Bullet train: Leap of faith

That the 508-km long Ahmedabad-Mumbai high speed train, which is loosely called a bullet train,  will give a negative political dividend to Prime Minister Narendra Modi is a certainty. Yet, this may be the only saving grace for the listless Modi administration on economic fronts in over three years in the office. The cost at Rs 1.10 lakh crore is jaw-dropping, but the spin-offs in a few decades will offset all the financial pain.

THE French Rail Corporation (SNC) in the business viability report had unequivocally stated that a

Shinkansen bullet train

standalone Ahmedabad-Mumbai high speed rail corridor with speed in access of 350 kmph will have to be funded by the government. That it will not make profits for years is certain, which will keep the private investment away, the report submitted to the Ministry of Railways noted, while adding that the world over such endevour has been publicly funded.

Not that the Ahmedabad-Mumbai high speed rail could ever be profitable, the report had stated, and for such a scenario to emerge the Railways would need to spread a garland of inter-connected semi-high speed rail lines to help flow strong traffic. Such garland will surely take a few decades more to become a reality.  The SNC report had set the chill in the Ministry of Railways. The enthusiasm for the ambitious project had been dulled.

Japan is battling deflation. The population is aging. The manufacturing capacity there is in access of local and offshore demands. The capital is equally in access. The Japanese industries have to set up shops abroad to stay afloat. The idle Japanese capital needs avenues to sink in and make money. That China has cheap labour with population still younger along with manufacturing base at a scale which still awes the world long put Japan in quandary. 

But India and Japan are bound by historical bond of culture, besides absence of even an iota of animosity. Indeed, the high speed rail corridor project had been lying idle since the time of the UPA headed by Manmohan Singh. The first definitive agreement between the two nations had also been inked during the times of Singh. Yet, the Congress which swore by Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) to win polls and trumpet its brand of politics could never believe in the capital intensive high speed rail corridor. The Congress knew well, the bullet train will hit with bullet speed in damaging the vote base. 

In contrast, Modi believes that the bullet train will help him get votes. And, he's not wrong either. 

THE state of economy since 2011 had slipped into a self-limiting warp. The appetite for private investment had been doused. The sword of fiscal deficit launched P Chidambaram and Arun Jaitely

afterwards into obsession for expenditure squeeze. The economy cried for a spark. This is vintage Modi, the Narendra Modi of Gujarat, that has been unveiled by the ground breaking ceremony of the high speed rail corridor project. Modi, the man who could execute expansion of Sardar Sarovar Project which lifts the flow of Narmada river by not less than 25 floor high building in a course of a few Kilometers, is promising to rediscover himself at a time when his government has to bat out the last few over in which he has to score unbelievably large runs.

Undeniably, the faith of rail travellers in the railways has been left shaken due to spare of mishaps in the last two years. Every train journey now looks suspect. Suresh Prabhu, who had been Minister for Railways for almost three years, though of taking up new projects -- new lines, capacity augmentation and fresh products. He forgot that the Kakodkar Committee in its report long back had cried for immediate modernization of at least 19,000 kms of rail tracks. No surprise, that derailments of trains constitute more than 50 per cent of the rail mishaps, which in turn most likely take place due to poor conditions of tracks. Prabhu forgot his basic mandate and lost the job.

In speed, the Railways has traveled least in the last four and a half decades. Premier trains of today -- Rajdhanis -- were launched in 1969. The inaugural Mumbai-Thane had run at a speed of 30 kmph. The average speed of the passenger trains now is just 60 kmph. The goods trains travel at much slower speed. Thus, the Railways could never gain the confidence, capacity and capability (3Cs) to break free from the status quo.   

THE Ahmedabad-Mumbai high speed rail corridor will give the Indian railways the 3Cs to give the mobility solution to more than one billion people of the country. That hundreds of high ranking railway officials have already gone leadership training is already part of the India-Japan story. The upcoming high speed rail institute in Gandhinagar should be giving India not one but hundreds of E Sreedharan. The 3Cs will help Indian Railways to compete with China for rail projects in South-east Asia and Africa is another in-built sub-text of the story. That IRCON has already executed a few of the long route rail projects in South-east Asia is well known. 

Indian economy in the short term will gain from the pump-priming effect, as Rs 80,000 crores of the total project cost would be spent within the country on civil and associated works, which will generate demands for steel, cement, labour. Unlike the Dadri-JNPT dedicated freight corridor, Indian companies could also be the lead partner for bidding the civil works. Besides, the strong mandate for Make in India will hasten technology transfer in running high speed trains which over the years will have its own spill over effect.

Japan is sinking in Rs 88,000 crores in the Ahmedabad-Mumbail high speed rail corridor. This money is going into a standalone project and it was not available for the existing demands of the Indian Railways. The Ministry of railways will roughly contribute about Rs 20,000 crores in the course of next six years. 

That the money in parts will be returned to Japan beginning 15 years later at an interest of 0.1 per cent was the most low-lying fruit that Modi had to pluck to give the spark to the economy with just about 16 months to go for him to seek votes again.

Rising spate of unemployment in India: Is Modi riding a tiger

BJP top guns are sweating hard to talk gains of demonetization. Hard-selling his book "I do what I do", Raghuram Rajan has  emerged within a few days a nemesis of the BJP and Prime Minister Narendra Modi. Desperation on the back of mainstream media not believing numbers thrown by government to talk achievements is sinking in fast. In three years, Modi seems high on the steroid administered by achievements on borders with China and Pakistan, but quite fragile on domestic front, with unemployment at its peak.

Anand Mahindra is arguably a straight-talking India Inc man. He is also one of a few Indian industrialists who has been expanding his businesses. But he too is not an industrialist who invests in employment intensive sector. He prefers businesses with light manpower. And, so does most of the Indian industrialists, with vision of just immediate future. Expansion of the industry and the consequent job growth happens when industrialists think long into the future with certainty of growth. 

India undeniably is caught in a time when vision is short -- ultra short.       

"In the special economic zones (SEZs) of Gujarat, most liberal labour laws are in practice backed by

world class infrastructure. yet, I've not seen industrialists taking advantage of facilities to invest in employment intensive industries," first vice-chairman of NITI Aayog Arvind Panagariya told Mahindra in a discussion with an intention to genuinely know why Indian industrialists have aversions about businesses which could trigger employment generation.

Before Mahindra could shed light of his wisdom, a senior officer, betraying a sense of resignation, stated that the ministry of labour had engaged the industry captains and sought to know from them what all changes they wanted so that they could take up businesses with employment generation. She rued that no concrete suggestion came. "We talk of labour regulations impeding on industrial growth. Yet, when asked what all regulations should go, there are no answers from the industry," the officer told Mahindra.

At last Mahindra replied, with an admission that Indian industrialists are only attempting to imitate the outsiders setting up shops in the country. "We are best following others. The foreigners are coming and setting up units in the country. We may be watching them out and follow them in the coming years," Mahindra quipped.

The Economic Survey of 2015-16 pegged unemployment at five per cent, a notch higher than previous year. Subsequently, situations have only worsened. The informal sector accounts for bulk of employment in the country. The construction sector has been the bellwether of employment. They lay battered following demonetization. The result was reflected well in the numbers, as the first quarter gross domestic product (GDP) of 2017-18 slumped to 5.7 per cent. Rating agencies rushed to scale down growth projection to 7 per cent. Growing at 8 or more per cent GDP growth rate is a distant dream for at least a couple of years by all accounts.

So, what happens to employments in a country where 68 per cent of population is in working age group. Number of the working population is on an ascent only. Millions of youth are passing out from schools, colleges and institutes with prospects of job market further squeezing. That they would become employer is looking a crude joke after all the talks of Start Up India, Stand Up India turning out to be all about App and portal makers bottled in Bangalore and Hyderabad.

"We've given 80,000 jobs in various government departments in the last one year. But they youth don't remove their names from the employment exchange till they get the jobs of their choices. That explains why there is not much of change in the job data," the Gujarat chief minister Vijay Rupani reasoned at unemployment rising to quite high level.

The organizational secretary of Swadeshi Jagran Manch (SJM) Kashmiri Lal claims that the Chinese goods coming in the country account for 50 per cent of the Indian manufacturing outputs. "Chinese firms are making a clean profit of Rs 65,000 crore ($9 billion) annually, besides having a Rs 7 lakh crore trade value. If only we can replace them with our domestic manufacturing capacities, the impact on employment could be evident," Lal opined. 

But Lal will not admit that the Indian industrialists long back turned into traders of Chinese goods.

So, what happens to the promise of Prime Minister Narendra Modi at a rally in Agra in 2013 that if the BJP was to be voted to power 10 million jobs would be created. The BJP chief answers that

historical riddle with number-crunching from Mudra scheme. A month back, he had quipped that 7.28 crore Mudra beneficiaries have gained from the loans, which now has surpassed 8.25 crores. They're employers also, the BJP leaders would make others believe. But the Mudra beneficiaries are mostly in the semi-urban and rural areas, yet the economy hasn't got any evident shot of adrenaline for demands.

Yes, the stock market is at a record high. With banking instruments offering only an inflation neutral returns and the property option flattened, surplus money is pouring in strong stream to the Dalal Street.

With employments on freeze, Modi may well be riding a tiger.