When he came to office in May, Indian prime minister Narendra Modi faced many challenges. India is the second most populous nation on Earth, with an estimated 1.2 citizens and huge economic, social and health problems fuelled by endemic poverty, bureaucratic inefficiencies and widespread corruption. Mr Modi was elected on the promise that he would bring to the whole of India the reforms he undertook as chief minister of Gujarat state, where he cut red tape, attracted large amounts of foreign investment and built much-needed infrastructure. To his credit, he has started delivering.
Fresh from a trip to Japan, where he secured a pledge for investments worth $35 billion (Dh 129bn) over five years from prime minister Shinzo Abe, he is now back home playing host to Chinese president Xi Jinping. While the agenda will include talks on disputed stretches of border between the neighbouring countries, the tone of the mission is expected to be friendly with a focus on economic cooperation. Among expected outcomes of the three-day trip, which ends tomorrow, are approval for Chinese industrial parks to be set up in Gujarat and Maharashtra, and the announcement of significant Chinese investment in India’s vast but fragile railway network.
With an estimated 65,000 kilometres of track, 19,000 trains per day, nearly 7,200 stations, more than 8 billion passengers a year and an annual freight load of over 1 trillion tonnes, the rail network is essential to India. It has been reported that China’s investment, which will help build high-speed rail connections between major centres – could be worth between $100bn and $300bn.
This is good news for India, which desperately needs the cash to improve its ageing public-transport and logistics infrastructure, but it will come at a price. China will undoubtedly require a return on its investment, so Mr Modi will need to exercise some caution before committing to any deals.
