India will start work on its first high speed railways bullet train — the Mumbai-Ahmedabad High Speed Rail (MAHSR) tomorrow. Funded by the Japan International Cooperative Agency (JICA), this project will be the biggest change Indian Railways has witnessed in post-Independence India.
What is the deal?
The MAHSR debt structuring is very attractive: a ₹88,000-crore loan at a notional rate of interest of 0.1 per cent to be repaid over 50 years, with a principal payment moratorium of 15 years.
Need of HSR – Chinese experience –
When China introduced its HSR, its per capita GDP was just under $3,500. When the MAHSR is inaugurated on completion of 75 years of Independence, India’s per capita GDP should be between $2,500 and $3,000 depending on the how the growth rates stack up in the next five years. Hence, there’s no better time to start working on a high speed railways bullet train
- Technology upgradation – The most obvious benefit of MAHSR will be an Indian manufacturing and software ecosystem for the Railways. The Japan external trade organisation or JETRO will be assisting the Indian government in identifying potential areas for ‘Make In India’ localisation. Indian industry will gain further experience in managing large projects. A network of mid- and small-size enterprises will come up to support this manufacturing process and the ecosystem will eventually tap new Indian HSR requirements and export market possibilities.
- Expansion possibilities – New production bases and townships will eventually expand along the MAHSR. The trickle-down effects of opening avenues for cheaper housing, logistics hubs, and industrial units along the route will benefit smaller towns and cities. Construction activity will boost allied industries such as steel, cement and infrastructure. This will translate into additional logistics and warehousing demand. This will help near-term economic growth which has been sluggish in the last few quarters.
- Job creation – New temporary and permanent jobs will also be created with most of the manufacturing, from components to rolling stock, done in India. Managing a project of this complexity and scale will be a great learning experience for the Indian agencies involved, resulting in skill development.
- Skill training and education – The safety standards of Shinkansen will be something to learn from. India is already planning to set up an HSR training institute at Vadodara. Expected to be functional by 2020, it will train up to 4,000 individuals in high quality rail technology following Japanese standards, methods and tools. Indian Railways will train 300 of its officials on rail technology in Japan.
- Safety in operations – The HSR systems offer reliability of operations, not affected by bad weather or congestion, which impact road and air traffic. Once commissioned, 40,000 commuters are expected to use the service everyday. This will decongest the conventional rail, road, and air traffic between Mumbai and Ahmedabad.
Technology boost should not wait for critical approval. India should put on fast track what it can, even if there are some slow lanes in the economy. Not only should India welcome the MAHSR, there should be more concerted efforts to set up new lines in sectors such as Bengaluru-Chennai, Delhi-Chandigarh, MumbaiPune, Nagpur-Hyderabad, and Varanasi-Kolkata.