Some see the project as a non profitable extravaganze.
What is the project about?
India is considering establishing a high-speed train corridor between Ahmedabad and Mumbai based on the Japanese Shinkansen technology.
The project will be funded and executed by Japan.
The Japanese are providing a 50-year loan of Rs 88,000 crore of the total project cost of Rs 1,10,000 crore.
The rest will come from the central government and state governments of Gujarat and Maharashtra.
What is the financial viability?
A project viability report was done, but the details haven’t been shared with the public.
Projections have shown that the train service will need to carry nearly 1 lakh passengers a day to keep fares at a reasonable levels.
The current traffic is only about 18,000 per day.
This means that either fare will have to be raised well above air fares, or that the system will have to be subsidised perpetually.
Has Japanese funding been really generous?
Japan’s loan is claimed to be “virtually interest-free”.
While the interest rate of 0.10% being offered to India sounds great, according to a financial analyst, the average Indian inflation at 3%, and Japanese at 0% has serious implications.
The rupee will hence depreciate 3% every year vis-a-vis the yen.
So over 50 years, the sum to be repaid will be well over twice of Rs 88,000 crore.
This will be a huge burden on future generations. .
Is this advantageous for our passenger needs?
95% of rail users in India do not use even the present fast trains like Shatabdi as they find the fares to be costly.
So, the bullet trains can address only a small population that already has the option of air travel.
The cost of the Mumbai-Ahmedabad bullet train project is almost as much as the entire annual rail budget which stood at Rs 1,21,000 crore last year.
The Indian railway system, with over 13,000 trains running every day, carries more than 8 billion passengers per year plus 1,000 million tonnes of freight over the whole country.
A big bang bullet for the few or a large, improved and safer system for all is the choice that we need to make, as finances are limited.
Notably, there is no mention of transfer of technology anywhere in the agreement, which is the norm for big projects.
