Shinzo Abe in Gujarat: Will bullet train be a win-win for Japan and a no-win for India?

Prime Minister Narendra Modi on Thursday heaped fulsome praise on Prime Minister Shinzo Abe while jointly inaugurating the Ahmedabad-Mumbai High Speed Rail Project (popularly known as bullet train). Modi said that Abe’s personal intervention and generous support paved the way for the speedy initiation of a project that would galvanise India’s development.

Well, courtesy demands that we make a visiting dignitary feel good while he is on the Indian soil. To that extent, our prime minister is right when he paid rich tributes to his Japanese counterpart.

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.

Is it a strange coincidence or an orchestrated design that just days before the inauguration of this venture jointly by the Indian and Japanese prime ministers, a series of articles were published in by various media outlets hailing the move as a milestone in the Indian transport industry?

On 12 September, most newspapers published the news of the new railway minister’s declaration that the time-period of the bullet train would be shortened by a year. The earlier railway minister, Suresh Prabhu, had declared that the project would be completed by 2023. The new minister, Piyush Goyal even came come up with the statement that “the Prime Minister believes the country’s engineers and workmen have it in them to complete the project a year in advance.”

 Shinzo Abe in Gujarat: Will bullet train be a win-win for Japan and a no-win for India?

Representational image. Reuters

The very same day that the new railway minister’s announcement was published, a many media houses carried opinion articles by ‘professionals’ hailing the bullet train project as a ‘game-changer’ for India in several ways. It continued the next day too.

If one takes a cursory glance at all these opinions, one would find a similar argument running through each of them. The common theme is this: a) that the Narendra Modi government has managed to wangle the softest ever loan possible from Japan; b) that the project would give the much-needed boost to Prime Minister Modi’s “Make in India” programme, with the spin-off effect of the project creating job opportunities through ‘localised manufacture’.

Can there be anything more economical in telling the truth? What are the facts that the government of India and its apologists would like to hide?

The fact is that the Japanese government has not done India a favour by giving it a loan at a low interest rate; rather India has done Japan a favour to Japan by accepting a loan at a positive interest rate at a time when the Bank of Japan has facilitated negative interest rates in order to encourage Japanese banks to lend to businesses instead of hoarding cash. This may be an unconventional practice, but Japan had to resort to it to fight deflation that is debilitating its economy. That is the reality, but the spokesmen of the Modi government would like to hide it.

Then there is the other claim. “We would see an entire ecosystem come up around manufacturing of locomotives and rolling stock for future bullet trains, as well as the entire component value-chain, with thousands of suppliers. ‘Make in India’ would get a fillip, and going forward India would manufacture and export bullet train technology hardware and software to other countries in the Asia-Africa Growth Corridor...,” as this article in The Times of India says.

The fact is that Japan has made it a pre-condition for extending the loan to India – and we have meekly accepted it – that India would buy the entire rolling stock for the bullet train from Japan. Japan has also made a pre-condition that it would not be in a position to guarantee the safety record of the Shinkansen Railways – which is a matter of pride for both the Japanese technology as well as execution – if India did not buy the locomotives and the major equipment from Japan.

The Chinese government refused to accept these conditions and embarked on a path of its own; the Chinese safety record of the bullet trains is a mixed one. India has agreed to Japanese conditions for safety reasons; so the hyper-claim about developing an ‘eco-system… around manufacturing of locomotives and rolling stock for future bullet trains” is a figment of imagination.

Many of these apologists of ‘Make in India’ campaign have also perpetuated the myth that Japan would transfer the technological know-how of the High Speed Rail technology so that when India takes up the next bullet train projects, it would be able to evolve indigenous technology, facilitating long-term economic growth. But the fact is that Japan has always made it clear – in its negotiations with China, India or any other country – that it remains uncompromising in its stand that it would not transfer technology to another country.

That explains why no India-Japan agreement document makes a mention of the technology transfer from Japan to India. But the news reports claim Japan has agreed to transfer high-speed rail technology to India, attributing to "sources in the government” or unnamed railways officials. If there was indeed transfer of technology built into the agreement, the government of India would have painted the town red with the announcement, not leaked it secretly to a few journalists.

The reality is for Japan it is a win-win situation. It is able to advance its surplus money remaining idle in its banks; it is able to use its technology and being paid handsomely for it without transferring it; it is able to boost Japanese economy as most of the Rs 88,000 crore that it is advancing to India would be ploughed back to Japan in buying Japanese goods and investing in Japanese skilled personnel.

And what will India get in the bargain? Of course, a dedicated high-speed corridor between Ahmedabad and Mumbai. Minister Piyush Goyal says that the ticket price will be ‘affordable’. Does the minister know that an average hour-long trip in the Shinkansen trains in Japan costs about $100? And mind you, these high-speed trains barely make both ends meet in Japan; they do not generate any profit. By that token, the Mumabai-Ahmedabad trip that would take two hours to complete should cost about $200 (about Rs 13,000) to run on a no-profit-no-loss basis.

Japanese, whose per capita income is $50,000, can afford to take such trips; how many people in India, where the per capita income is $1,500 dollars, can afford it?

When Goyal says that the ticket price would be affordable, does he presuppose the creation of another white elephant with high subsidies that would bleed the Indian economy for the next 50 years – till the time we pay back the loaned amount to Japan?

On the whole the trillion-rupee question is this: Is the project a win-win for Japan and a no-win for India?

Updated Date: Sep 14, 2017 14:34:38 IST