Wednesday, September 13, 2017


Junko KimuraIndia on track To follow the Japanese model

This project will open up huge job and skilling opportunities, apart from boosting economies all along its route

India will start work on its first bullet train — the Mumbai-Ahmedabad High Speed Rail (MAHSR) — on September 14, with Japanese Prime Minister Shinzo Abe and Prime Minister Narendra Modi laying the foundation stone together. Funded by the Japan International Cooperative Agency (JICA), this project will be the biggest change Indian Railways has witnessed in post-Independence India.

The MAHSR debt structuring is also 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.

Japan has had Shinkansen, its HSR, for over 50 years now. China has laid more than 20,000 km of HSR tracks.

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. There’s no better time to start working on a bullet train. 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. The districts of Palghar in Maharashtra and Valsad in Gujarat, along with the Union Territory of Daman, will have a great shot at attracting new investments and amenities.

The Japanese experience has been quite positive. In areas where Japan has put up the HSR, local government revenue receipts have grown at almost twice the rate compared to areas which do not have HSR connectivity. If this trend works in India, it will be a boon because Palghar, Daman and Valsad are relatively less developed.

Construction activity will boost allied industries such as steel, cement and infrastructure. This will translate into additional logistics and warehousing demand. It is estimated that an additional annual cement demand of two million tonnes and steel demand of five lakh tonnes will be generated over four years by the MAHSR project. This will help near-term economic growth which has been sluggish in the last few quarters.

Jobs and skills

New temporary and permanent jobs will also be created with most of the manufacturing, from components to rolling stock, done in India. The construction phase will create opportunities for employment for about 20,000 people. After the commissioning of the project, there will be job openings for 4,000 for the operation and maintenance of the line. Further, some 16,000 indirect employment opportunities are expected to be generated.

Managing a project of this complexity and scale will be a great learning experience for the Indian agencies involved, resulting in skill development. 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.

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.

When Prime Minister AB Vajpayee launched the Golden Quadrilateral, commentators said it was a waste of tax money. When ISRO launched the Mars Mission, the global media mocked India as a poor country with fancy ambitions. 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, Mumbai-Pune, Nagpur-Hyderabad, and Varanasi-Kolkata.

The writer is a management consultant with an interest in public policy


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