Here's how the bullet train can overcome the story of despair that Indian Railways is

By Jai Mrug For a fan of Indian Railways like me, two stories yesterday morning evoked contrasting feelings, one of hope and the other of despair. The story of hope was the cabinet clearing the Rs 98,000 crore Japanese funding for the proposed Mumbai-Ahmedabad Bullet train.  The story of despair was that the new cash-based accounting system projected Indian Railways operating ratio close to 100, based on the cash flows in the first half of this fiscal, which means that they spent almost a rupee to earn a rupee. The frightening worry then is that how would we service the costs of the ambitious network upgradation, doubling and electrification projects that Suresh Prabhu has taken up in right earnest. Now, we add to that the cost of the bullet train, the scenario becomes grim indeed. Though the Japanese have agreed to a 15-17 year moratorium on the loan, these are indeed sums we need to pay back some day. A dispassionate analysis follows. Pricing I tried booking a ticket for next week from Mumbai to Ahmedabad. The Shatabdi Upper Class ticket from Mumbai to Ahmedabad for the following week was quoting at Rs 1,920, which with addition of various IRCTC service charges could go up to Rs 2,000. The cheapest Air India ticket, on the other hand, for the same date without any surcharges was quoting at a competitive of Rs 1,771, with additional surcharges it could head to somewhere around Rs 1,900, effectively the same range. If the Shatabdi upper classes do not compete favourably with flights for most times of the year, how does one expect the bullet trains to be competitive? During regular seasons on the Mumbai-Ahmedabad sector flights are available at an average of Rs 3,500 on advance booking, so if a bullet train were to charge around the same price, it is difficult to see how the same would be a competitive proposition for the customer. Volume of traffic That brings us to the next question. Can we have the volume that will create economies of scale for this sector? The volume of traffic may not be commensurate enough to allow for a bullet train. In China, the High Speed Rail covers almost a third of China’s 6 million rail users, while in India 82% of the rail users travel in non-express, non-upper class trains. Of the remaining 18% most would not migrate to the Bullet train. Add to that all that stops the road traffic from scaling the approx 500 km Mumbai Ahmedabad Road stretch in an audacious 6 – 7 hours is a narrow bridge at Bharuch which is also being debottlenecked. If its debottlenecking were to be completed, many would take the road to Vadodara and Ahmedabad. So there is no incentive for those who love stepping on the gas as well to migrate to the Bullet train and bring in more economies of scale. Costs High Speed Rail in India is expected to cost around Rs 200 crore per km, implying a cost of approx Rs 98000 crore for the Mumbai-Ahmedabad Project. It is estimated that the 968 km Wuhan-Guangzhou corridor costed China around US$ 19.4 billion. According to media reports the Chinese Railways are reportedly struggling with a debt of US$ 318 billion and an annual loss of around US$ 1.46 billion. What are other countries like us doing in this space ? Argentina was to have its High Speed Rail funded by the French. However, with European recession, this project was terminated and that led to an expedition for a semi high speed rail in Argentina which is now planned to scale to speeds such as 160 kmph, the same that Indian Semi High Speed is expected to scale. So is there a ray of hope for us? Indeed, and it lies somewhere buried in the media report of the Japanese funding. The report says that there could be possibility of extending the line to Delhi. Actually it is this extension which holds the key to the success of the project, and the railways must convert this extension from a probability to a certainty. Mumbai-Delhi is currently the most dense airline sector in India. There is a flight almost every hour or even more. By latest reports Jet airways itself operates 16 daily flights between Mumbai and Delhi. Here is where a huge volume of customers with the pocket size to afford a bullet train exists. The perennial over-crowding of the Rajdhanis on this sector is testimony to the fact that a huge market exists for those who can afford luxurious train travel. A Bullet train with an average speed of just 250 kmph would cover Mumbai-Delhi in effectively six hours, which means the so called Mumbai Delhi Bullet train would be the Shatabdi equivalent of Mumbai – Delhi, and now see how successful the Shatabdis by and large have been across various metros in India. In addition, the integrated Mumbai-Ahmedabad Delhi route cover many sectors such as Mumbai-Jaipur, Jaipur-Delhi, Mumbai-Ajmer, Ajmer-Delhi, Ahmedbad-Delhi as well, besides Mumbai-Ahmedabad passengers, ensuring maximum capacity utilization across various legs of the trip and therefore a huge economy of costs, which can be passed onto the passenger, and yet more passengers could be brought into the net of the bullet train. Today Mumbai Jaipur has three daily connections, but Delhi Jaipur has a vast traffic which could easily take the bullet and turn back the same day after a very effective business day in either of the metros. Let’s not forget – huge industrial corridors are expected around the Mumbai Delhi dedicated freight corridor, which is going the same route i.e. Mumbai – Ahmedabad-Delhi. The author is a transport analyst and CEO of M76 Analytics, and IITB-based Big Data Startup