The Talgo will fly past your trains and the resulting air eddies under it might spray the excreta freshly laid by its passengers right in through your windows !
Actually, the Talgo comes equipped with the mdoern capture and dispose lavatory system but this system has been disabled in the trial in India as Indian Railways remains the only major railway in the world that does not have the infrastructure to dispose lavatory waste at stations !
Having such infrastructure - which, very insultingly, even Pakistan railways has - calls for gigantic budget allocations that ought to have been started long long ago in phased sequences !
The World Sanitation Congress (an arm of the UN) has castigated the Indian Railways and the Indian govt several times for throwing hundreds of thousands of litres of human waste all across the country instead of disposing it the way it should be !
The Spanish team that addressed the Indian project was stunned out of their wits when they realized that Indian Railways - the second biggest in the world - dumps excreta on its tracks !
I’ve heard many people say, “Japan is giving loan (at less than 1% interest) so let’s take it and build Bullet train”. Such people have little understanding of international finance esp. of Japanese method of ODA finance. Let me explain this.
1) The interest rate of 1% per annum is applicable only if the money is borrowed and re-payed in Japanese Yen. Since the money (Loan) will be used in India, it will be first converted into Indian rupees. So we have to hedge the loan which costs about 5-6%. So in reality the loan will be at the rate of 5-6% (and not less than 1%).
2) For comparison, do you know what is the interest rate in Japan? The (long-term borrowing rate) in Japan are close to zero (yes about 0%). Even home loans can be availed at about 1.5 – 2.0%. So if japan is giving us a loan at less than 1% interest rate, it is not really low.
3) The cost of Engineering Consulting Services for the bullet train project is about 6-7% of the total project cost. There is a condition in the Loan agreement that the Main Consultant should be a Japanese company. So this way Japan is able to get back 6-7% of the project cost immediately.
4) As per the loan conditions, 30% of goods for this project must be procured from Japanese companies only. (because of this condition, we will have to buy a Rs 100 item for Rs. 120; since you can buy it only from Japanese), thereby making the very low interest rate of 1% meaningless.
Re: The truth about Japanese Loans!
by sushil verma on Jul 22, 2016 09:56 PM
Dear Mohit, Clarification on your points. 1. Lets say we are hedging at 5-6%. But if we are able to get return on the same as per long term GDP rate. it is then also profitable. secondly 5 -6 % is certainly on the higher side. 2. Yes japan is currently having interest rate close to 0 %. This is because of no growth. if u see real interest rate (off set to Long term interest rate) it is again going to hardly 1 %. 50 % discount to prevailing loan rate is huge one . i think they are going away with risk premium and also offering discount on risk free rate. 3 & 4. These things which we buy from japan certainly has value. Japanese product always carry a premium for their quality. secondly lets say if india offers line of credit to nepal and if nepal a business entity is set up by ONGC. it doesn't mean money earned by ONGC will go all to Govt.
Moreover, you need to also consider monetarium period of 15 years.
Re: Re: The truth about Japanese Loans!
by mohit on Jul 23, 2016 12:16 PM
Dear Verma, Thanks. It is good to discuss with someone who is knowledgeable on the subject. Please note, it is a Loan and it must be re-payed. In order to re-pay loan (of Rs. 80,000 crore) the bullet train project must be profitable. Unfortunately, it is very difficult for High-speed rails to be economic viable. It is not just the high construction cost but even the operation and maintenance costs are very high (about 5-6 times of normal trains). Because of these factors, the world over, most of the bullet trains are running in losses even after being so many years in service.
Moreover, the budget airlines are getting cheaper by day. The bullet train fare between Mumbai-Ahmedabad is proposed to be about Rs. 3500/-. Whereas, the air fare is only about Rs. 1900/-. So it will be a tall task for the bullet train to compete with air travel. So both the loan and the operating losses will have to be borne by Indian tax payers.
Re: The truth about Japanese Loans!
by sushil verma on Jul 22, 2016 09:56 PM
Dear Mohit, Clarification on your points. 1. Lets say we are hedging at 5-6%. But if we are able to get return on the same as per long term GDP rate. it is then also profitable. secondly 5 -6 % is certainly on the higher side. 2. Yes japan is currently having interest rate close to 0 %. This is because of no growth. if u see real interest rate (off set to Long term interest rate) it is again going to hardly 1 %. 50 % discount to prevailing loan rate is huge one . i think they are going away with risk premium and also offering discount on risk free rate. 3 & 4. These things which we buy from japan certainly has value. Japanese product always carry a premium for their quality. secondly lets say if india offers line of credit to nepal and if nepal a business entity is set up by ONGC. it doesn't mean money earned by ONGC will go all to Govt.
Moreover, you need to also consider monetarium period of 15 years.
Re: The truth about Japanese Loans!
by sushil verma on Jul 22, 2016 09:56 PM
Dear Mohit, Clarification on your points. 1. Lets say we are hedging at 5-6%. But if we are able to get return on the same as per long term GDP rate. it is then also profitable. secondly 5 -6 % is certainly on the higher side. 2. Yes japan is currently having interest rate close to 0 %. This is because of no growth. if u see real interest rate (off set to Long term interest rate) it is again going to hardly 1 %. 50 % discount to prevailing loan rate is huge one . i think they are going away with risk premium and also offering discount on risk free rate. 3 & 4. These things which we buy from japan certainly has value. Japanese product always carry a premium for their quality. secondly lets say if india offers line of credit to nepal and if nepal a business entity is set up by ONGC. it doesn't mean money earned by ONGC will go all to Govt.
Moreover, you need to also consider monetarium period of 15 years.
Re: The truth about Japanese Loans!
by sushil verma on Jul 22, 2016 09:56 PM
Dear Mohit, Clarification on your points. 1. Lets say we are hedging at 5-6%. But if we are able to get return on the same as per long term GDP rate. it is then also profitable. secondly 5 -6 % is certainly on the higher side. 2. Yes japan is currently having interest rate close to 0 %. This is because of no growth. if u see real interest rate (off set to Long term interest rate) it is again going to hardly 1 %. 50 % discount to prevailing loan rate is huge one . i think they are going away with risk premium and also offering discount on risk free rate. 3 & 4. These things which we buy from japan certainly has value. Japanese product always carry a premium for their quality. secondly lets say if india offers line of credit to nepal and if nepal a business entity is set up by ONGC. it doesn't mean money earned by ONGC will go all to Govt.
Moreover, you need to also consider monetarium period of 15 years.
Re: The truth about Japanese Loans!
by sushil verma on Jul 22, 2016 09:57 PM
Dear Mohit, Clarification on your points. 1. Lets say we are hedging at 5-6%. But if we are able to get return on the same as per long term GDP rate. it is then also profitable. secondly 5 -6 % is certainly on the higher side. 2. Yes japan is currently having interest rate close to 0 %. This is because of no growth. if u see real interest rate (off set to Long term interest rate) it is again going to hardly 1 %. 50 % discount to prevailing loan rate is huge one . i think they are going away with risk premium and also offering discount on risk free rate. 3 & 4. These things which we buy from japan certainly has value. Japanese product always carry a premium for their quality. secondly lets say if india offers line of credit to nepal and if nepal a business entity is set up by ONGC. it doesn't mean money earned by ONGC will go all to Govt.
Moreover, you need to also consider monetarium period of 15 years.
I have travelled on TALGO train when I visited Spain sometime back. It is a really nice train. In our Indian context, it is cost-effective and efficient.
Another technical advantage is that both India and Spain (also Portugal and a few Latin American countries) run trains on broad-gauge rail tracks, whereas most of the European and other countries use standard gauge tracks. In railways engineering, "gauge" means the distance between the inner sides of two parallel rail tracks. Indian broad gauge is 5ft 6in or 1.676 metres, whereas Spanish gauge is nearly similar 1.668 metres. Standard gauge is 4ft 8½in or 1.435 metres.
Therefore the TALGO coaches manufactured in Spain, with slight modification of spacing of wheels, can be directly imported and run on Indian tracks. In due course, these coaches can be manufactured in India, with initial collaboration of Spain. In case of importing from other countries, the manufacturing cost will be much higher because the rolling stock and coaches for use in Indian will have to be totally custom-made.
Finally, the Spanish, Portuguese, southern Italian and Greek people have lot of loving admiration of India. We should enhance our all-round engagements with these countries for mutual benefit.
Re: GOOD MOVE
by bakchod on Jul 22, 2016 06:24 PM
50 years ago, the price of a large 5000 sq feet bungalow in south Delhi was around 1 lakh rupees. Now it would cost 10 crore rupees.
Now suppose someone had given you a 1 lakh rupee loan in japanese yen 50 years ago for 0.1% interest per annum with no repayment due for 15 years, should you have taken it to buy the bungalow? 50 years later, you would have to repay only 1 lakh 5 thousand rupees. Whereas the house is worth 10 crores now. Now we need to factor in forex rate. Japanese Yen is now 60 times stronger than indian rupee in last 50 years. So multiplying 1.05 lakh by 60, you would effectively have to repay 63 lakh rupees to pay off the loan. But your house is worth 10 crore.
Same logic with the japanese loan which is practically zero interest. After 50 years, the Japanese 80,000 crore loan will appear to be like 8,000 crore now because Indian economy will be 15 trillion dollars from 2 trillion now.
Re: Re: GOOD MOVE
by guptaapsn on Jul 22, 2016 06:33 PM
It is nice to see in paper. Is Japan is paying in Yen it is ok. If they pay in USD, what is the amount to be paid by us after 50 years. Can you explain.
Re: Re: Re: GOOD MOVE
by bakchod on Jul 22, 2016 07:06 PM
Actually USD was equal to roughly 4 rupees in 1960, while now it is 68 rupees. So USD has appreciated only 17 times against rupee while Yen has appreciated 60 times (1 USD = 360 yen, 50 years ago, but now 1 USD = 100 yen roughly). So Yen has become 3.6 times stronger than USD over the last 50 years. (This makes sense because 50-60 years ago, Japan was just recovering from its World War II defeat and nuclear destruction of Hiroshima/ Nagasaki). In the next 50 years it caught up with US economy which is why its currency appreciated against USD).
So coming to the example of the bungalow, if the loan was made in USD, you would only have to repay 1.05 lakh * 17 = Rs 17.85 lakhs.
it's a good news for indian passengers. as these type of trains can run with 180 speed on existing structure.so we don't have to wait for longer time. we can start running this type of trains immediately. Good Going Indian Railway.
However an after thought-------Has the trial been done with our engines??? If YES we need to re-look at the efficiency, power to weight ratio of our India make engines - specially the diesel ones.
The same Talgo coach train can easily increase speed by 12% - 15% with better engines.
Re: Better efficient engines for Talgo trains
by bakchod on Jul 22, 2016 05:59 PM
Good point. Actually I think we need to streamline our engines to make it more aerodynamic because at that speed (180kmph) air resistance becomes a very significant factor. So the engines need to be made more aerodynamic like the front of aeroplanes or bullet trains. I think the power of our engines is sufficient. Look at the photo of the Talgo engine in this article. We need to give such a nose to our engines.
However an after thought-------Has the trial been done with our engines??? If YES we need to re-look at the efficiency, power to weight ratio of our India make engines - specially the diesel ones.
The same Talgo coach train can easily increase speed by 12% - 15% with better engines.
However an after thought-------Has the trial been done with our engines??? If YES we need to re-look at the efficiency, power to weight ratio of our India make engines - specially the diesel ones.
The same Talgo coach train can easily increase speed by 12% - 15% with better engines.
