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Is Mumbai-Ahmedabad bullet train really worth the cost?

Karan Dhar     September 14, 2017

For a country which runs nearly 10,000 trains every day to ferry more than 23 million passengers, equivalent to Australia's entire population, a bullet train that will carry a few thousand people could hardly be called a sign of 'development'.

Crumbling infrastructure

India's mammoth 66,687 km long colonial-era rail network is old and creaky. Less than half of it is electrified. Trains that seldom run on time are now witnessing frequent derailments. As if the lack of safety standards weren't enough, the hygiene level is abysmal too.

Railway stations across the country, especially in metros, are ill equipped to cater to the growing number of passengers. Passengers are often seen jumping inside unreserved coaches through the windows to grab a seat before all are taken.

Soft loan

While Prime Minister Narendra Modi heaped praise on his Japanese counterpart Shinzo Abe for extending a soft loan worth Rs Rs 88,000 crore at 0.1 per cent for India's ambitious bullet train project, it's Japan who should thank India for accepting the loan at a time when Japan's economy has yet to fully overcome deflation.

Bank of Japan has been battling deflation for the last two decades. It adopted negative interest rates in 2016 to boost consumer prices which have been stagnant for years. Japan's struggling economy will get a fillip as majority of Rs 80,000 crore loan money would go back to Japanese companies and in hiring skilled Japanese workers.  

While Prime Minister Narendra Modi said ,"In Shinzo Abe, India has found a friend no bank in the world could match," it is evident that there are no free lunches here. Japan has as much to gain by financing the bullet train project as India does by getting a modern rail network.

Fares

The cost of Ahmedabad-Mumbai High Speed Rail Project is estimated to be Rs 1,10,000 crore, almost equal to total capital outlay of Indian Railways in 2017. This expenditure for a route which is only 500 odd kilometres in length could become a burden for state exchequer in the years to come.

According to a study conducted by IIM Ahmedabad, Ahmedabad-Mumbai bullet train will need to make 100 trips daily and carry 88,000-118,000 passengers per day to be financially viable. This figure could well be way above the total number of passengers travelling between the two cities on any given day.

Not to mention the ticket price for the bullet train is expected to be around Rs 3,000. For the same price, one can travel between Ahmedabad and Mumbai on an airplane and reach in an hour.

Railway Minister Piyush Goyal had earlier said the fare of the high-speed bullet train would be 'affordable for all'. If the ticket prices of the bullet train which caters to well-to-do passengers are not driven by market force, then this negates the viability of such a huge investment.

At a time when the government is looking to sell debt-ridden Air India, the bullet train could create another white elephant in the country.


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