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.