Bullet Train In India: An Economically Non-Viable, Immature Decision

Posted by Vinay Sharma in Business and Economy, Society
February 8, 2018

Earlier in 2015, during the annual summit meeting between India and Japan, the Narendra Modi regime announced the launch of India’s first high-speed bullet train. Modi and Japanese President Shinzo Abe signed a civil nuclear pact strengthening the economic as well as technological relations of both the countries. Japan also agreed to give a whopping loan of $12 billion to initiate the bullet train project in the country.

There were several articles published on websites and newspaper across the country, celebrating the friendship between India and Japan because the loan covers 80% of the cost for the bullet train project with an interest rate of only 0.1%. Prime Minister Modi said that this project was a big gift from Japan to India and was “free, in a way”. But if the amount of interest is to be calculated, then it amounts to a lot in Indian currency.

There are several critical analyses, on several aspects, made by economists and journalists on the bullet train project. These analyses highlight not only the economic non-viability of the project, but also the trouble for securing land, as well as India’s own ‘Make in India’ initiative.

Earlier in September 2017, Modi and Abe laid the foundation stone of the bullet train with a promise to promote ‘Make in India’ and transfer of technology. However, now Japanese companies will probably supply 70% of the material required for the construction of the high-speed rail. Indian companies will only be able to supply cement and manpower. Tomoyuki Nakano, director for international engineering affairs in the railway bureau at Japan’s transport ministry, raised concern about the experience of Indian companies in technological specialisations and quality. Thus, there are no hopes for joint ventures in the upcoming contracts regarding the high-speed rail project and this is a major blow to Modi’s economic policy to boost ‘Make in India’.

Also, according to a study conducted by Indian Institute of Management, Ahmedabad, it has come out that the bullet train will have to make about 100 trips per day to come out of the loan. The report highlighted that the high-speed rail will have to carry between 88,000 and 110,000 passengers per day to repay the loan with interest on time, that is, only when the price of the ticket is set to ₹1500 per person.

Indian Railways requires 1,100 hectares of land to make 508 kilometre long premises for the bullet train and the land needs to be acquired in order to start the construction for the same. The train would cover areas which are majorly used for agricultural purposes which would be destroyed. Some might argue that this is ‘collateral damage’ which is necessary in order to enhance the infrastructural development. However, the question remains that this ‘damage’ – is it worth it? Only the rich and upper middle class would be able to easily afford the luxury to travel in the bullet train. No farmer or people from lower classes would be able to afford the same. Is this development only for the rich and not for the poor? And does this justify the government acquiring the land?

Between 2016 and 2017, the death toll due to rail accidents and derailment of trains have been the highest in a decade, according to Firstpost, “As many as 1,394 train accidents were reported in India over the ten years considered for this analysis. Of these accidents, 51% or 708 were due to derailments.” In Maharashtra, Maharashtra Navnirman Sena (MNS) chief Raj Thackeray and other party leaders criticised the Modi government for the stampede incident at Elphinstone station in Mumbai and complaint about the poor condition of the bridge.

The cost of this project is ₹1,10,000 crore which would just connect Ahmedabad and Mumbai. The amount of money being spent on the bullet train project can be used for several other issues such as fixing the current railway conditions, expanding the railway network across the remotest parts of the country for better connectivity, and providing jobs for the youth. The Central government needs to fix its priorities to cater to issues which need much more attention in the country.