Kerala and K-rail Silver Line: An unplanned case of prioritizing

Kerala, popularly known as God’s own country, is one of those states which has always made headlines and most of the time for good reasons. Nonetheless recently, the state is in the news because of controversies and political turmoil. One of the headlines which is gaining attention throughout the country is the state’s most ambitious development project, the K-rail silver line project. Despite being portrayed as the flag bearer of financial and business growth for the state, the project has drawn criticism. For a state, which has broken its spine due to the floods, COVID-19, and previous failed rail projects, this is a matter of prioritizing. This brief article is intended to take the reader through the probable outcomes of this project and to help them decide and discuss the relevance and the practical implications of Silver Line implementation.

What exactly is K-rail Silver line?

K-rail (Kerala Rail Development Corporation Ltd) is a joint venture between the Government of Kerala and the ministry of railways, the Government of India, which undertakes various rail projects under the banner of the state right from its inception and get the necessary approval from the center for the same. Lately, K-rail has become the talk of the town due to its upcoming project, “Silver Line”, the semi-high speed rail project connecting Kasaragod to Thiruvananthapuram districts of Kerala. The state with a population of around 3.5 crore uses roads and waterways (in a few parts of the state) as major modes of transportation. The choked highways due to heavy traffic and the non-feasibility of highway expansion projects due to the occupancy by residents and small businesses are quoted as the reason by the government when asked about the need for this massive investment project. K-rail in its detailed report submitted to the center, states that this 529.45 km corridor connecting the two districts at the extreme ends of the state, will reduce the traveling time to 4 hours compared to the present 10-12 hours to cover this distance with a traveling speed of 200 kmph and with only 9 intermediate stations in between. The cost of completion of this project is estimated to be a massive Rs. 63,940.67 crores. 

Image Source : Railwhispers.com https://railwhispers.com/?p=1603

The state government is pushing hard for the implementation of its project as they consider it to be the most valuable feather in their cap. The project, according to the government, will change the way people travel in the state and create a lot of employment. It will help in boosting tourism like in addition to becoming a boon to the healthcare system, and will also reduce the environmental issues to a great extent. The K-rail also expects a daily ridership of 67,740 passengers, all of which makes it a highly feasible project, both economically and politically. 

But is that all? If this was the case, why are so many protests going on against the project? While those favoring the project might call it a usual power game of the opposition, that need not be the only reason. The experts say that this project will displace thousands of families and will create a lot of environmental damage over and above the financial crisis it is sure to create. While the state government estimates the cost of the project at Rs. 63,940.67 crores, NITI Aayog reports that the same will be Rs. 1.24 lakh crore when it nears its completion in 2025. 

A throwback to the Kochi Metro

While not much can be predicted about the actuals of this project in the pipeline, a throwback to the history and the current status of Kochi Metro, a similar highly promoted rail project of the state, can give some clarity on what may be the future of this project. When the construction of the Kochi Metro started in 2013, most Keralites would have been proud to have witnessed it. The state was joining hands with many other larger states boasting the presence of the metro in their major cities. And when the metro was dedicated to the public in June 2017 by prime minister Shri. Narendra Modi, it made yet another history by becoming the fastest completed metro project in India. It was not only awarded the Best Urban Mobility Project in India by the Urban Development Ministry in 2017 but was also lauded for its decision to employ Kudumbashree workers and transgenders. The government’s estimate for the Kochi metro travelers was 3.2 lakh riders per day when they commissioned the project and it was expected to grow to 4.5 lakh riders per day by 2020. But the actual number of riders when the project turned into reality was just 35,000-40,000 per day and during the lockdown, it went down to 22,000 riders per day. Even during the offer days, the mark could not cross more than 50,233 passengers in a day. Soon, the first phase of the 13 km and Rs. 5181 crore investment project of the government became a huge debt trap for them. The loss figures of the Kochi metro in the last 4 years are Rs. 167.33 crores in 2017-18, Rs. 281.23 crores in 2018-19, rs. 310.01 crores in 2019-20 and Rs. 414 crores in 2020-21. These figures are the biggest evidence of the poor planning and inaccurate projections that went into this multi-crore project. The metro is still battling to minimize its losses, forget about making profits soon. Although multiple revamping efforts were made under the Managing Director of Kochi Metro Rail Limited, Mr. Loknath Behra IAS, to reduce the losses in 2021, nothing made a difference and the efforts are still on.

To add to this is the overall debt obligation of the state, which according to the latest report of CAG in March 2022, rose to 39.87% and stood at a whopping Rs. 3,02,620.01 crores (which excludes the Rs. 5766 crores availed as back-to-back loans facilitated by the central government to make up for the shortfall in GST compensation). So my only question is “Do we need such multi-crore projects, which are going to put the state and its people in heavy debt cycles, or should we be investing this money in re-building the state which has been hit by floods and such natural disasters multiple times in the past and utilize the tax-money of the commoners for reinstating the people who have lost everything during those times.” 

Conclusion

The public’s money should not be floundered on the projects which may not bring in any development but are sure to raise the liability of the government. The ultimate burden comes on the citizens in the form of higher tax liability and the price rises due to inflation. The question is of  prioritizing. What needs immediate attention and what is it the government is spending on?

Key takeaway

Whether it is personal financing or financing for state projects, the concern should be on prioritizing. The development of business and infrastructure should not be done at the cost of the common man’s basic needs. The issues which need immediate attention need to be prioritized first. One cannot go for buying pasta when he doesn’t have one time meal to eat.

References

https://www.newindianexpress.com/states/kerala/2019/nov/08/semi-high-speed-rail-project-silver-line-work-may-get-a-flying-start-2058637.html

https://keralarail.com/silverline/

https://www.indiatimes.com/explainers/news/kerala-silverline-project-protests-558797.html

https://kochimetro.org/

https://www.newindianexpress.com/states/kerala/2022/mar/19/keralas-debt-grows-to-40-of-gsdp-cag-2431720.html#:~:text=THIRUVANANTHAPURAM%3A%20The%20state%20government’s%20debt,was%20Rs%203%2C02%2C620.01%20crore.

https://keralakaumudi.com/en/news/news.php?id=682887&u=kerala-in-severe-financial-crisis-public-debt-increased-to-rs-2.74-lakh-crore-cag-report

The article is authored by Sakeerthi S

Sakeerthi S is finance faculty with the International School of Management Excellence, Bangalore. She had a work experience spanning around 8 years at IDBI Bank, HDFC Bank and XIME, She has contributed to the academic research circle with half a dozen of publications in reputed journals of national and international repute (which includes Scopus indexed journals and ABDC C category journal).

She is a lifetime member of the Indian Institute of Banking and Finance and was one of the nodal officers of the Kerala Start-up Mission. Her area of interest is banking, financial inclusion, behavioral finance, and insurance. She is currently pursuing my Ph.D. in finance from the prestigious Jain University, Bangalore.