Bullet Trains – Does India really need them?

Presented by –
Ankur Gupta
16th PGD PPM
Roll No 23PPM02
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Project Overview
 Project Overview
• The Government of India approved the Mumbai–Ahmedabad High-Speed Rail (MA
HSR) project in December 2015, to be implemented with Japanese technical and
financial assistance using Japanese Shinkansen technology.
• It is a 508 km long high-speed rail corridor ,have 12 stations and the operating
speed would be 320 km per hour. journey time between Mumbai and Ahmedabad
from 8 to 2 hours.
• On February 12, 2016, a company called National High-Speed Rail Corporation
was incorporated by the Ministry of Railways.
• The project was expected to be completed by December 2023.Due to delays in
acquiring land ,completion date for the whole corridor is uncertain, though the
352 km section through Gujarat will fully open in 2027, after opening the section's
50 km (31 mi) stretch, from Surat to Bilimora, in August 2026.
 Cost Implications

• The project was estimated to cost ₹1.1 lakh crore (US$14 billion) , 81% of the total project
cost ₹88,087 crore , bearing 0.1% interest, 15 year lock-in period, repayable in 50-60 years is being
provided by Japanese Govt.

• The expenditure already incurred rose to ₹28,442 crore by July 2022, even as analysis suggested a
48% cost escalation in the project to ₹1.6 lakh crore due to the COVID-19 pandemic and land
acquisition issues.

• India may have to repay much more than Rs 88,000 crore over a 50-year period because of rupee
depreciations/exchange. If India’s inflation rate is average 3% over the next two decades and
Japan’s inflation rate is zero, as is widely anticipated, then rupee is bound to weaken by over 60% in
two decades. more than Rs 1,50,000 crore at the end of 20 years.

• Interest rate of 0.1% may appear free from an Indian perspective, it is not so in Japan. Japanese
short term interest rates (Tokyo Inter Bank Offer Rate) is 0.06%. The interest rate offered by ten-
year Japanese government bonds is 0.04%. Therefore, 0.1% interest rate that Japan would earn
from India is a very lucrative investment opportunity for Japan
 Contd.
• The TPC of the Mumbai-Ahmedabad HSR project is estimated at $17 billion (Rs 1.1 lakh crore).The
construction cost of project rail infrastructure works out to $27.44 million per km. In comparison, the average
cost of constructing infrastructure for 350 km per hour bullet trains in China is $17-21.

• Even if the highest figure of $21 million per km, the cost estimate of the Mumbai-Ahmedabad HSR project is
still at least $3.2 billion higher. At $17–21 million per km , Chinese rail is cheaper as compared to $25–39 million
per km for traditional exporters of high-speedrail like Japan and Germany.

• China’s expertise has largely been developed in the last decade, as China built the world’s largest network of
high-speed rail. Moreover, the Chinese companies have a higher threshold for building in risky areas and
willingness to finance their projects. Export–Import Bank of China will be funding 85% of the Mexico rail project.

• It is difficult to justify a grandiose and expensive project like the bullet train at a time when the existing rail
infrastructure in the country is creaking and train derailments, accidents have become a daily occurrence,
instilling fear among passengers.India’s death toll of 193 from train derailments in 2016-17 was the highest in a
decade.
 Financial Viability
• HSR projects are highly capital intensive, requiring high passenger volumes and high tariff to justify the
investment. Taiwan, which has been running HSR based on Japan’s Shinkansen Bullet Train system since
2007-18 has seen massive losses owing to high depreciation and interest payments as well as low
ridership and the operator has sought bailout from Government

• IIM, Ahmedabad estimates that at least 1 lakh passengers at fares approx Rs. 1,500 per 300 km would
be required daily for the project to break even. The proposed bullet train will have to compete with
airlines flying on the Mumbai-Ahmedabad route & it is also connected by Expressway.

• With oil prices projected to remain moderate in the foreseeable future, the bullet train is going to face
tough competition from low-cost carriers for traffic.

• Domestic air traffic was about 50% of the railway AC passenger volume in 2014-15, rose to 71% during
April-December 2016.As per the railway’s own projection, local airlines will fly more passengers than its
AC coaches by 2019-20.

• Recently it is seen that, Indian Railways has lost its upper end travellers to budget airlines in recent
years.
 Should Develop Existing Railway System
• The cost of the project is more than 1.5 lakh crore for a single rail line. Instead, this money can be
invested in the development of the present infrastructure of the railways which is a case
deserving more immediate attention, seeing the recent rail accidents in India.

• Furthermore, the Kakodkar committee recommended an investment of Rs. 1 lakh crore for
upgrading the safety and security of the railways.

• Standing committee on Railways, led by Sudip Bandopadhyay, said that in 2014-2015, over 40%
of incidents happened at unmanned level crossings, and in 2015-2016, over 28% of incidents
happened at unmanned level crossings

• The committee also said that Railways completely switched over to the manufacturing of LHB
coaches – which do not pile up unlike the conventional coaches in case of an accident.

• 90% of railway passengers of India travel through sleeper class or lower class so this huge sum of
money should be invested in the development of the present railway system which is for the
larger population.
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 Benefits of the Project
Social Benefits
• There are a number of positive externalities of high-speed rail like economic travel, reduced CO2
emission, comparatively less land required than a 6 lane highway for same passenger capacity
and employment generation because of higher economic activity and faster connectivity.

Economic Benefits
• Transportation by HSR would be powered by indigenous electric power like diesel/petrol and
aviation fuel need by cars and airplanes, which is largely imported. This will benefit the Indian
economy and reduce its relevance on imported fuel.
• According to a study conducted by London School of Economics and Political Science, towns
connected to a new high-speed line saw their GDP rise by at least 2.7% compared to the neighbors
not on the route.
• MAHSR Corridor spans over 12 stations of which 6 are cities (Ahmedabad, Anand, Vadodara,
Bharuch, Surat, and Vapi) are major Industrial hubs .The connectivity will bring to the
interconnected cities and adjacent district by virtue of intersectoral relationships is bound to bolster
cohesive economic wellbeing.
 Conclusion

•India aspires to become the third largest economy in the next 25 years. It has already proven its
prowess in the field of space and now is the time for furthering its international stature by joining the
exclusive club of nations having a high-speed rail network.

•Shinkansen bullet train as one of the safest train networks in the world. Japan will share with India
the expertise of safe transport which will help the entire Indian rail network. There are costs to
technological progress, but the safety of our citizens shouldn’t be one of them.

•While air transport can cater to such needs, the capacity that it offers simply cannot match that of
the railways. While making incremental changes to improve existing infrastructure is desirable, it is
equally important to adopt proven state-of-the-art technologies.

•While any change which appears disruptive is likely to be opposed, it is more important to consider
the overall long-term benefits, resulting from the high speed rail projectThere are good things and
bad things about everything. It’s up to each person to weigh the options fairly and make a wise
choice.
Thank You

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