Industrial development needed before high-speed rail

The Times of India feature, “High-speed rail not on track yet” (July 15, 2016), highlights the lack of economic development priorities in the way Kerala authorities plan mega projects.

The report says, “The DPR (detailed project report) submitted by the DMRC to the government suggests acquisition of 1,155,57 hectares of private land and relocation of 3,868 residential/ commercial structures on its route for realizing high speed rail from Thiruvanathapuram [2, 3] to Kannur [2]. As many as 36,923 trees need to be felled to realize the project which will cost Rs 1,27,849 cr ($19.2B) to the state exchequer.”

T Balakrishnan, CMD, Kerala High Speed Rail Corporation Ltd said they would conduct a further study, as announced in the budget, seeking a better alignment. “It is true that we have submitted the DPR. As the government wants to study more options, we are going back to drawing board.”

Total cost of the project at the time of completion in 2027-28 is at Rs 1,27,849cr ($19.2B), as per current estimate Rs 86,735cr ($13B).

The line is expected to reduce 8,868 vehicles reducing road congestion.

Current plan contains 105km underground tunnel and 190km of elevated duct.

Daily passengers between T’puram and Kannur by 2025-26 estimated at 5,857.

“The DPR suggests that union and state governments may waive of respective taxes Rs 13,541cr ($2.03B) and Rs 5,841cr ($876m) to help the project. The DPR says the remaining Rs 91,446cr ($13.72) can be raised from the Japan International Cooperation Agency. The state government’s burden will be Rs 17,272 crores ($2.6B). The state government may raise part of the amount by domestic borrowings.”

The report adds, “The Anti-High Speed Rail People’s Forum is planning to resume their agitation once they get a clear view of the state government stance on the project. The committee, chaired by environmental activist C R Neelakandan, has around 150 units and 10 district committees under its ambit from Thiruvanathapuram to Kannur. (“Anti-HSR activists to wait and watch”)

Based on the information in the report, it seems Kerala government is behaving like children who get excited about new toys. What is missing is the economic rationale for the high speed rail system. The number of vehicles in Kerala was 6.411 million (2012). The HSR is expected to “reduce 8,868 vehicles reducing road congestion.” Therefore spending Rs 127,849cr ($19.2B) on HSR can hardly be justified as reducing congestion. Only remaining reason, other than as an expensive toy, is faster travel within Kerala. However, faster travel as an economic justification depends on economic activities that can benefit from faster travel. Currently there are no industrial centers that can benefit from HSR.

Rationalizing the HSR because of the availability of paying passengers is not a justification that can be used by a government that places the interests of its citizens first.

What needs to happen before planning the HSR is serious efforts for industrial development. Starting incubators and startup clusters [2, 3, 4, 5] by themselves will not create the necessary industrial development. Claiming otherwise exhibits utter lack of understanding of economic development dynamics [2] in a modern economy.

Aside from an independent industrial development effort, the HSR project presents an opportunity to initiate the development of a high speed rail industry in Kerala. Similar opportunity for initiating the development of a metro rail industry in Kerala was squandered away in the recent past. However, half-hearted attempts [2] at industrial development will not produce results, neither will “political engineering development projects.” Learn from the French government how they are providing full fledged support, including loans to Kochi Metro to help support the rail industry in France [2, 3, 4, 5].

A responsible government will prioritize the state’s industrial development ahead of expensive toys that adds to the state’s financial burden.

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