Dear Metro Man, Bullet Trains Can Be Low-Cost if Sensibly Financed

Fares alone will not make bullet trains viable. They will have to capture other streams of revenue.

When “Metro Man” E Sreedharan told The Hindustan Times that the bullet train is highly expensive and will be beyond the reach of ordinary people, I suppose he was expressing himself against the Mumbai-Ahmedabad project currently under way and not against high-speed railways in general.

My Conversations With ‘Metro Man’ E Sreedharan

I recall a conversation with Sreedharan in 2008 at the inauguration of the Bombardier metro coach factory at Savli in Vadodara. After a panel discussion which I had moderated, I asked him for his views about the dedicated freight corridor which the then Railway Minister Lalu Prasad had mentioned in his budget speech, earlier that February.

Sreedharan said a freight corridor did need high technology. It merely shifted goods trains to a separate track where they could travel at speeds of 100 kmph and more over long stretches, without interruption from passenger trains.

But moving passengers at high speeds needed a different set of engineering skills in terms of design, manufacture, operation and maintenance. The Railways would have to imbibe a safety culture they were not used to, because even minor errors could have very nasty consequences.

By high-speed, I don’t know whether he meant trains running at 350 kmph or those categorized as semi-high speed doing 200 kmph. Of course, there is a huge price difference between the two. A 2012 pre-feasibility study done for Japan’s Ministry of Economy, Trade & Industry (METI) said a 12-hour track between Delhi and Mumbai would cost around USD 7 billion (Rs 48,000 cr), while a 10-hour track would cost USD 16 billion (110,000 cr).

The Beijing-Shanghai high-speed track, which is about the same distance as Delhi and Mumbai, cost USD 33 billion to build. Despite the high cost, it had become profitable, a representative of China Rail said at a conference of the Asian Infrastructure Investment Bank (AIIB) in Mumbai in end June 2018.

Fares Alone Won’t Make Bullet Trains Viable

Sreedharan says India needs fast, clean and reliable trains more than those that dart like bullets. But why can’t it have a mix of both?

Sreedharan was himself accused of elitism when he championed the metro system for Delhi. Critics said the Bus Rapid Transport (BRT) was more apt and held the system in Bogota, Colombia, as an example for Delhi to emulate. But Sreedharan persisted; the central and state governments backed him and the people of Delhi are grateful for that.

True, it has not made even operational profit in its 16 years of existence. But it has averted a lot of emission-intensive personal travel, with its deleterious effects on health and navigation. The Housing and Urban Affair Secretary, Durga Shanker Mishra, says the Delhi Metro will be in the black this year thanks to the two price hikes effected last year (which has also resulted in up to 5 lakh passengers opting out daily).

Fares alone will not make bullet trains (or metro services) viable. They will have to capture other streams of revenue like advertising or the appreciation in land value that they create. This is easy in China because the state owns the land. Even Hong Kong’s MTR metro lines have been financed with revenue generated through property development.

Bengaluru’s Namma Metro has used innovative financing to pay for the 17-km IT corridor stretch. It got IT companies to pay for stations near their offices and also sold station naming rights. A special cess on commercial and residential spaces along the line will skim some of the resulting value appreciation, says Pradeep Singh Kharola, the metro’s former Managing Director (and current CMD of Air India.

How to Make an Expensive Project Cost-Effective

In areas where land is privately held the government can enter into revenue sharing arrangements to finance trophy projects like bullet trains. For instance, the Paharganj sprawl, adjoining New Delhi Railway Station and downtown Connaught Place, which has evolved haphazardly, can be developed into a planned high-rise commercial district and a chunk of the money used for investment in high-speed railway corridors, says Bharat Salhotra, Vice President, Sales and Business Development for Alstom’s Asia-Pacific region. This can create jobs and demand for construction material and result in a cascade effect on the economy.

Expensive projects, if innovatively financed, need not be elitist and can be made affordable.

High-speed trains make ecological sense too. According to the European Commission’s 2011 white paper on transport, they are 15 times less emission-intensive than airplanes. If stations can be set up, say every 100 km, they can help decongest large cities. For climate change reasons, as India climbs to middle-income status, it will have to avert flight travel for large numbers of people who want to move swiftly across long distances.

Sreedharan is right in cautioning against unsound, prestige projects for political glory or national pride. He may be speaking from experience because the capital’s Airport Express line has become a crushing financial burden on the Delhi Metro, because the concession to an erstwhile private operator was badly crafted.

(Vivian Fernandes is editor of www.smartindianagriculture.in. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)