State departments wary of bullet train losses: RTI reply

The Narendra Modi government’s Mumbai-Ahmedabad bullet train project may turn out to be a loss-making proposition and burden Maharashtra’s already dwindling finances, the latest information obtained by an activist under the Right to Information (RTI) has revealed.

As per the RTI response, a State Transport Department report has highlighted several objections raised by various departments over the economic viability of the Shinkansen train, which could result in losses in the form of wasted Floor Space Index (FSI) and delayed loan repayment in the absence of proper frameworks.

Unutilised FSI

In its assessment, the State Urban Development Department (UDD) said some part of the FSI at the station proposed at Bandra Kurla Complex (BKC) in Mumbai could “remain unutilised because of the height restrictions, leading to revenue losses”. “Hence, a conscious decision must be taken in this regard even as the Railways have said there is no impediment to the construction viability of the financial centre. However, the clauses in this regard must be specifically incorporated so that no objections are raised by the Railways later on,” a note from the UDD reads.

Both Planning and Finance departments have called for a thorough study of bullet train economics in other countries before a decision is taken on its feasibility in India. Additionally, the departments said the Centre must clarify the formula for sharing the loan burden if the project remains loss-making for a long period of time. Since the State is coping with serious loss in income and further burden of loans, the impact of this project on government finances needs to be considered, both departments said.

High chance of losses

“The estimated annual return of the project is less than the expenditure, hence the chances of losses are high. [We] need clarifications regarding sharing of such losses and expenditure,” the State Finance Department said in its note.

Activist Jeetendra Ghadge, who had filed the RTI application with the State Home Department, said it was “shocking” that the government had cleared a project which has no practical benefit for the State and would add financial stress. “The State government has clearly rushed into approving the project under pressure from the Central government, without even looking at its feasibility or the interests of its own State,” he said.

Moreover, the documents show that the ministerial committee headed by Chief Minister Devendra Fadnavis has not met to discuss the project since being incorporated in February 2017. The committee was tasked with carrying out an in-depth study of the Japan International Cooperation Agency report and the project’s feasibility. “The Home Department, in the RTI response, has said there has been no meeting conducted by the subcommittee till now,” Mr. Ghadge said.

The Transport Department’s report was prepared on January 3, 2017, and presented to the State Cabinet soon after. It sought r clarity on the responsibilities of the State and Centre regarding expenditure on land acquisition and rehabilitation, and competitive tender process for reducing the expenditure. The report further demanded clarity on the number of passengers going from Maharashtra to Gujarat for business/jobs to ascertain the benefit of the project.

Liability of State

The Finance Department had also forewarned that the Central government should bear the burden of the loan to the special purpose vehicle (SPV), without the State government bearing any guarantee towards the SPV. How the loan will be availed is yet to finalised. “[This was an issue] faced by the Pune Metro, when the World Bank refused loan to the SPV, even though the Centre and State had 50:50 equity. These aspects need to be borne in mind. In essence, the loan must be taken by either the Central government or SPV without any guaranty by the State,” it said.

The train, with a capacity of 750 passengers, will travel at speeds between 320 km/hr and 350km/hr and is expected to reduce travel time between Ahmedabad and Mumbai to three-and-a-half hours or less from the present eight. The project is expected to be completed in seven years.

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Printable version | Sep 25, 2021 6:31:03 PM |

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