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Tuesday, December 24, 2002

Delhi to Get its First Metro

Maybe this doesn't sound like any big deal, but I think it's an important and interesting sign of the times, and of how things are changing. The metro programme will be built in stages, and today prime minister Atal Behari Vajpayee will open an initial 8.3km stretch of track connecting east Delhi with the north of the city. The entire first phase of 62km should be finished by next spring, and the complete 250km network will be completed by 2010.The state-of-the-art rail system will cost a total of £1.4bn to build and aims to revolutionise transport infrastructure for Delhi's 14m-plus people. The project has been in the pipeline since the 1970s, but building only began in 1998 under the control of the Delhi Metro Rail Corporation, which has overseen consulting and construction work by private contractors including companies from Europe, the US and Japan, while loan financing has been obtained from, guess where, Japanese banks.

A couple of observations seem in order here. Firstly if I am right, and the growth curve for the Indian economy just goes up-and-up, then this type of project with a relatively low initial cost due to India's low current price level, can yield pretty good long-run returns as living standards rise and the value of India's currency and capital stock goes up accordingly. Secondly, the productivity implications are mind boggling. Apparently crossing Delhi now takes anything from an hour upwards, while jumping the metro will involve only a 15 minute ride. Secondly all those rickshaw drivers being freed to work in more productive and less onerous activities would also work wonders for productivity. The key problem is one of job creation, and the transition from being a misery-wage to a low-wage economy. For it is the 'misery' wage situation which perpetuates all those otherwise menial and demeaning activities as performed by the multitute of pan, cigarette and milk 'wallas'. To make this transition what India needs is a steady flow of outside investment, and that, by the look of things, is what they are about to receive.

India's capital is in gridlock. Three-wheeler rickshaws, smoke-belching buses, herds of cows, leper carts and 4m cars have brought Delhi's roads near to standstill.Today, all that could begin to change when prime minister Atal Behari Vajpayee gives Delhi's commuters a long overdue present: its first metro. "It's a 50-50 split on cost between the state and the central governments, with Japanese loans to finance some building," said Delhi's chief minister Sheila Dikshit from her office overlooking the Delhi skyline. "The metro will have a terrific impact on alleviating congestion."

Metro tickets will cost between four and seven rupees (5p and 9p), making it affordable to many commuters. The network hopes to have 2.2m passengers a day by 2005. Passengers will be able to start boarding the first stretch from this month after the premier's inauguration. Ms Dikshit and the metro officials insist the network will not be hit by Delhi's chronic power shortages. "We'll have a dedicated power supply for the metro," she said. As well as taking power from five sources, the metro will have its own electricity generator.Publicity campaigns have been launched to teach Delhites how to cope with the new technology for services such as ticketing. A recent Delhi transport trade fair had a model ofthe metro coach alongside short films showing the Indian public how to usethe network and adopt the proper metro etiquette. Attempts to sit on the roof of the train will be discouraged, with offenders facing the threat of a jail sentence. The traditional Indian pastime of chewing and spitting red betulnut juice at the nearest available surface will also be strictly prohibited on the shiny new network.
Source: Financial Times

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