Potential for high speed rail corridors in India

FT charts the high-speed rail (HSR) networks across the world. China is the runaway leader with 37% of the total global operational HSR track. However, if its pipeline of projects under construction are added, it will have more HSR track length than all other countries combined! Among HSR under construction, EMs count for over 60% of the total track being built.



India does not have any HSR track under construction, nor anything in reasonably advanced stages of planning. Rail transit policy making in India, it appears, is taken up with metro rail systems, with even small cities preparing grandiose projects for metro-rail systems.

In this context, HSR offers exciting possibilities for promoting economic growth and laying the foundations for the creation of large growth corridors. Despite the significant successes achieved by the National Highways Authority of India (NHAI) with the construction of the Golden Quadrilateral road network in the past decade, roads cannot form the basis for integrating regional growth clusters.

Ahmedabad-Mumbai-Pune, Delhi-Lucknow-Patna, Delhi-Chandigarh-Amritsar, and Chennai-Bangalore-Hyderabad are four promising HSR corridors. HSR services in these routes, which connect important industrial and commercial centers, have the potential to underpin economic growth by harnessing the increasing returns from geographic integration. The HSR will provide greater integration among the large population clusters in these corridors. It will integrate labour markets and strengthen the existing manufacturing and services base in these corridors.

In this context, the Kerala's government's proposed 580 km, Rs 1.18 lakh Cr HSR corridor between Thiruvananthapuram and Mangalore, which would reduce travel time more than four-fold to around three hours, is an excellent proposal. Instead of wasting its scarce resources pursuing a metro-rail link for Kochi, the Kerala government would do well to vigorously pursue this by upgrading the existing rail network into HSR in a phased manner. Given its narrow-strip geography and urban demographics, Kerala would stand to benefit immensely from such rail links.

Urban renewal on Railways Lands

FT has an article that describes the successful ongoing re-development of the King's Cross district of London, the largest urban re-development project in London in the past 150 years. It consists of the redevelopment of a particular area, King's Cross Central,

"Ten years ago, prostitutes and drug dealers loitered on the streets and many buildings were disused or derelict. Now King’s Cross has been cleaned up and is in the middle of a £2bn redevelopment programme, which is transforming the area and making it an appealing place to live...

Behind the station is a 67-acre former brownfield site, which is being turned into a new community, King’s Cross Central. Owned by London & Continental Railways, a UK government-owned property company, and DHL Supply Chain, it is the largest single-owned site to be redeveloped in central London for 50 years and even has its own new postcode, N1C...

The statistics for King’s Cross Central come thick and fast: there will be 20 new streets, 10 major public spaces and 50 new buildings. Meanwhile, 20 historic buildings and structures are being restored and refurbished. There will be 8m sq ft of mixed-use space and 22 per cent of King’s Cross Central has even now been "taken"... Two thousand new homes (44 per cent of them affordable) are also planned, with the first stage of 143 homes being completed by 2013...

In the past seven years, prices for homes in the King’s Cross district have doubled, from £400 per sq ft in 2004 to between £800-£1,000 per sq ft today. By comparison, homes in neighbouring Bloomsbury and Fitzrovia fetch about £1,200-£1,300 per sq ft."

The biggest challenge with urban re-development is the difficulty associated with negotiating with multiple property owners and convincing them about a single comprehensive plan. The much diminished credibility of governments in many developing countries adds to the difficulty of convincing them. They are likely to be wary of time over-runs and suspect governments to infringe on their contractual obligations.

In this context, like with the King's Cross Central, the large swathes of sub-optimally utilized lands around railway stations in many large Indian cities offers tremendous opportunities for commercial development and urban renewal. There are two big advantages in choosing such areas. One, the major chunk of land parcels around these stations are likely to be owned by Indian Railways. This would eliminate much of the practical difficulties associated with re-development.

In fact the King's Cross Central re-development project benefited from the fact that all the land was held by the same owners, thereby eliminating the need to manage multiple contract negotiations, and facilitating the process of comprehensive planning and delivering ‘joined-up’ infrastructure. Nevertheless it is an impressive project.

Second, they are generally located in the older part of the city, have crowded residential and commercial units, and could do with a big dose of urban renewal. Re-development projects in such areas would deliver the biggest bang for the buck. Such renewal projects can provide the stimulus to revitalize stagnating urban districts. It would form the anchor around which modern economic activities can emerge and flourish. Land values will invariably increase.

Areas where government departments have large tracts of land and where the renewal projects can potentially provide the platform for a much larger development agenda too can be prioritized for such projects. However, such projects require very careful and painstaking preparatory work before arriving at any re-development plan.

This assumes critical importance since there is a serious risk that such projects become viewed more as engineering and architectural projects than as area renewal projects. The former approach overlooks the social, economic and political dimensions of such re-development projects. How does the project promote livelihood opportunities, both for those within the project area and those outside? How does it mesh with the social and political realities of the area?

Further, urban planners and developers miss the big picture and tend to view these projects as self-contained developments. They need to realize that the value of these projects go beyond the specific project area and has to form a catalyst to usher in more broad-based development in its surroundings. In other words, such projects have to provide the economic, social, and cultural development opportunities that its neighbourhood can leverage to their benefit.

All the aforementioned means that such projects cannot be mere Railway Department Projects, if they are built on railway lands. It will have to be driven by the local municipal body, draw on professional expertise in design and implementation, and involve profit sharing with the railways. The local government will invariably lose money, atleast in the initial years. However, the net long-term social benefit from carefully structured urban renewal projects will always be a huge positive.

Infrastructure facts - India Vs China

The 1318 km Beijing-Shanghai high-speed rail link, the longest in the world, and constructed within three years at a cost of $33 bn, is just one in the long list of mega infrastructure projects that China has been executing. To just put this in perspective, the total outlay for India's flagship urban development program, the Jawaharlal Nehru National Urban Renewal Mission, covering 64 largest cities in the country, including the metros, and spread over five years (2005-10) was slightly more than $20 bn.

The Bandra-Worli Sea Link (BWSL), built at a cost of Rs 1800 Cr (or ~$400 mn), several years behind schedule and with substantial cost over-runs, was greeted with much national rejoicing as further proof of our arrival as a big economic power. The Hangzhou Bay Bridge, the world's longest cross-sea bridge project, was built at a cost of $16 bn.

The comparison with China is truly humbling. However, this is neither an endorsement of the Chinese model of investment driven economic growth nor of mega-infrastructure projects in general. The contrast is drawn merely to put in perspective the infrastructure investment challenges facing emerging India.

China's high speed rail march stumbles?

China's spectacular $300 bn high-speed rail projects of the past decade has to rank as one of the most breathtaking infrastructure achievements of the last half century. It has been staggering not only in its sheer scale, but also in the pace at which it has been executed. As the graphic below shows, in a matter of five years China has destroyed all competition and has emerged as the unquestioned global leader in this cutting edge sector.



However, as a recent Washington Post article highlights, the success is fast tuning sour. For a start, the pay-back time on debts incurred to finance the projects has arrived and the Ministry of Railways is left with a whopping $271 billion in debt. Ticket sales and other revenue streams are hardly enough to cover the massive $27.7 bn in debt service for 2011 itself. Tickets priced at two to three times the regular rail ensures that ridership is poor.

However, of even bigger concern are question marks over safety and reliability. Contractors have been accused of colluding with officials and skimming off tax payer resources by using cheap, low-quality concrete and equipments. Tales of corruption abound, with even the Head of Ministry of Railways getting sacked.

As the Post article writes, Chinese high-speed rail will soon require government bailout. In this it is following the experience elsewhere, which conclusively shows that such projects are rarely fully viable commercially. Japan’s bullet trains needed a bailout in 1987. Taiwan’s line opened in 2007 and needed a government rescue in 2009. In France, only the Paris-Lyon high-speed line is in the black.

High-speed rail networks, with speeds of upto 350 km/hr, can deliver competitive advantage over airline for journeys of up to about 3 hours or 750 km, particularly between city pairs where airports are located far from city centres. Construction and rolling stock capital costs typically range from $35-70 million per km, depending on the complexity of the civil engineering work, rolling stock capacity etc. A World Bank report on high-speed rail writes,

"Governments contemplating the benefits of a new high-speed railway, whether procured by public or private or combined public-private project structures, should also contemplate the near-certainty of copious and continuing budget support for the debt. A developing country must reasonably expect atleast 20 million passengers/year with significant purchasing power, just to have the possibility of covering the working expenses and interest costs of providing that capacity with high-speed service; and probably double that number of passengers to have any possibility of recovering the capital cost.

In summary then, high-speed rail is now a tried and tested technology that delivers real transport benefits and can dominate market share against road and airline transport over the medium distances that many inter-city travelers confront. However, the demographic and economic conditions that can support the viability of high-speed rail are, in global terms, limited. The number of passenger transport corridors of the requisite length, that are already capacity constrained, and where there is sufficiently dense potential demand by people of adequate purchasing power, is limited; some may be in countries where the implementation capacity may be lacking."

Update 1 (23/6/2011)

Excellent Times story captures the benefits of light-rail network for China's economy,

"Around China, real estate prices and investment have surged in the more than 200 inland cities that have already been connected by high-speed rail in the last three years. Businesses are flocking to these cities, now just a few hours by bullet train from China’s busiest and most international metropolises.

Meanwhile, a shift in passenger traffic to the new high-speed rail routes has freed up congested older rail lines for freight. That has allowed coal mines and shippers to switch to cheaper rail transport from costly trucks for heavy cargos. Because of this shift, plus the construction of additional freight lines, the tonnage hauled by China’s rail system increased in 2010 by an amount equaling the entire freight carried last year by the combined rail systems of Britain, France, Germany and Poland, according to the World Bank.

The bullet train bonanza, and the competitive challenge it poses for the West, is only likely to increase with the opening of the 820-mile Beijing-to-Shanghai line, which will create a business corridor between China’s two most dynamic cities. The railway ministry plans 90 bullet trains a day in each direction."

The new, high-speed lines owned by joint ventures between the rail ministry and provincial governments, have also generated criticism for high costs and pricey fares, the quality of construction and corruption, and huge bank loan exposures. From Changsha to Guangzhou, the one-way fare in economy class for the two-hour journey, at speeds of up to 210 miles per hour, is 333 renminbi ($51). That is comparable to a deeply discounted airfare, but expensive for a migrant worker from Hunan who might earn only $160 to $400 a month in wages in Guangzhou. The same trip takes nine hours on an older, diesel train. But it costs only 99 renminbi ($15).

Trans-Atlantic vacuum Maglevs?

The Maglev trains minimize the friction arising from the physical contact between trains and railway lines and thereby increases railway speeds. Now, here comes news of a project to achieve super-sonic train speeds by eliminating the air and thereby air friction from the trains path.

Accordingly, a vacuum Maglev is being proposed at a cost of $88-175 bn between London and New York. The magnetically levitated train would run at speeds of upto 4000 mph in vacuum tunnel submerged 150 to 300 feet beneath the Atlantic's surface and anchored to the seafloor.