Modi sells a dream
By: Rajeev Sharma
With the presentation of its maiden rail budget on Tuesday, the barely 45-day-old government of Prime Minister Narendra Modi has given a sneak peek into its economic vision — a mix of selling dreams to 1.2 billion Indians by undertaking big-ticket, eyeball-grabbing projects with a heavy dose of Thatcherism.
Forget the fact that the budget was presented by Railway Minister Sadananda Gowda. It could have been anyone as Indian railway minister and the result would have been the same. Modi is obviously the engine driver of his government’s first rail budget.
The budget is imbued with Modi-ism from the scratch to the finish — a Modi-ism that has a strong imprint of Thatcherism.
The biggest dream that Modi is trying to sell to the Indians through his rail budget is to start work on a bullet train on the Pune-Mumbai-Ahmedabad route. The budget makes a provision of $16.7 million for this purpose. The provision of such a paltry sum for the mammoth project which is going to cost up to $11 billion at current prices raises many questions, though this amount is said to be toward conducting feasibility studies. Incidentally, the $11 billion price tag for this single project is roughly the same amount as the entire budget of Indian Railways for 2014-15.
Many preliminary studies have already been done on this subject by the previous governments. An entirely new and dedicated rail track will have to be laid for the purpose. This amount is enough to build just one kilometer of bullet train track!
Where from the Modi government is going to get this kind of money? The government says the money would be raised through the FDI route.
But haven’t we been there and done that? The previous Congress-led United Progressive Alliance (UPA) had targeted to raise $1 billion for the railways through the FDI route last year but miserably failed and could garner only a few millions. Why? That is because any potential investor needs to have a guarantee of minimum assured return, which the UPA government could not give.
True, the Bharatiya Janata Party-led National Democratic Alliance (NDA) government has the luxury of being a strong government and the BJP has emerged as a party to have won absolute majority on its own steam for the first time in past three decades.
Therefore, theoretically it is possible for the Modi government to pull off this achievement, which deluded the UPA government. But then theories are far different from the ground realities and the Modi government will have to walk its talk. One will see how far it succeeds.
This brings us to another debate: Can a poor country like India, where a vast majority of its citizens don’t even have rudimentary facilities like a toilet, afford a “luxury” like bullet trains which are essentially elitist?
This is the reason why successive governments have merely toyed with the idea of having bullet trains but never taken the concept beyond drawing boards. The highly expensive concept has been viewed by previous governments as politically incorrect and economically disastrous.
But then Modi is different and has the image of being a strong leader. His idea is to make this bullet train project operational within five years, in time for the next general elections where he can parade it to the electorate as a symbol of strong and resurgent India. Modi can decidedly be not faulted for selling this expensive dream to the Indians when the neighboring China has a bullet train network of 10,000 kilometers and India has zilch.
That’s why his government’s first rail budget promises to increase speed of trains to 160 to 200 km per hour in nine select sectors and launch diamond quadrilateral of high-speed trains connecting major metros.
These are the kind of projects China has undertaken and finished in past one decade and emerged as a dominant global power. Modi wants to emulate China, a country he admires and has visited four times as chief minister of Gujarat.
To generate this kind of money and to undertake such big-ticket projects the Indian Railways will have to generate its own resources as the union finance ministry simply cannot provide this type of financial cushion. The Modi government plans to do so by seeking the union Cabinet’s approval for allowing FDI in Railways, barring in operations, and finance bulk of new projects through the PPP (Public-Private Partnership) mode.
This is where Modi shows a streak of Thatcherism. The Modi government plans to privatize everything and outsource maintenance of railway stations, catering and cleaning of trains, to name a few, the way it is done in many developed countries.
But isn’t it rather odd for a party like the BJP to go in for FDI in railways and even in defense when it has vociferously opposed FDI in multi-brand retail?
The writer is a New Delhi-based independent journalist and a political commentator who tweets @Kishkindha.