Liberalisation in Railways: Manmohan Singh, the then PM also favoured, but his colleagues foiled it

New Delhi: This may well be a high speed season in Indian Railways. No one had imagined that IR would catch a speed fever in this manner. If we look at railways’ policy three or four years ago, we find experienced politicians like Pawan Kumar Bansal or Mallikarjun Kharge dismissing the idea as a useless one.

Backed by trade unions and officials of railways, they were confident enough to even resist perception at the top level. It is well known that Manmohan Singh, the then prime minister, always favoured liberalisation in railways like in other sectors, but his colleagues did not endorse it.  Insiders who were present in the then PMO said there were many attempts by Manmohan Singh to revamp and modernise Indian Railways.  However his own colleagues nudged the proposals in a different manner to suit their political gains all the times, they said.

Even the immediate predecessor of incumbent Suresh Prabhu,  Sadanand Gowda, did not  show much enthusiasm towards such projects. If we take a glance at railways’ current policies, Prabhu seems to be completely in the grip of high speed fever despite the fact that railways do not consider these projects as core projects. The real theme behind chasing a bullet train seems to be rapid commercialisation of the national carrier wherein high end projects are to be executed with the help of Foreign Direct Investment (FDI). It is not difficult to decipher the script that bullet train projects are those which can allow a 100% FDI and no one could question it. That is why these projects have jumped on the priority list.

One among many facts which makes the story of bullet train interesting is the manner in which feasibility studied have been done. A very senior rail official confided that generally, the companies which are exploring markets for bullet trains have sponsored the study. Obviously, these studies endorse the projects.

The ministry has formed a High Speed Rail Corporation of India to oversee the implementation of the high speed projects. The Corporation declares that the high speed corridors are essential for revitalisation of the Indian Railways. “India does not have a single high speed rail corridor capable of running trains at speeds of over 250 kmph. High speed corridors have played a major role in revival of railways in Japan and Europe,” says the Corporation.

It also maps out the strategy, “Indian Railways would follow a two-pronged approach in this respect. The first approach would be to raise the speed of segregated passenger corridors on trunk routes using conventional technology to 160 to 200 kmph. The second approach would be to identify a number of intercity routes, depending on viability, and build state-of-the-art high speed corridors for speeds up to 350 kmph through the PPP mode in partnerships with the state governments.”

And, the Corporation sets the target as well. “By 2020, at least four corridors of 2,000 km would be developed and planning for eight other corridors would be in different stages of progress,” the HSRC says. According to it, the contract has been awarded for the consultancy of Feasibility study for Diamond Quadrilateral network of High Speed Rail Corridors. The contract for Delhi-Mumbai corridor has been awarded to a consortium of led by China, Mumbai-Chennai to SYSTRA (of France) and RITES (India), and Delhi-Kolkata to INECO (Spain).

In addition to the Diamond Quadrilateral network, the SYSTRA has already submitted an interim report on the feasibility of Delhi-Chandigarh-Amritsar corridor. Acco-rding to the report, the cost of the 458 km-route will be around Rs 1 lakh crore. The French company has recommended that the project should not be implemented on the Public Private Partnership (PPP) mode. It has said that railways should implement with its own resources. Likewise, a Chinese company has submitted an interim report on the Chennai-Bengaluru-Mysore route.

But, the Mumbai-Ahmedabad project seems to be the front runner in gaining momentum, perhaps because it is generating huge political and commercial interest. The Delhi-Amritsar is also attracting attention for the simple reason that Punjab is going to polls next year. The Mumbai-Ahmedabad project has been put on fast track for it would be electorally beneficial if it is seen running by 2019 when the nation goes to polls.

Mumbai-Ahmedabad project

This is no secret that Prime Minister Narendra Modi has been after such projects and he was keen to sign the Memorandum of Understanding for Mumbai-Ahmedabad project during the official visit of Japanese Prime Minister Shinzo Abe. The momentum of the project has pushed questions of viability into the background. The ministry went ahead even without properly debating the issue. In fact, more objective facts have started coming in later.

A study by IIM-Ahmedabad has suggested that the bullet train on 508 km route can only be financially viable when it carries 88,000-1,18,000 passengers per day. This can be only done by making 100 trips a day. The railway has planned only 70 trips a day and assures viability.

The haste with which minister Prabhu has proceeded has not given enough time for the railway officials to reconcile to the change in priorities. Officials are not ready to buy the argument that these projects will modernise railways and help acquire new technologies. They view with doubt the agreement on transfer of technology and say that it even prescribes import of spare parts.

The argument of speed trains becoming a catalyst of industrialisation alongside the track on which it will run also does not seem to carry much weight. In fact, all the proposed high speed projects are connecting such metro cities which have reached saturation. Railway officials are worried over the fact that the bullet train project will cripple railways as financially important routes will go to foreign companies and railways would be left with poor and backward areas.

Moreover, Yen loan is considered to be the worst loan in the global financial market because of currency fluctuations. “The 0.1% interest is misleading. We will have to pay much more,” a senior railway official argued. But the ministry seems to have shut the doors on these arguments.

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