Delayed deadlines, inflated costs of the bullet train makes it a costly liability, alleges Opposition

With an annual outgoing EMI of ₹6,802 crore but a lower estimated revenue, the Mumbai-Ahmedabad bullet train project is set to become a big liability to the exchequer

Updated - May 21, 2024 09:33 pm IST

Published - May 21, 2024 08:58 pm IST - New Delhi

Training of Indian engineers and work supervisors underway for track construction work for the Mumbai-Ahmedabad Bullet Train Corridor project underway. File.

Training of Indian engineers and work supervisors underway for track construction work for the Mumbai-Ahmedabad Bullet Train Corridor project underway. File. | Photo Credit: ANI

Prime Minister Narendra Modi’s pet project of constructing a bullet train from Mumbai to Ahmedabad will form a gaping hole in the exchequer’s pocket, an analysis carried out by Opposition party Indian National Congress has alleged.

At a speed of 320 kilometres per hour the bullet train is expected to cover 508 kms in under three hours.

Also read | Bullet train project speeds up with completion of 50 km of viaduct, 180 km of pier works construction

A thread posted by Congress Kerala’s twitter handle says that in 2013, PM Modi announced that a bullet train project connecting Mumbai to Ahmedabad will be ready by 2022, a decade later it is only 30% complete, and the revised deadline is now 2028.

The Congress has alleged that the bullet train will become the biggest liability of India once it is launched. “The initial cost estimation for the project was ₹1.08 lakh crore for constructing 508 kms with 12 stops, cost was later revised to ₹1.65 lakh crore but it is expected to cost ₹two lakh crore when completed, which is ₹398 crore per km,” the tweet analyses.

The project is supposed to be funded 80:20 by Japan International Cooperation Agency (JICA) which is a loan with a tenure of 50 years and an interest of 0.1%. This means that ₹1,60,000 crore will come from Japan at 0.1% for 50 years, and so the total interest will be around ₹4,040 crore over 50 years. For repayment purposes, an EMI has to be paid ₹273.4 crore every month, which brings up the cost to ₹3,280 crore every year for 50 years.

If the cost stays at ₹2 lakh crore then the rest of the ₹40,000 crore has to be raised by National High Speed Rail Corridor from state governments of Gujarat and Maharashtra which will be funded via loans. “Assuming a loan at 8% interest for 30 years the total repayment amount will come up to ₹1,05,657 crore, which means ₹293.5 crore has to be paid every month, which is ₹3,522 crore annually for 30 years,” the analysis further states. This means that for both loans combined, there will be an amount of ₹6,802 crore to pay off every year.

The thread further states that the JICA loan is given in Japanese Yen (JPY) and has to be paid back in JPY. “If the Yen appreciates the loan amount will increase significantly in rupees, if the rupee appreciates, the loan amount will decrease significantly. For example, if 12 years ago, ₹1 was 1.39 JPY and today it has depreciated to 1.86 JPY, now if it appreciates again and goes back to 1.4 JPY, then the loan amount simply goes up by ₹52,571 crore. Even though it looks like a low-interest loan, currency fluctuation can change the whole game,” the analysis states.

The analysis also factors in the total number of passengers which will travel along the entire Mumbai to Ahmedabad route, as well as Surat to Mumbai or Surat to Ahmedabad route, which could be double of 17,900 passengers, considering passengers travel to and fro. The proposed fare for one side travel was ₹3,000, which is 1.5 times the rate of a first class train ticket.

In a best case scenario where all passengers are travelling from Mumbai to Ahmedabad and back, the bullet train will generates an annual revenue of ₹3,920 crore, but the yearly loan liability is ₹6,802 crore, so there will be a shortfall of ₹2,882 crore. But that is in best case scenario. More conservative estimates peg revenue at ₹2,499 crore per year. “Which implies revenue short fall will be of ₹5,103 crore in the first year itself, where will this money come from, just to pay the loans? Who will pay off these loans?” Congress has questioned.

The estimated cost of operations was ₹412 crore per year in 2014, but by 2028 it will become more than double, at over ₹800 crore, the thread states.

It further goes on to say that Indian Railways with all 13000 passenger trains including First Class, 2AC, 3AC, Rajdhani, Shatabdi, and Vande Bharat could only earn ₹63,300 crore in the last year. Delhi metro with a daily ridership of 46 lakh people clocked revenue of ₹3,088 crore last year.

“On Mumbai - Ahmedabad route there are anyway many regular trains, buses, and highways available. If it can achieve a revenue of ₹2,000 crore every year, that itself will be great deal,” Congress has stated.

If we look at bookings of say May 20, most cheaper trains are fully booked, and Vande Bharat and Tejas Express have lots of seats available. Already, 33 trains running on the route. Moreover, a ticket price of ₹3,000 was determined when cost of construction was ₹1.1 lakh crore. “Now it will nearly double when project is completed, so can the ₹3,000 fare be maintained now? Will the number of passengers be the same if the ticket price becomes ₹5,000? Will a family of four shell out ₹40,000 for a trip to Ahmedabad and back?” the thread asks.

Congress has said that there are alternatives to the expensive bullet train if there was a legitimate need for cutting travel time from Ahmedabad to Mumbai. “A Greenfield Kannur International Airport was constructed at ₹1,892 crore a couple of years ago, the new Navi Mumbai International Airport is being constructed at ₹16,700 crore, even if we add a dedicated runway and terminal exclusively for people travelling to Gujarat, it would have cost an additional ₹2,000 crore. If we construct a new airport at all 10-11 stops of the bullet train, it would still cost around ₹24,000 crore,” the thread said.

The Congress has alleged that the Modi government’s pet project will become the biggest liabilities to India. “The Ahmedabad - Mumbai travel problem is something that can be solved with hardly ₹15,000 to ₹20,000 crore budget,” it said in the thread.

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