparative inflation.

The bullet train is a wasteful project which only serves to deliver an illusory feel-good perception among the wealthy.The Hindu, 6 October 2017

» D. Raghunandan is Director, Centre for Technology and Development, New Delhi.

Bullet Train Route

See also