Separating the Bull from the Bullet Train, one bogey at a time.

There is something perverse in taking a trillion rupee loan to build a 500 km bullet train that’ll serve just a few million people, while the remaining billion people have to travel in filthy, outdated, excruciatingly slow and dangerously overcrowded trains across the country on 69,000 km of decaying track.

PlainTalkin
Sep 21, 2017 · 21 min read

By building High Speed Rail (HSR) before medium-speed rail, are we putting the cart before the horse? Isn’t fixing our crumbling railway-infrastructure a higher priority than shuttling rich people between cities?

Why is it that cartoonists and satirists are having such a field day with this Bullet Train tamasha? Is Japan really offering us a free ride, or is our gov’t taking us for a ride?

Will it end up a White Elephant for India, and a Golden Goose for Japan?

Now don’t get me wrong. I’m not being negative about this entire project just because I’m some kind of rabid Modi-hater. I’m against this because of very specific, quantifiable reasons.

Four Reasons Why I’m Dead Against The Bullet Train

High Speed Rail , 300 kmph+, is prohibitively expensive to build and run. That explains why, even though the technology is 50 years, only a handful of countries have implemented them — and why rich countries like US, UK and Australia for example have been putting off these plans for decades.

Now, even if we assume the loan is free — that this is Japan’s “gift to India” — low-occupancy on the bullet-train coupled with high operating costs will bleed the Indian Railways of an estimated Rs. 4,000+ crore/year.

  1. For the bullet train to break-even, 1 lakh people need to commute daily — that is four times the number of people who can currently even afford the service. Total premium-fare (AC, train or bus/flight) traffic on the Mumbai-Ahmedabad route is a mere ~25,000/day.
  2. A loan of 88,000 crores however cheap, is still a loan (not free or a gift) and subject to adversely fluctuating exchange rates. The money must be earned and paid back. If all evidence points towards loan default, we shouldn’t take the loan in the first place. Besides, 22,000 crores of the total 1.1 lakh crores, will have to paid by taxpayer money, over 5 years.
  3. Bullet-hysteria has sidelined a fare more important project. Medium speed trains (180–220kmph) could be implemented within months at 1/10th (or less) of the cost, and crucially, be offered at economically viable rates. Why not start with those and gauge actual demand.
  4. Each year, ~30,000 Indians die in avoidable rail-related accidents, mainly due to a appalling shortage of 1.25 lakh Indian Railways safety staff. If the railway budget can be stretched by even a thousand crores to stop or reduce these fatalities, it should be done — before indulging in such foolhardy ventures. Rail-travel should be safer for all, not some.

A Vanity Project? 🚅⭐⭐

Consider this…

Your current car is a rickety old Maruti 800. You need an upgrade. But you don’t earn much; your house needs repair too, and the kids’ education costs a bomb. Should you buy an practical and affordable car like the Baleno, or Dzire?

Yes, you probably should.

Or should you buy a Lamborghini for 3 crores just because some guy is giving you a 30-year interest free loan?


Can we afford small luxuries to help us develop?

Yes, there’s definitely an “excitement factor” in being connected to state-of-the-art technology — which has numerous morale-boosting benefits. And by all means, it is imperative for us to innovate and adapt the best practices from more developed nations.

But development should be a holistic solution, not an abstract import.

ISRO is worth the limited amount of money spent on it (annually $1.4 billion or 1/15th the cost of the bullet train), because it provides us spacial independence — which is priceless. To compare that with a frivolous ‘relatively-faster-surface-transport’ option, is ridiculous.

Moreover, all ISRO technology is developed indigenously; it flows downstream and sustains an entire ecosystem of hi-tech research. Additionally, ISRO’s annual earnings by way of launching global satellites, top 100 million USD.

Shinkansen bullet trains on the other hand are being imported lock, stock & barrel. The only money that will flow back into India is from construction and land acquisitions. If there was to be real tech-transfer, the BJP IT Cell would have been splashing the details all over Social Media right now.

NOTE: Only civil construction contracts to Indian Companies, no making engines, coaches or anything of the sort.

Let it be understood, no factories to build engines or even coaches will be set up. There will only be negligible amounts of “technology transfer” in this project (more on that later). And even if we do get any of this much vaunted “technology”, we just don’t have the resources to put it to use.

The miserable state of our public finances (can’t afford to even repair bridges and overhead walkways) will not allow us to build another one of these trillion-rupee babies anytime soon.

Besides, the geophysical reality of western-India does not facilitate extension of the MUM-AMD track. Bullet trains can’t climb the rugged 500m incline up to Pune, nor can we extend the track northwards as there simply is no major city right until Delhi — which is a 1000km away.

Getting our priorities straight

All else being equal, bullet-trains will cost 10 to 12 times more than medium-speed rail [160–220kmph], to create as well as maintain.

The Indian Railway budget is annually Rs. 1.3 lakh crores or $20 billion. In contrast, China can afford to build thousands of kilometres of bullet train lines because their railway budget is a whopping $115 billion.

A White Paper published by the NDA regime in 2015 (linked below) has not a single mention of the term ‘bullet train’. On the other hand, it repeatedly identifies capacity expansion on key routes as the need of the hour.

Wasting precious funds on a risky, low-return, standalone project diverts scarce resources from the needs of a national network — one that is in a pitiful condition, desperately in need of funds. It is an alarming deviation from all previous studies and recommendations by the Indian Railways.

If any vast sum is to be borrowed and spent — it should be done towards achieving our primary objectives, which are:

1. Construct the 5,846km ‘Golden Quadrilateral’ high speed corridor

150 kmph: dedicated freight & passenger lines linking the four metros, such that two cities are no more than an overnight journey away.

2. Fix that which needs fixing the most: Basic Infrastructure

Outdated tracks, signals, unmanned level-crossings; increase capacity, strengthen bridges, improve punctuality and hygiene.

3. Modernize 19,000km of high-volume tracks

Increase capacity of these tracks, which comprise 40% of the total network and carry 80% of traffic — as recommended by a high-level committee in 2012.


What is not the priority:

Gimmicky burn-a-hole-in-your-pocket bullet-trains that marginally improve the travel-time of a few. *And help BJP win the Gujarat elections*


Will Create 20,000 Jobs! 👏

1In demographic-disaster-zone India, each month 1 million 18–21 year-old’s enter the job market. Yes, 1 million. That’s 33,000 a day. Meanwhile, shockingly, at present Indian Railways has a 16% shortage in safety staff, as ~125,000 positions still lie vacant.

Is Rs. 1 trillion really the price we have to pay for a mere 20,000 jobs? Every single jhopri from Ghatkopar to the Gujarat border has twenty thousand jobless chokras hanging about playing Blue Whale and singing Bolna Aunty Auu Kya because this gov’t has failed miserably on the jobs front.


Will Reduce Travel-Time To 2 Hours… 💨

2A top speed of 320kmph doesn’t mean you press a button and it instantly goes to 320 for the rest of the journey. Depending on the load, it takes 3–5 minutes to reach full speed, and gradually brake before each of the 12 stations — where it’ll pause for 3 minutes each. So, that’s a minimum of 30 minutes added on.

The current best-case scenario for the 508 km BOM-AMD section is 2 hours 58 minutes. Running on Indian Standard Time— it could well be 4 hours. Note: this is not a random projection; view the graphic below.

Depending on the number of stops, the Tokyo-Osaka Shinkansen takes 3 or 4 hours for a similar 515km journey — and that’s with Japanese standards of efficiency.


India is Taking a “Technological Leap of Faith” 🏃

3Look before you leap; unlike Japan in the 60’s, and China in the 2000’s, India is not a industrial powerhouse—and it isn’t becoming one either. We don’t have stretches of high-density, highly-urbanized clusters which require technology of this scale.

No less than two-thirds of our population still live in rural areas, and they aren’t particularly growing richer. They can not afford to, nor do they have the need to, travel by bullet trains.

ore importantly, any technological knowhow that comes with these bullet trains won’t really help us upgrade our existing railway infrastructure. Shinkansen technology uses a fully computerised system with minimal human interaction.

Indian engineers, already world-renowned, could easily implement this if given the task. Our obstacle is not that we don’t we don’t have the technology. We are failing to keep up with standards because we lack proper management and funds.

What is the point of importing a technology which we don’t have the means to replicate? Technical knowhow is valuable only if it can be put to use.

As our “Metro Man” said in early 2016 — what would have helped is “improving existing facilities, speed… and comforts of passengers”.


Will Ferry 100,000 Passengers Daily

4There is virtually no chance of this happening — unless you offer free travel. Seriously, the demand/numbers simply is not there.

Besides, the route is already well-connected by a medium-speed (75–120 kmph) train line, best-in-class highways, and all cities on the route have airports!

Flights:

As of 2017, on any given day, 20-25 direct flights connect Mumbai to Ahmedabad, ferrying a maximum of 8,000 people, both ways; duration is 1h 10mins. Fares mostly range between Rs. 1,500 to Rs. 3,000. Amongst the other two cities on the bullet-train route — Baroda has 6 direct flights to Mumbai; Surat has 2–3 depending on the day of the week. Fares are lower than BOM-AMD. Total ~10,000 passengers.

There are few incentives for inter-city travellers to choose a 3-hour train, when there is a 70-minute flight for half the price. In developed cities such as Tokyo & Beijing, bullet-train travel makes sense as airports are 30+kms outside the city centre. In Mumbai, Ahmedabad & Surat, airports are very much, in the city.

Trains:

Ahmedabad-Mumbai route has ~20 daily “express trains” — of which 6 are modern “fast” trains — average speed of 60–75 kmph; the rest “SuperFast” only in name — average less than 50 kmph.

As NDTV pointed out in this show, the total passenger traffic (including non-AC coaches where fares are below Rs. 500), on this route, is less than even 20,000/day.

However, barring Shatabdis and Durontos, most trains run only one AC 1st class and two AC 2-tier bogies per train — that’s a total of 116 (24+46+46) seats each. Multiply that into 20 trains and you get around 2000 seats daily, or 4000 both ways.

From the AC chaircars add another 3000 both ways— that gives us a total of around 7000 daily passengers, both ways.

A point to be noted here is that — of these 7000 premium-fare travellers, less than 1/3 travel by the 1AC or 2AC. The vast majority travel in AC 3-tier or AC economy, and pay less than Rs. 1000 for the entire ride. It is irresponsible to assume that they will suddenly be able to afford Rs. 3,000 or more.

Buses:

On that route, there are ~20 AC Volvo buses, with an average of 40 seats each, delivering a capacity of 800. Fares range between Rs. 800–1200.

Total Projected Traffic in the Mumbai-Ahmedabad route

So, to begin with, we’re dealing with numbers that constitute a fraction of what the bullet train needs to break-even. Some will argue that it is an “industrial corridor” hence traffic will increase. Well, heavily industrialized Taiwan is still making losses with 140,000 daily passengers.

Another factor to consider — executives, who would form a large chunk of passengers, are travelling lesser by the year as 40 mbps broadband speeds have facilitated seamless video-conferencing across cities and continents, reducing the need for face-to-face meetings.

Considering these numbers, it is even if the Bullet trains run just once an hour, the occupancy rate cannot be more than 25%.

The same way people go to malls just to take selfies, ordinary people will board the train just for the thrill and experience initially. But that euphoria will fade away after one or two experiences. And then we’ll be left with one hell of a White Elephant!

As a side, the joke is that bulk of the traffic will come from Gujju tipplers heading to Daman for a quick one, without worrying about bribing the cops or having their names being plastered in the papers the next day.


It Will Be Cost-Effective

5There is a basic minimum cost to build, maintain and run bullet trains. ‘Frightfully expensive’ is a more accurate term to describe the costs — which explains why less than a dozen countries across the world have implemented them in spite of the technology being half a century old.

A plethora of research papers and articles have argued against it, warning that only very high volumes of traffic make it economically viable to run bullet trains. So let’s find out what costs we might be looking at.

On top of the 210 crore/km building cost, each train itself costs a few thousand crores; whereas daily operating costs range between 8–16 crores.

This figure is projected from the 345km Shinkansen Taiwan line.

Annual Operating Cost:

$30 billion Taiwan dollars = Rs. 6,500 crores, or 18 crores daily.

That operating cost must be recovered through ticket prices.

Page 47: http://www.thsrc.com.tw/UploadFiles/FinancialDocument/465c2b34-2eb1-4a0d-a2f7-2d0e7eb29614.pdf

The Problem:

Ticket fares, as determined by sky-high input costs, will work out to a lot more than then even the premium Indian customer can afford.

Even Bigger Problem:

A rather benign viability study conducted by IIM Ahmedabad says, the bullet train(s) will need to make 100 trips daily and carry 88,000–118,000 passengers per day to be financially viable.

Basically, to make up *purely* the cost of investment — over 50 years, it needs to make 6 crores every day (1.1 trillion / 50x365). If we add Increased Cost due to Rupee Depreciation or Hedging Premium (scroll down to point no. 8 for a detailed analysis), the figure will be 12+ crores daily.

We then need to add the daily operational (maintenance and running) costs, 8–16 crores depending on the number of trains and daily trips.

Note: The aforementioned Taiwan HSR line — running the entire length of the heavily-industrialized island nation — currently ferries 150,000 daily passengers @ 47 USD or Rs. 3,000 (8.70/km). Owing mainly to high depreciation, interest payments and low ridership, it is still mired in huge debt and needed a gov’t bailout in 2015.

There is clear and present danger that this Mumbai-Ahmedabad bullet train corridor too will fail to achieve the required ridership figures and will have to subsidized by the rest of the country.

Let’s Do the Maths

What rate should the tickets be prices at? What are the chances of breaking-even?

If we use a more realistic average ticket size of Rs. 1,500 for 300km [Rs.5/km — lowest possible rate] we get a viability figure of ~150,000/day.

If we use a very optimistic average ticket size of Rs. 3,000 for 500km [Rs.6/km] the minimum required daily passengers are still 73,000 a day. In other words, 2-3 trains every hour, total 72 trains up and down, carrying 1000 people each.

Across the world, bullet trains are priced between Rs. 7.50 to 20 per km. An IR’s preliminary estimates put our rate at Rs. 6.75 (Rs. 3300/508 km).

However, right now, only executive chair-car seats and 1AC berths, are priced at Rs. 4.50/km — but that’s only 50-odd seats per train. Regular AC seats come at a much lower rate of Rs. 1.50–2.75/km.

The question is: how likely are the notoriously tight-fisted Indian middle-classes to switch to an option that is almost triple of what they’re currently paying? Especially when they can fly for faster and cheaper?

A point to keep in mind: India’s per capita income is $1,650 — a fifth of China’s ($8,200) and a mere fraction of Japan’s ($42,500). It will take 20–25 years just for our incomes to reach China’s level.

If the occupancy rates are anywhere less than 50%, we could be looking at a loss of a few thousand crores per year.


It will usher in a “new age of safety”

6Each year 25–30,000 Indians die in train-related accidents. This is not a trifling number. I really don’t think there’s anything more to say beyond this — especially in light of the criminal shortage of 1.25 lakh IR safety staff.

As a consequence of steadily increasing traffic, dropping safety standards, misallocation of resources and under-investment in practically every aspect of the railways, train-travel is fraught with danger and disappointment.

In 2016–17, the Indian Railways was hit by 78 derailments with 193 people dead, the most in 10 years, IndiaSpend reported on August 22, 2017.

This is the state of affairs in spite of importing US-made track-laying machines that can lay around 1.5 km of tracks per day — and other big announcements by the Railway ministry back in Feb 2017.

According to estimates, the railways need Rs 1.2 lakh crore for overhauling its safety infrastructure that include constructing new rail bridges by demolishing the old ones, besides repair and maintenance of bridges and tracks.

There has been a shortfall of track length renewed annually. Instead of the yearly target of 4,500 km, in 2015–16 only 2,700 km of track length was targeted to be renewed.

http://www.financialexpress.com/india-news/is-india-ready-for-bullet-trains/838432/

This is too large a topic to delve into right now. Let us just say that there are a million other problems that urgently need fixing before one can even think of diverting precious resources to a vanity project.

Read this article for a detailed examination into safety standards:

Also, watch this video embedded below:

In situations similar to this one, 7000 people die every year in Mumbai passenger trains because there is no money to increase capacity and speeds.


There Will Be Massive “Technology Transfer”

7It appears, Japan has placed a pre-condition on the loan, stating that for them to vouch for Shinkansen’s renowned safety guarantee, we will have to buy the entire rolling stock (engines, coaches and track) from Japan.

One mustn’t think the Japanese don’t know exactly what state the Indian Railways are in. It would be foolish to assume that they would allow us to run roughshod over their precious Shinkansen and screw up its brand value.

A nation holding advanced rail technology is unlikely to offer more than low-tech and low value items like car bodies. It is unlikely to offer critical components in the traction chain — R Sivadasan, The Wire, 12/12/2015.

One might note, in August 2016, IR pulled out of a deal where the Japanese were charging double of what the locomotive engines were priced at.

China has built (by a long distance) the world’s largest bullet train network, equally to showcase their (mostly) indigenous engines and tracks as to purely ferry people. Many countries across the world will begin moving to HSR in the next few decades and the Chinese will seek to grab these projects — as happened in Indonesia.

However, importing entire bullet train sets, lock, stock & barrel, with no real tech-transfer, does no good for Indian manufacturing. All loose talk of developing an “eco-system around manufacturing of locomotives” is merely a figment of imagination.


We Are Getting An “Almost Free Loan”

8After all the propaganda we’ve been fed lately, one would think that the Narendra Modi government has managed to wangle the softest ever loan possible from Japan.

Yes, 0.1% is ‘almost free’ — but for Indians, not the deflation-hit Japanese. The truth, is that we’re doing them a favour by accepting a loan at a positive interest rate at a time when the Bank of Japan is giving out ten-year Japanese government bonds at 0.04% (India’s ten-year government bond offers 6.5%) and has even facilitated negative interest rates to make banks lend to businesses rather than hoard cash.

But this is where the problem lies: India is a poor country getting richer and younger, Japan is an rich, old country getting even older. Deflation could well become the norm there, and the Yen is going to remain stable at its current value. Not so for inflation-hit India.

To put this 50-year Yen-appreciation factor in perspective:

  • In 1977, 100 Yen was worth 3 Rupees.
  • In 2017, 100 Yen is worth 58 Rupees.

Don’t believe me? See the RBI data for yourself, here.

Just saying, that works out to an interest rate of 37% per year.

The yen appreciated by 64% against the rupee in the last ten years. The yen-rupee exchange rate was 0.3517 on September 17, 2007, but on September 15, 2017, the yen was trading at 0.5786 against the rupee. -Noor Mohammed, The Wire.

Using a low estimate of Yen appreciation — at par with hedging premium:

[L] Calculation of 1 lakh 10 crores with 3% interest as a result of Yen appreciation against the rupee. [R] Yen-Rupee Chart — 10 years.

As NR Mohanty has written so eloquently in this FirstPost article, “But then ordinary citizens of India must learn to separate fact from fiction. They must know the forces that are at work to showcase the bullet train project as a gift of an over-generous Japanese government for a visionary Modi’s India.”


Apart from competent Railway Ministers and a responsible policy towards investment and pricing, we need to gradually move up the gears.

We must learn to walk before we run.

China didn’t go from an average speed of 48 kmph in 1993 to 350 kmph overnight. They carried out six rounds of “Speed Up” campaigns over 15 years, which provided them with the infrastructure and knowhow to successfully implement HSR with minimal foreign technology.

That is the model we should be following. And, besides basic track safety upgradation, the first step we ought to take towards achieving indigenous HSR is to change the huge lumbering Linke Hoffman Busch (LHB) bogies we use, and bring in lighter, smaller, energy-efficient coaches — like those of the Spanish manufacturer, Talgo.

As you would expect, none of the pics tweeted above are actually from India. However, in September 2016, 9 Talgo coaches were brought to India for a trial run. They used a Shatabdi engine completed the 1400 km Delhi-Mumbai journey in less than 12 hours. That’s an average speed of 120 kmph — without any track modifications whatsoever!

Yes, there were certain track clearance concessions made towards this, but the successful trial run proved that we can shift to Medium-HSR with our current infrastructure.

If the Mumbai-Ahmedabad Duronto were to run at that speed, it would complete the journey in 4 hours and 20 minutes — not a whole lot slower than the Shinaknsen bullet-train, but crucially, at 1/10th the cost.

To top it all, Talgo is keen to locally manufacture 1000 coaches under the “Make in India” initiative.

What were talking about here is only upgrading the coaches, not even the engines or the tracks — which certainly could be done to further increase the speeds.

The smaller size, aluminum build and ergonomic design of Talgo coaches make them less than half the weight and hence 30% more energy efficient than existing coaches.

Being lighter, trains can also accelerate faster than conventional coaches, thereby clocking a higher average speed. Furthermore, its low center of gravity leads to higher speed and stability on curves.

At Rs 1.7 crore, Talgo coaches cost per seat is just a little higher than the existing coaches, however benefits are numerous.

http://timesofindia.indiatimes.com/good-governance/centre/mission-raftaar-railwaymen-to-be-trained-abroad/articleshow/58237556.cms

It’s not just Talgo, French National Railways (or SNCF) and RZD International of Russia have come to India, surveyed tracks and given proposals for upgradation.

“The French team has offered three options to us. First is to upgrade the track for running trains at 160 km per hour speed at an estimated cost of Rs 17 crore per km,” said a senior railway ministry official involved in the project.

Half the speed of bullet trains at less than 1/10th the cost, that’s a deal a majority of Indians would happily take. But alas, all of this has been sidelined as we chase behind thebullet-train.


Still not too late to cut our losses

When Demonetisation was announced, we all said, “give it a chance” you never know. 9 months later we find that it has wiped out almost 2 trillion rupees in lost GDP growth.

It is not without cause that people are concerned about this project — Modi has a history of grand delusions which end up losing crores of tax-payer money.

  • This streak extends way back to when, as CM of Gujarat, Modi frittered away 20,000 crores on the now-failed KG natural gas basin.
  • Next, the unsuitably named MEGA, Metro-Link Express for Gandhinagar and Ahmedabad, was conceptualised in 2005, shelved, restarted in 2008, lingered till Oct. 2014 when Modi, as PM, had the Union Cabinet approve 10,773 Crores for the project. Currently, the date of completion is 2020.
  • On coming to power, Modi promised…..

Elementary things like wi-fi aren’t even in place. “Utrasonic fixes!!” 😆

So lets remove ourselves from this Sc-fi La La Land.

Do not try to “imagine reaching Mumbai from Delhi in less than 5 hours by train” and other saffron-tinged daydreams because they aren’t going to happen. “Make in India” promised to transform Indian manufacturing. 3 years later, for the first time in 4 years, we just registered a negative IIP growth in June ’17.

We need to face reality. Ours is a slowly-growing, still-very-underdeveloped economy. Before we indulge in luxuries that might yield benefits decades later, we must take care of our basic priorities that are crying out for repair and improvement.

PlainTalkin

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This blog offers ideas, perspectives & factual analyses of pressing matters — with the general idea of bringing about a fairer, happier society for all possible