I may be mistaken about this but I get the distinct impression that whenever India’s development is mentioned, the matter immediately shifts to PCs and internet, BPOs and call centers. It is as if the entire economy will be magically transformed if only everyone had broadband access and a web enabled cell phone with customized irritating ring-tones and had the ability to subscribe to a gazillion web logs through RSS and had the ability to publish his own stuff for the edification of the masses who were similarly engaged in publishing their own stuff.

By persistently going against the popular illusions of the age, one risks the possibility of being branded a crank. I expose myself to that fate because it is my desperate hope that I may be able to change a few minds and perhaps influence policy however indirectly.

ICT as the Nervous System

The crux of my argument is that information and communications technology (ICT) plays a supportive role in an economy. Not unlike in a body, where the nervous system though critical is worthless unless the musculo-skeletal is robust, the digital network is worthless unless there is an underlying non-digital economy of stuff such as manufacturing, agriculture, and services. You need to have factories and farms, roads and railways, schools and shops, houses and hospitals — not just broadband digital 3.5G MP3 camera phones for surfing the web.

Not paying attention to the fact that the “digital economy” has as its foundation the “stuff economy” has perverse consequences of providing the illusion of progress while the system insistently regresses. For instance, unlike in those bad old Pre-internet days, today you can visit the web site for the railways in India and make your train reservation in about a half hour. You no longer have to stand in line for hours on end to get to the ticket counter and find out that there are no seats available for weeks on end. The website will tell you that the trains are full after half an hour.

The illusion of progress — at least to those lucky few who have web access — is short-lived when you realize that though you can attempt to book the seats online, the underlying system has not changed much, if at all. The so-labeled “super fast express” trains make their way at a stately 70 kms an hour average, pretty much what they were capable of doing forty years ago. Thirty years ago, the Shinkansens were doing 200 kms an hour and today they exceed 300 kmph. But in India, we maintain a dignified traditional 70 kms an hour for decades on end.

What India needs to pay attention to is the underlying hard economy which is the infrastructure upon which the soft economy of internet and services can ride. In this one, I will briefly focus on one bit of the hard economy: the railroad transportation system.

The Railroad Transportation System

The big picture shows India to be a very large country with a massive population. To feed, clothe, and house this billion plus population requires lots of stuff. For obvious reasons very large number of people and goods have to be moved efficiently over long distances. There are three primary methods for this: roads, railways, and air.

Let’s take air first. Air transportation is relatively simple and for long distances it is expedient. It is also grossly expensive for a poor economy such as India. Besides, it is totally dependent on fossil fuels and this makes it seriously polluting. Air transportation is OK for moving rich people over long distances but for bulk transportation of goods, and for bulk transportation of not-rich people, it is not a good solution. Thus, for moving about 300 million really affluent people over long distances, air transportation makes sense, as in the US. Even in the US, bulk transportation does not use air. They use the roads and rails.

Next consider roads. Roads are expensive to build and extremely expensive to operate. For moving people, the best roads can at most do an average of 80 kms per hour over long distances under ideal conditions such as can be found in the advanced industrialized economies. Private cars are expensive to own and they use polluting fossil fuel. Indians cannot afford cars because we are too poor and there are too many of us. Besides we are seriously dependent on external supplies for fuel. Finally, roads are notoriously unsafe as compared to air or rail.

Common carriers such as buses are also not the right solution for India over long distances. A recent journey of 500 kms by a “luxury” bus took 15 hours. The bus was luxurious but the road was pitiable and the overall experience put the fear of travel in me. I would have preferred to take a slow train but severe capacity limitations of the railways ruled out that option.

The best solution for India’s transportation needs is what I call an “Intergated Rail Transportation System” (IRTS) which I will outline in this piece.

Intergated Rail Transportation System

First, the “R”. Steel wheel over steel rails is the most efficient method of transporting goods and people, especially when both volumes and distances are large. It is super efficient and clean because of a number of reasons. First, because steel wheels over steel rails have very low friction and with aerodynamically designed trains, you can have the least transportation cost per ton per mile. Next, you don’t have to use fossil fuels. You can generate electricity using whatever technology is most efficient and available to power the trains. Third, you can use the same system — the tracks and the signaling and switching system — for both passengers as well as goods.

Next, trains can be very fast compared to roads and can be compared favorably to planes over short and intermediate distances. Mumbai to Pune (a distance of about 120 kms) takes 3 hours by road, city center to city center. By a fast train, with a modest top speed of 200 kms an hour, the journey should not take more than an hour. Currently the trains take over 3 hours. And by air Pune-Mumbai takes about 4 hours. You drive to the airport, proceed through security, then take a flight that spends more time taxiing than flying, and arrive and then go from the airport to the city center (which can easily take over an hour at peak traffic time.)

Over long distances such as between Delhi and Bangalore, planes have an evident advantage for people but not for goods. But that advantage is restricted to only the very rich in India. The average person cannot afford the round-trip fare which approximates the average annual income of about $400. Imagine how many people would fly between NY and SF if the price was about $23,000 instead of the $400 it is.

So the core of the IRTS is a very fast rail network connecting the major population centers. The backbone of the system is high speed trains that move between metros such as Mumbai and Kolkata (via Nagpur), between Delhi and Bangalore/Chennai (again via Nagpur.) These I call the “Cross Links” which are different from the “Diagonal Links” which go between Mumbai and Delhi (via Ahmedabad), Delhi and Kolkata (via Kanpur), Kolkata and Bangalore/Chennai (via Hyderabad), and Bangalore to Mumbai.

The backbone of the system is therefore the diagonal and cross links. Trains travel at an average 250 kms an hour and make at most one stop. Mumbai-Delhi is done in 6 hours (instead of the 18 hours currently by the fastest train.) Mumbai-Kolkata is done in 8 hours. If you want to go from a town close to Mumbai to a town close to Delhi, you do the journey in three bits: two short distance segments (relatively slow) and one fast long distance train. The short distance segments will be served by the “integrated” part of IRTS.

For short distances, the road system and the existing rail system would suffice. For instance, a journey from Pune to Chandigarh would involve a bus or train from Pune to Mumbai, a train from Mumbai to Delhi, and then a train from Delhi to Chandigarh.

This is really a hub-and-spoke model with multiple hubs (Mumbai, Nagpur, Delhi, Kolkata, Chennai, Bangalore), each serving a bunch of spokes that terminate in towns close to the hub.

Without going into details, I would like to outline some advantages of the IRTS. The obvious hurdles will also be dealt with simultaneously.

Costs

The most obvious point is that it is massively expensive to build a rail system. Even conservatively it will cost $50 billion. Here is the way out. Let it be private/public partnership. The government owns the land on which the existing rail system operates. So that could be the contribution of the public sector. The rails can be farmed out to the private sector on a “build and operate” scheme. And the rolling stock can be owned by private sector firms. These private sector firms can operate trains just as they operate airlines today. They can import the best available train technology from Japan and France just as airlines import planes from Airbus and Boeing.

The involvement of the private sector will not only free up public resources, but the increased efficiencies will propel economic growth which will increase government tax revenues.

The world is awash with liquidity these days. India needs to come up with projects which will attract these savings. Building a modern railways for India is one such project.

Employment

The IRTS will have to be built from scratch. Doing so will involve the labor of millions. Just like the interstate highway system did for the US, it will give a permanent boost the growth of the economy. Spending $50 billion will generate direct employment.

Economic Linkages

Then there are secondary effects which arise from backward and forward linkages. Forward linkages such as the development of a more efficient agricultural and manufacturing sector.

A significant portion of agriculture production is wasted as it cannot be moved efficiently enough. Manufacturing for domestic consumption and for exports is stunted because of the slow movement of goods. Both sectors will obtain efficiency gains.

Technology

India does not have state of the art railroad technology which has been developed by countries such as France and Japan. To begin with, India will have to import these and build up domestic manufacturing capacity. Since the requirements for India will be large, India has the bargaining power to insist on technology transfer. Then given that engineering and design talent is not lacking in India, it is possible that India can improve on the technology and be a leader in the field.

Vision

What we have in India is a creaky dilapidated outmoded transportation system. More than roads and airports, India needs a great rail transportation system which will form the bedrock upon which a modern Indian economy can move. It is a great challenge and if articulated well, it can galvanize the entire population. It will not be easy but then easy things are not worth doing and are rarely transformational in their impact. The movers and shakers of India should look for projects that transform, hard though they may be.

The beauty and elegance of a modern transportation system beckons. Are we up to the task?

[This post is continued at “The IRTS – Revisited“.]
{Related links: See these pictures of Shinkansen (the Bullet Trains of Japan). Wouldn’t it be amazing to have trains like these in India? Reuben at Zoostation had a bit about the new Shinkansens.}