Bullets on the bullet train

Some people feel excited and some people feel frustrated. I am not excited and I am not frustrated. But, I see it as a good thing. I refer to the announcement of a Bullet Train project between Mumbai and Ahmedabad by the Indian and Japanese governments.

Typical reaction is whether the money could have been spent on more immediate priorities. In life, there are urgent things to do and there are important things to do. Both need to be done. Some fall in between. This need not be deemed important but the mileage and the benefits that one reaps from this project are more than those that can be quantified. The optics and the pride that come with it are not insignificant.

The confidence booster and its trickle-down to other areas plus the usual development of many ancillary activities around the construction of the high speed line and the manufacture of the coaches in India are likely to be substantial. If a trophy project can be executed within time and cost estimates, then it gives us confidence and self-belief about executing other projects.

Second, the transfer of know-how and management techniques in project management should also be counted. Considerable scope for public Sector and private sector skills acquisition in these projects exists.

Probably, similar objections were raised – ‘needless expenditure’ – when India embarked on space research. Now, India is launching satellites for the UK, for France and for Singapore. The information that is being gathered from the Indian remote-sensing satellites is immense.

Similarly, with respect to Pokhran nuclear tests in the Seventies and the Nineties, many well-intentioned but naive do-gooders criticised them. The reality is that a country with a hostile and difficult neighbourhood with one billion people of which a substantial portion is flirting with the poverty line has to pursue multiple goals and objectives simultaneously. Time and tide wait for no man. If it is the case for men, certainly, not for countries.

In the Tamil film, ‘Nayakan’, Kamal Hassan does social work for his people but also has to engage in ‘Dadagiri’. To his daughter, in a scene of famous confrontation, he tells her to tell the other side to stop and then he would stop too. India is in a similar position on many of these things. In an idyllic and ideal world, the bulk of the government spending would be on essential infrastructure and social needs.

India awarding the project to Japan, while China was also bidding for it, is significant. Indonesia appeared to have decided on a similar high-speed rail project to Japan. Then, wanted to abandon it. Then, turned around and  went ahead with the project. Then, it awarded it to China! Now, Indonesia wants to take China to international court for disputes over islands in the South China Sea. Is there any chance that China would take Indonesia’s objections seriously, after it has awarded the project to them?

The common fallacy that people make is about the opportunity cost of the resources deployed in the project. It is tempting and, prima facie, correct to argue that resources have competing ends. But, in these instances, the resource won’t be available if it is not for this project. The Japanese government is not giving a general purpose loan to India at concessional rates of interest for a 50-year period and giving the choice to the Government of India to spend it on any project and then, the Government of India has chosen to ‘waste’ it on a high-speed rail project. It does not work that way.

If the Government of India did not spend on this project, the funds from Japan would not be available for other projects. You can check out the terms of the financial concessions offered on this project in this news link. It is rather generous and, Suresh Prabhu, the Minister for Railways said, 85% of the trains are being made in India. Know-how will be accumulated in India.

I had also overlooked the fact that a High Speed Rail Corporation of India has been incorporated. The website is here.

The Indian Prime Minister’s media statement welcoming the Japanese Prime Minister is available here.

Having written all of the above, I might have overlooked more positives to the story and also some negatives. I would appreciate comments that provide more substance to the above observations.

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9 thoughts on “Bullets on the bullet train

  1. People are forgetting that Govt of India need NOT spend a single rupee on this directly. Given the soft loan terms and (conservatively) projected daily passenger traffic of 40000, each passenger needs to pay something like Rs 1600 per journey for fully servicing the loan. Remember, that this will be in 2031 onwards. At a conservative inflation rate of 7%, this is like Rs 580 in today’s money. This is like the airport development fees that we pay already. As years roll by, this amount will come down exponentially. In year 2040 with 10% YoY passenger growth, loan repayment by passengers per journey will be Rs 640 in 2040 money and Rs 118 in today’s money

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  2. This is a well written and balanced piece by Anantha Nageswaran. I fully endorse the view that such transformative projects, with far-reaching potential to not only crowd-in a lot of additional domestic and foreign investment, and potential for upgrading India’s accessibility to a wide range of new skill-sets, are essential to safeguard India’s future.

    I also appreciate your subtle, but clear, explanation of the application of the concept of ‘opportunity cost’ in the context the ‘bullet train’ project. This concept appears simple but in public policy debates in India, it is often applied in a manner to give credence to the adage that ‘a little knowledge of economics is dangerous’.

    As the project proceeds, the following points merit further consideration. First, is the project for a bullet train or a high-speed train? There is a difference and it should be clarified which it is. The high-speed train will permit greater flexibility and adaptation than the bullet train, and may be for appropriate for India,though technologies may be similar.

    Second, it is worth noting that the contract awarded by Indonesia to China was for a high-speed train and not a bullet train. In principle, one of the considerations for Indonesia in deciding between the two, according to an industry researcher, was whether the technology, construction, etc., that is used for China’s high-speed train could be partly sourced from other suppliers as compared to a project undertaken by Japan or Germany or any other country.

    Indonesia appears to think that if it were to consider extending the network line to Surabaya (where no contract has been currently awarded), they could approach other countries besides China to undertake the project. Of course, political economy considerations would need to support such an action.
    Implication for India is that it would need to avoid a high degree of asset and technology specificity, and incorporate contestability in procurement and other areas so as to keep future options open.

    Thus, it would be useful to check if the Japanese technology that is transferred would require some less commonly-available components. For instance, this may be the specifications of the rail tracks being used (which could be different from the ones that are more commonly used internationally). There may also be other engineering aspects which require checking for compatibility with alternatives being used.

    Third, the operations and maintenance aspects are critical to any train system. These need to be considered and planned from the early stages.

    Fourth, how to ensure that the ‘Make in India’ goals and processes are a part of the project implementation need to be given due consideration.

    Finally, the reported plans for about 1000 engineers to be trained in Japan are welcome. Perhaps this could be expanded to a much larger range of skill-sets required for enhancing professionalism in India’s railway sector.

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  3. Dear Ananth,

    You are far too charitable in this comment:

    “Similarly, with respect to Pokhran nuclear tests in the Seventies and the Nineties, many well-intentioned but naive do-gooders criticised them.”

    I was in DRDO for the 1998 Shakti series of tests, and I can tell you confidently that the critics were overwhelmingly NOT “well-intentioned but naive do-gooders.” They were the same left-libtard-sickularists whose masks have, fortunately. been stripped off since then. Back in 1998 the masks were still in place. I had predicted to my fellow DRDO Directors that the American businessmen would themselves get the sanctions lifted without our having to lobby for it, and that was exactly what happened, And this was in the India of 1998! Today India needs to move forward confidently and do whatever its self-interest dictates. This is why the left-libtards are out in full force to scuttle all reforms and all progress. I hope they don’t succeed but I would say that the future is still (unfortunately) poised on a knife’s edge.

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  4. Hi Ananth,
    I think you have touched on the point but it may be worth elaborating that the technologies associated with the High Speed Rail link will have benefits in other fields. The skills and qualifications acquired by Indian companies and engineers supplying components to the project would be invaluable for other areas of the country’s development.
    With kind regards, Arun

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  5. The most important argument in favour of bullet trains is: air travel and travel by car are driven by a fuel(oil) from foreign source whose price can suddenly go beyond the reach of the common man. Bullet trains are fuelled by electricity which in turn is fuelled by coal which we have in abundance and also get easily(its prices are more stable). The opponents of bullet trains conveniently ignore this fact

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  6. When Rajiv Gandhi proposed trial introduction of ‘telephones that can be used while moving’, I had mocked and wondered how that could ever succeed in a poor country where the existing telephones creaked and sputtered. Some might think likewise about bullet trains too. I must also add that my opposition then was not a little influenced by my antipathy to the then PM. Any current opposition to bullet trains too could be for both such reasons.
    A leader’s vision often strains peoples’ credulity. Bullet trains may turn out to be as much a growth inducing disruptive industry as the mobile telecom has become.

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  7. Good Sensible article. Countries having Bullet trains are not fools. Thank god we Have MODIJI who has Vision and DESHBAKHT. His personal contacts with world Leaders will Help BharAth very greatly.
    Mr Prabhu is a very effective Honest technical Minister. 85 percent INDIAN made is great. I also feel very substantial part of the tracks SHLD all be MadeIn INDIA. For fast progress Tracks to be laid from both ends. Bullet trains save enormous time By better Last Mile Connectivity. So much better than Airplanes which is not good for short distances. It’s O.K Between Metros and that sort of distances.
    Commutation to RLY stations of Bullet trains easier and Faster than Airports. Less expensive. RLY stations can create many biz OPPURTUNITIES. JAPAN will teach us how to run Superfast Trains even with Seismic Activity.
    RLYS can study Diff traffic Patterns during diff times of the day, and in diff months and time the trains and frequency.
    Perhaps now someone has an idea of running trains where entire line need not be power energised, as the train keeps moving for that particular train power is switched off on the O.H Line as the train moves forward towards its destination.
    In many sectors The density of traffic depends on the days timing according to the sector. So why keep the line energised,continuously.
    In the evening when the train returns the O.H line is energised in the reverse Direction.
    These are ideas which also Mr Prabhu ,perhaps our Finest and Most knowledgable RLY Minister We Ever had can Implement along with bullet trains etc.
    INDIA needs to march Forward with New Technology and Becoming Most Cost effective.
    We would then be among top,4 Nations in the World in 12 yrs time
    Thank u.

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