The speed challenge

The speed challenge

The government should recognise that the high speed train is a serious opportunity for a giant leap in techno-prowess.

In the new railway budget presented to Parliament, the Indian Railways (IR) is pitching high on investments from the foreign direct investment (FDI), public-private-partnership (PPP) and private investment. While this is a major reform announcement, the moot point is whether these will materialise? Various commentators on the IR, looking at high speed rail (HSR) through a limited vision of a mere faster surface transport  are portraying it as a loss making-programme that will require heavy government subsidy, simply because of the capital intensive long gestation nature. 

Yes, HSR is a gigantic, enormously expensive project. But, in India, with a large population, HSR can be made a reality, through a skilfully crafted business model that integrates all the stakeholders who stand to gain from the project. There is one such business model being developed by a senior official in Planning Commission, presently pursuing a part time PhD for developing a new investment model for High Speed Rail in India. The model rests on the premise that beyond transport, HSR has to be developed as a vehicle for technology acquisition, assimilation and subsequent techno-mercantilism to give a boost to GDP, as has been done by other Asian countries. 

This model holds the promise of showcasing HSR as a win-win proposition for all stakeholders, imposing minimal burden on state exchequer. What is required is an Act for HSR and a legislated policy for it and advanced rail technology. All other routes- FDI, PPP etc, eventually will only lead to an eventual burden on the state exchequer. While announcing the intent of bringing FDI, PPP etc, surprisingly, the budget does not speak of private trains. This could have paved the way for more investment in IR and better travel experience. Of course, this will require transparency in railway costing, otherwise, the government may end up subsidising the private train operators. The railway operations too will have to be opened up to ensure there is no discrimination in allotting paths for private passenger trains.

The new government would be well advised to recognise that the HSR is a serious opportunity for a giant leap in India’s techno-prowess. It is also a major public expenditure challenge, that will be mired with controversies on high cost, environmental concerns, including noise pollution, land acquisition and social activism. The solution lies in adopting a national policy and enacting an Act. Give the correct market signals on speed, network size and technology acquisition routes. India must make this the route for eventual techno-mercantilism for nourishing its own GDP and not that of nations offering FDI or bilateral credit. This will require prior policies and enactments. The buy-off-the-shelf route will only bleed India when it comes to HSR. 

Landmark move 

The proposal on Railway University is another landmark announcement. This must cut beyond Railways’ institutions to cover academia and industry. The truth is that India has no Advanced Rail technology R&D institutions, dedicated laboratories or Rail Technology Universities. China, where railways came at the same time as India, has a China Railway Society --a national institution of railway science and technology funded by Chinese government, several railway universities, design institutes and key laboratories including a State Engineering Laboratory for High Speed Trains System Integration. In sharp contrast, India doesn’t even have a test track! Similarly, the Northeast could not be connected by rail, for decades because we never wanted to acquire and assimilate advanced rail technology required for bridges and tunnel in challenging mountainous terrain, like the technology China deployed to reach Tibet.

  The financials in this budget portray the same old story. New railway minister Sadananda Gowda appears to be somewhat apologetic about the operating ratio of 92.5 per cent and the operating surplus of Rs 15,198 crore. What he has to remember is that he is the only railway minister in the world who moves the highest volume of 1116 billion passenger km at the most economical fares. At the same time, he also operates the world's fourth largest 675 billion freight tonne km volume again at a freight rate per tonne km comparable to China Rail freight rates. All this in a year, when the economy is under performing, on the same railway network of 65,000 route km, that too with a profit and paying a dividend to the government. No rail minister in any country has ever done this feat. 

Railways have announced an increase in Plan size. This should not go the way the massive Rs 3,20,000 crore was spent since 2007. Even after such a heavy plan spend, old problems like capacity constraints, technology obsolescence, glitches in safety and security, slow speeds etc remain. The Railways had spread this money on diverse projects, ignoring critical coal carrying new lines in Jharkhand, Chhattisgarh and Odisha, which would have raised the freight carrying capacity by 300 mt. 

The adjustment of tariff with increase in cost of fuel will help railways recover part of the cost of operations. However, this will not go very far in containing overall working expenses or generating internal surpluses. Part of the tariff increase is likely to set off a price rise spiral. More than half the energy consumed by IR is from electric power. When railways pass on increase in energy cost over to coal, which is a raw material for powerhouses, this in turn will be passed back to railways through higher electricity prices.  

(The writer is a retired financial commissioner, Railway Board)

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