Analysis

Pakistan Can Learn From This Example: India’s Bullet Train; Success Or Failure?

As bullet train service has been kick-started in India, many have questioned about its possible success. The routes of the high speed rail (HSR) are being extended in India and this has created serious doubts about the feasibility of the move.

Last week, the bullet train project was launched by the PM of India, Narendra Modi along with the PM of Japan, Shinzo Abe. The project has been hailed across the struggling middle class of the country as a specimen exhibiting the national Shining India marketing campaign.

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Bullet train criticism

Critics have expressed doubts over the success of the development, when taken in comparison with High Speed Rails (HSRs) in other countries. They have also doubted the extension of its routes in India. These objections have created more doubt towards the possibility of technology maintenance in India. Will it create more employment opportunities or is it just going to collapse in the end as India fails to maintain the project?

Moreover, the budget used for this small railway network begs the question that this money could have been used to improve the already tragic condition of the common railway system in India. While the elite class enjoys travelling in bullet trains, who will pay attention to the lower class which is in constant need of improvements. However, supporters said that the low-interest loan given by Japan won’t have that much of a significant impact on the cost and the project alone would create more job opportunities for the general public.

Although critics claim it to be an elite project, supporters say that this is just negativity which is being spread by them as the project will be open for everybody from all types of classes.

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The project

The project includes a 508 km long railway between Mumbai and Ahmedabad with a total of 11 stops. Out of these 11 stops, 4 are in Maharashtra while 7 in Gujarat. The Maharashtra and Gujarat government have agreed to financially contribute in the project. The whole route will be an elevated track. A small 21km track will be underground in the Thane-Virar section while a 7km track will be under sea. With 6-10 coaches, the train will have the capability to carry 1300-1600 passengers at a time.

The journey from Mumbai to Ahmedabad will take only 2 hours and 8 minutes approximately with stops only at Surat and Vadodra. The journey will be a little slower if the train covers all stops and will take a time of 2 hours and 58 minutes. This time is calculated based on the idea that the train travels at its maximum speed of 350 kmph. However, the average operational speed of the train is expected to be between 220-250 kmph. On the other hand, the fastest service other than the bullet train completes the journey in 7 hours. The train will make 35 trips in one day and 3 services per hour during its peak hours while 2 services per hours when it is not operational.

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Project budget

The total budget for the project has been estimated to be $17 billion. With an interest rate of 0.8%, Japan will provide India with $14 billion. The loan will be extended to a period of 50 years. Payments will begin 15 years after the initiation of the project.

The PM of India describes this budget as “almost free”. However, financial analysts do not share the same view. Keeping in mind the exchange rates between the Indian rupee and the Japanese Yen with the Yen having an inflation of zero, the repayment could rise up to an amount of Rs1.5 lakh crore instead of 1.2. This is just a rough estimate as this amount might increase further taking in account of the rise in cost of the project.

The component manufacture will take place in India by the public sector Bharat Heavy Electricals Ltd. On the other hand, Japan will also benefit from the project through providing equipment and other labor.

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The project is really expensive with an estimate of $27 million per km. Keeping this amount in mind, India’s railway project alone cost almost the same amount as the small HSR project. The question that rises is that will India be able to afford this project which costs this much?

The Indian government has promised the public to extend the HSR to 4 biggest cities of the country. This will extend the project to almost 6,000 km. If 500 km of the HSR can cost Rs.1 lakh crore, imagine how much will 6,000 km HSR cost the country!

On the other hand, the conventional railway is in urgent need of upgradation including double-tracking, expansion, and other safety measures. With over 120,000 km of railway, the upgrade will cost an estimate of Rs.10 lakh crore. With the railway going towards downfall, the place where money should be invested is not the place where it is being invested.

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Will the project be successful?

The HSR will be a luxury affordable by only the elite class. Although the tariffs for the HSR haven’t been announced yet, it is expected that an AC first class will cost around Rs3000. Business class will be even more expensive. According to Detailed Project Reports, the fare would be roughly Rs4300.

In order to balance the cost an estimated amount of 100 trips, daily carrying of 90,000 to 120,000 passengers would be required. For viability, almost 25 million passengers are required to travel the train annually. Conversely, the Indian government has planned a meager amount of 70 trips per day. If this is the case, the Indian economy will fall down immediately.

The HSR also has to compete with air services offering a much cheaper service with AC class. The Mumbai air services cost around Rs2000 and this will prove to be a pain for the HSR in order to compete with such low fares. This might further decrease the revenue generated by the HSR as it will lose customers from the AC class to the air services.

Air travel in India is growing by an amount of 20% per year. During the second half of 2016, air passenger traffic of AC class grew to 70%. Before that, the AC class air passengers were 50% as compared to rail traffic. Although the prime minister confronted the general public by saying that the HSR would be affordable to all, the facts do not state the same.

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International HSRs

India has followed the trend of having an HSR expecting that this will increase its rank in the world. However, countries other than India having an HSR did have all the more viability issues along with serious financial issues. One more thing that India should keep in mind is that the world leading countries with high developed incomes do not have these HSRs or even if they do, those countries are facing serious difficulties through them.

The US has also declined its idea of building an HSR on the San-Francisco-Los Angeles route. Earlier, the US considered another HSR on the Philadelphia-Boston-New York- Washington DC route. Both of these routes are pretty important as they connect industrial and commercial areas. These would rank among the top ten if they were individual countries. Japan has an HSR which carries over 30 million passengers annually. South Korea’s HSR, the Seoul-Busan covers 70% of the country’s population through its routes. France also has an HSR on the Paris-Lyon route and carries a big amount of passengers. The HSR has been receiving subsidies over the years.

Breaking all the records and topping them all, is China. With over 20,000 km of HSR, the Chinese railway is going through an internal debt of $300 billion. The country has reduced the fares about 10 times to cover these expenses. However, the efforts have been all in vain.

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Taiwan is also undergoing some difficulties with its HSR. The HSR covers almost the whole island from the capital Taipei to Tainan city. With a starting cost of $14 billion, the service was started in 2007. By 2014, the project was at the edge of bankruptcy with only 50% of the expected passenger traffic.

Argentina also planned on starting HSR but gave up on it. In Indonesia, the development of a Jakarta-Bandung HSR is undergoing. Turkey also operates an HSR in Istanbul-Ankar but the viability of it is not known.

India would be the only low-income country to start an HSR project even after looking at all the failures by the high-income countries in the field of HSR. Supporters of the project and the government claim that the project will rise. Additionally, it will also prove to be very beneficial for the country. Spokesperson said that,

“Dreams will always triumph over doubts and scepticism”

However, the question that will India be able to maintain this project or not is still a mystery.

 

2 Comments

2 Comments

  1. Dinesh Dutta

    25/09/2017 at 5:24 pm

    Pakistan is even poorer compared to India. Pakistan asks for aid form the US and Saudi Arabia.

  2. Gus

    26/09/2017 at 5:21 am

    Please do not worry about indian HSR, we want to see whole of India with HSR. China will want it’s pound of flesh so no stopping of HSR for India

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