What is the issue?
- India is planning its first high-speed railway.
- 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.
Source: Indian Express
