Railways: Choice And Competition- XIV

The problems with high-speed trains

Given the topic, this column requires a double caveat.  This is an issue where I am stating my personal views alone.  They are not the views of the Committee.  Nor are they the views of the government, that second caveat becoming necessary because this column appears immediately after the Railway Budget. 

I have in mind high speed rail (HSR) and bullet trains.  Whenever I am asked a question about either, my response is – what do you mean by high speed and what is a bullet train?  First, think of a track that doesn’t carry mixed traffic, no slow passenger trains and no goods trains along that track.  Second, think of a track that is completely segregated and separated, no humans and animals crossing the track, no level crossings to slow down trains. 

Admittedly, there are a few minor weak segments where rails and their foundations have to be strengthened.  But once that strengthening is done, if those two conditions are satisfied, with today’s rolling stock (coaches and locomotives) and today’s rails, IR is capable of delivering trains at 175 km/hour, perhaps marginally more.  Depending on the number of stops, this means Delhi-Mumbai in 8 hours, Kolkata-Delhi in 8.5 hours, Mumbai-Kolkata in 11 hours, Delhi-Chennai in 12.5 hours, Chennai-Kolkata in 9.5 hours and Mumbai-Chennai in 7.5 hours.  Something like that.  IR can’t do it because those two conditions aren’t satisfied.

However, 175 km/hour cannot be high speed.  In response to my question, most people mention a speed of 300-350 km/hour.  That’s what they have seen in France, Japan, China and other places.  That’s an aspirational objective, at least from segments of the population.  Why can’t India have trains like that? 

For high speed or bullet trains to work, those two conditions must be satisfied.  In addition, from a terrain point of view, the track must be straight.  Otherwise, the train will keel over. For standard tracks, I have earlier mentioned a cost of between Rs 10 and Rs 15 crore per km, depending on the terrain, and without factoring in costs of segregating the track.  The moment it is in the range of high speed or bullet, we are talking about costs that are upwards of Rs 150 crore per km, without factoring in the costs of land. 

No one has an accurate idea of the costs, because the only stretch for which some kind of figure is floating around is Ahmedabad-Mumbai.  That’s 508 km, with a cost range between Rs 70,000 and Rs 90,000 crores.  Other than Ahmedabad-Mumbai, other possibilities are Delhi-Mumbai, Mumbai-Chennai, Chennai-Kolkata, Kolkata-Delhi, Delhi-Chennai, Mumbai-Kolkata, Delhi-Agra-Lucknow-Varanasi-Patna, Howrah-Haldia, Hyderabad-Dornakal-Vijaywada-Chennai, Chennai-Bangalore-Coimbatore-Ernakulam-Thiruvananthapuram, Delhi-Jaipur-Ajmer-Jodhpur and Delhi-Chandigarh-Amristar.  With the exception of the diamond quadrilateral, these are thus short stretches, less than 1000 km.  High speed works best when the stretch is around 500 km.  Notice also that these are mere possibilities.  There are several, for which, pre-feasibility studies haven’t yet been completed.  The Railway Budget speech makes this quite clear too.

Hence, the obvious question.  Why should IR divert resources for such an expensive proposition?  There are other priorities.  The counter-response is that these are incremental resources and incremental tracks.  No diversion of IR resources is involved.  For instance, the Japanese might fund such trains and tracks, or perhaps the Chinese.  Or perhaps the French.  What does fund mean?  While I am not privy to the details of any negotiations, “fund” logically means a loan, perhaps on soft terms and perhaps with a moratorium.  Eventually, that loan will have to be repaid.  For Ahmedabad-Mumbai, I have seen reports that suggest that the economic internal rate of return (EIRR) is 10.28%, certainly more than 9%. 

There are at least three reasons why I am sceptical.  First, as I mentioned in an earlier column, given the great discrepancy between anticipated ex ante IRRs in IR calculations and their subsequent ex post values, I am inclined to take all such figures with a pinch of salt.  Second, I am not aware of a single country in the world where high speed trains are generally commercially viable.  They are bailed out through public subsidies.  Third, today, on an average, an IR passenger pays something like 28 paise per km.  Do we really expect a high speed passenger to pay something like Rs 7-8 per km, despite the conveniences of high speed travel? 

I will be happy to be proved wrong.  But my apprehension is that the actual IRR will turn out to be something like 3%. Meanwhile, despite the moratorium and the soft component, the repayment rate will be 8% and more.  Whether it is through the artifice of a High Speed Rail Corporation of India or not, we may thus end up not with incremental resources, but with an incremental burden.  That’s not merely on account of construction costs, but operational losses too.

Thankfully, all this is a long distance away.  The only one which has progressed somewhat is Ahmedabad-Mumbai.  Since construction takes 10 years and more, even without land acquisition getting in the way, that Ahmedabad-Mumbai stretch will also be something that will become operational beyond 2025.  Hopefully, by then, IR will be on a sounder financial footing. 

There are many things that are seemingly attractive.  Subsequently, they become financial burdens.  I am sure IRCTC’s Maharajas’ Express seemed like an eminently good idea.  But the JV with Cox and Kings fizzled out.  Maharajas’ Express may have won several awards.  However, as far as I can make out, it still makes losses. (IRCTC’s accounts, in the Annual Report, aren’t very clear on this.)  That is a possible metaphor for what I don’t think high speed rail should become.