Mumbai-Ahmedabad Bullet Train: A Tale of Trouble?

Opinion Blogs

Posted by Rail Bureau on 2024-07-23 06:56:34 |

Share: Facebook | Twitter | WhatsApp | LinkedIn Visits: 68

---

Join our WhatsApp Group for Rail Journal for fastest updates

Mumbai-Ahmedabad Bullet Train: A Tale of Trouble?

Mumbai: Ten years ago, Prime Minister Narendra Modi announced the Mumbai-Ahmedabad bullet train project. This project was supposed to be completed by 2022 and was presented as Modi's ultimate vision. At that time, everyone blamed the Congress for not bringing the bullet train to India.

However, even after ten years, this project is only 30% complete and the revised timeline has been extended to 2028. We won't discuss whether we need a bullet train or not, but we'll analyze the financial situation of this project and see how big an economic burden it could become, if and when it is started.

Project Cost

Initially, the estimated cost of this project was ₹1.08 lakh crore, including the construction of 508 kilometers with 12 stops. Later, the cost was revised to ₹1.65 lakh crore, but it is expected to reach ₹2 lakh crore by the time it is completed, as reported in Swarajya. This amounts to a whopping ₹398 crore per kilometer!

Cost Detail	Estimated Cost (₹ crore)	Revised Cost (₹ crore)	Possible Cost (₹ crore)
Initial Cost	1,08,000	1,65,000	2,00,000
Cost per Kilometer	212	325	398

Funding Method

This project was to be funded on an 80:20 basis by the Japan International Cooperation Agency (JICA), which provided a loan at an interest rate of 0.1% for a period of 50 years. So, ₹1,60,000 crore will come from Japan, and NSHRCL will have to raise ₹40,000 crore if the cost remains at ₹2 lakh crore. It could be even more.

Funding Breakdown

Funding Source	Amount (₹ crore)	Interest Rate (%)	Period (years)	Total Payment (₹ crore)
JICA Loan	1,60,000	0.1	50	1,64,040
State Governments	40,000	8	30	1,05,657

EMI Calculation

JICA Loan EMI

Detail	Amount (₹ crore)
Monthly EMI	273.4
Annual EMI	3,280
Total Payment over 50 years	1,64,040

State Governments' Loan

Join our WhatsApp Group for Rail Journal for fastest updates

Detail	Amount (₹ crore)
Monthly EMI	293.5
Annual EMI	3,522
Total Payment over 30 years	1,05,657

Total EMI

EMI Type	Monthly (₹ crore)	Annual (₹ crore)
JICA Loan	273.4	3,280
State Governments' Loan	293.5	3,522
Total	566.9	6,802

Currency Fluctuation Impact

The JICA loan is given in Japanese Yen (JPY) and will have to be repaid in JPY. If the value of the yen rises, the loan amount in rupees will increase significantly; similarly, if the value of the rupee rises, the loan amount may decrease.

Year	₹1 = ¥	Impact (₹ crore)
12 years ago	1.39	1,14,388
Today	1.86	1,60,000
Potential Future	1.4	1,12,571

Potential Revenue and Loss

NSHRCL has estimated that an average of 17,900 x 2 passengers will use the bullet train every day. The proposed fare is ₹3,000.

Revenue Estimate

Detail	Amount (₹ crore)
Number of Passengers per Day	35,800
Single Journey Fare	3,000
Annual Revenue	3,920
Estimated Annual Operation Cost	800
Total Estimated Annual Loss	5,103

Alternative Solutions

If there was a real need to reduce travel time from Ahmedabad to Mumbai, what alternatives could have been available instead of this expensive bullet train?

Project Detail	Cost (₹ crore)
Kannur International Airport	1,892
Navi Mumbai International Airport	16,700
Special Runway and Terminal (for all stops)	2,000
Total Estimated Alternative Solution	24,000

Thus, the Ahmedabad-Mumbai travel problem could have been easily solved within a budget of ₹15,000 to ₹20,000 crore. Now we are spending ten times more just to fulfill our whims.

Join our WhatsApp Group for Rail Journal for fastest updates