Railway Budget 2016: Towards a High-speed Railway future

Railway budget 2016: The total project cost of the Mumbai-Ahmedabad corridor being around Rs 98,000 crore, India will have to invest around Rs 18,000 crore to meet its part of the deal

Ahead of the Rail Budget, the government has taken a step forward in making bullet train a reality in India by creating a new company called the National High Speed Corporation Limited.

Formed as a joint venture company between the Ministry of Railways and states of Gujarat and Maharashtra, the company has a paid-up capital of Rs 20,000 crore — basically taking into account the future amount that it will invest into the 500-km Mumbai-Ahmedabad bullet train corridor. The remaining money, 81 per cent of the project cost, is being funded by Japan.

A high-speed electric train emits one-eighth and one-fifth of carbon dioxide versus automobiles and aircraft per passenger km, respectively. A double-track rail line has more than thrice the passenger-carrying capacity of a six-lane highway, and requires less than half the land.

In the Rail Budget, railway minister Suresh Prabhu will infuse around Rs 200 crore for the first year of its operations as the newly formed entity takes baby steps, sources said. At present, the company has been formed with two temporary directors who are officials of the Railway Board.

Subsequently, during 2016, the company will finalise a building in Delhi for headquarters and induct a full-time management starting with a Managing Director to be selected by a search committee headed by the Cabinet Secretary. As per the Cabinet approval, the company, a first in the country, serves as a template for spearheading high-speed projects across India. As per plans of the government, the National High Speed Rail Corporation can enter into similar joint venture arrangements like other state governments to build other high speed projects, like the Delhi Metro Rail Corporation does in the case of metro projects.

The total project cost of the Mumbai-Ahmedabad corridor being around Rs 98,000 crore, India will have to invest around Rs 18,000 crore to meet its part of the deal. This money will be invested through this company which will be the implementing agency of the project.

In a recent meeting of state chief secretaries and Railways, chaired by Arvind Panagariya, it was highlighted that the company should start work as soon as possible and states have been advised to expedite the process along with getting the required funding as capital infusion into the newly created joint venture.

At long last, India is poised to redeem its tryst with high-speed rail (HSR). With Japan committing a $12-billion loan at concessional terms, the 500-km ‘bullet train’ corridor between Mumbai and Ahmedabad is now consecrated, and its financial and technological contours also charted. An autonomous corporation has been contemplated for executing the project as a joint venture with the concerned state governments of Maharashtra and Gujarat. Driven by Prime Minister Narendra Modi’s vision and pursued by railway minister Suresh Prabhu’s energy and tenacity, the project will enable India join the world HSR elite club, hopefully before 2025.

The pioneering HSR corridor has the potential to be an inflection point, to revitalise Indian Railways and trigger new dynamics for the economy. It would constitute one of the four pillars on which Indian Railways could build a structure essential for the transformation of the nation’s lifeline. The other three pillars are:

  • High-speed high-volume freight corridors, two of which are now being constructed, will enable Indian Railways to operate time-definite heavier and faster freight trains ferrying bulk as well as ‘retail’ goods, including double-stack container trains under electric wires;
  • A string of modern-day stations, akin to new airports, and multi-modal logistics nodes, optimally located across the sprawling network;
  • A revamped rail passenger travel wherewithal—a business line separate from the freight business.

The clamour for passenger trains providing speedy, safe, reliable and comfortable travel is constantly increasing.

Already, Indians are travelling more, and they are travelling longer. However, with around 13,000 passenger trains, carrying 23 million travellers daily, Indian Railways has only a 10% market-share of the country’s overall passenger business. It has to substantially extend, accelerate and modernise its infrastructure, stations, pre-board and on-board services. It must impart urgency on upgrading wherewithal for semi-high-speed inter-city trains for 10-12-hour journeys (Delhi-Mumbai and Delhi-Kolkata Rajdhani trains) and 3-4 hour commuting on Shatabdi trains, leaving local and regional passenger services to be managed by an autonomous entity under its wings.

Time on Indian Railways has run still, while the world has witnessed an HSR flurry. While the Shatabdi running on the 200-km New Delhi-Agra route is now cleared for a maximum speed of 150kph, the upper limit of Indian Railways’ ‘fast’ trains—Rajdhanis, Shatabdis, Durontos—has remained limited to 130kph, in effect averaging just 80kph. The Mumbai-Ahmedabad HSR is envisaged to be in the new genre; it will cut the current fastest journey time of 7-8 hours to just 2 hours. Today, worldwide HSR networks operating on exclusive high-speed lines aggregate some 22,000 km, of which China’s share alone exceeds half.

Conjuring up an image of an exorbitantly-expensive infrastructure mode, HSR on dedicated lines at 250kph or higher—often up to 350kph—has almost everywhere been dubbed as elitist. Costing R200 crore per km, India’s first HSR project involves an estimated outlay of R98,000 crore, more than that of the 3,300-km Eastern and Western dedicated rail freight corridors currently being executed.

For HSR in India—much like TGV in France and Shinkansen in Japan—a general query is posed: Why do we need such an expensive train for the rich, when many other pressing schemes need resources? One must understand that India’s pioneering HSR in no way crowds out any of Indian Railways’ other projects and schemes. Japan’s offer of the $12-billion assistance is only for the designated HSR; it is not transferable to other railway projects. Any attempt at its postponement will only add to woes of higher costs and missed opportunity, much as long delays caused for the Delhi Metro.

Today, TGV in France—operating on some routes every 5 minutes as a preferred mode—is hailed as the real ‘low-cost carrier’. Shinkansen in Japan has emerged as an invaluable part of the country’s mobility and economy. Less than a decade ago, China had no HSR; now tickets to ride on its network of ultra-fast trains routinely sell out. Its HSR network moves twice as many passengers as its airlines do.

Concerns over depleting fossil-fuel reserves, climate change, overcrowded airports, delayed flights and congested roads have conspired with HSR technology alternative. Energy-efficient and environmentally-benign, a high-speed electric train emits one-eighth and one-fifth of carbon dioxide versus automobiles and aircraft per passenger km, respectively. A double-track rail line has more than thrice the passenger-carrying capacity of a six-lane highway, while requiring less than half the land.

A really important plus is HSR’s unblemished safety record—with a 2,500-km network, providing high frequency up to 14 trains per hour, the Shinkansen ever since its inception on the 550-km purpose-built Tokyo-Osaka route in 1964 has maintained a unique record of no fatal accident. As also the TGV, sans any accident in 30 years and more.

“Chinese HSR has so far established a mortality-risk level that equals or exceeds that of the world’s safest airlines,” says Arnold Barnett, an aviation safety expert.

HSR does not only divert passengers from road and air, it also generates a new class of passengers. For distances of 200-800 km, airlines cannot match HSR—while below 200 km, road transport has an edge; beyond 800 km, air option is better placed. With average operating speeds of around 250kph, HSR helps bring settlements 500-km apart within two hours of each other. Designed to be faster than a car, and more frequent, cheaper and more convenient than an aircraft, HSR has been a catalyst for economic growth, a stimulus for the development of satellite towns, helping alleviate migration to metropolises. Providing services from and to city centres, HSR serves important centres en route, providing value for time through express and easy access to tier-2 and tier-3 cities.

HSR fares are normally higher than classic rail services for increased speed, reliability and comfort. The Shinkansen fare includes a surcharge which doubles the fare as compared to conventional trains. HSR fares in China are around thrice the conventional train fares. While most HSR lines recover their operating and maintenance costs, it is difficult to recover much of capital cost. Revenues from fare box collections are appreciably buttressed, in particular by commercial developments in and around HSR stations. Japan’s JR East Group operates over 40 hotels, offers some 177,000 retail locations at stations, and earns advertising revenues from 17 million daily passengers. HSR also wins some of the air freight business; freight represents 10-15% of French HSR revenues, and postal TGV trains use Paris-Lyon HSR line, replacing aircraft.

A nation of India’s size, potential and aspirations has to envision its destiny, dream big and bold, sometimes with irrational exuberance. It is inconceivable that, notwithstanding its size, scope and strength, Indian Railways would continue to deny itself a peep into rapid technological and commercial transformation that railway systems the world over experience. Besides legitimate national prestige being a motivation, technological development promotes the rail supply industry.

A recent McKinsey report suggests that, by 2025, India will be the world’s fifth-largest economy; the number of households earning Rs 2 lakh to Rs 10 lakh annually would have risen to 583 million from the current 50 million. More intensive urbanisation and rising incomes would lead to higher travel propensity. Indian Railways must push ahead with the HSR corridor, for a mature mobility mix, to unlock an immense hidden value, and the country not to be left out of essential technology upgrade.

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