With more delays hitting bullet train project, will it be a white elephant for govt?

One of Prime Minister Narendra Modi's pet infrastructure project, the proposed high-speed bullet train between Ahmedabad and Mumbai, continues to face challenges even before it takes off the ground.

Even as the government and Railways have been gung-ho about the project and its likely benefits for the country once it becomes operational, the project is still in the planning stage.

 With more delays hitting bullet train project, will it be a white elephant for govt?


A report in the Hindu BusisnessLine today says the project has hit a slow track as India is awaiting Japanese Diet to approve the proposal to transfer civil nuclear technology before it moves ahead with the train project.

The project is being financed by Japan International Cooperation Agency (JICA), which is providing a soft loan of about Rs 79,380 crore, amounting to 81 percent of the total project cost.

Although considered expensive when the high-speed train agreement was signed in December 2015, India still persisted with the deal with an eye to access Japan’s civil nuclear technology, a Business Line report said.

In fact, India has negotiated for a loan with a 50-year tenure Japan at low interest rates with a long moratorium period. A dozen stations are being planned and 2,000 jobs may be created in a project. The government expects the project to spur economic growth though there are critics have said a high cost project like this is the not an immediate requirement.

However, the government has not heeded these criticisms and are intent on going ahead with the project. The target to run the first bullet train in India, according to railway minister Suresh Prabhu, is 2023. The construction of the project is expected to start in 2018.

But with the delays kicking in, will the government be able to meet the target?

The latest news report of delay comes close in the heels of the BJP-ruled Maharashtra state government opposing the plan to build the station in the Mumbai city, under the Bandra Kurla Complex.

According to a report in The Indian Express, the state government is not keen on the project because the station as proposed by the Japanese consultants will result in a revenue loss of Rs 10,000 crore for the state.

Although, the plans were prepared by Japanese consultants and surveyed all options before zeroing in on this area, Maharashtra has told Railways that the proposed station would hamper its plans to build a financial centre at the same place.

The state government is also learnt to have told Railways that since only a small portion of the bullet train corridor — one of Modi’s pet infrastructure projects — falls in Maharashtra, such a large revenue loss cannot be justified, Indian Express report said.

With the delay in kicking off the project, there is every chance of cost escalating beyond the planned expenditure. Already there are reports that the cost may increase by $1 billion or Rs 7,800 crore.

A Bloomberg report recently said that the country may have to spend as much as $16 billion for the proposed bullet train project as against the initially estimated $15 billion. The higher cost is because of plans to elevate the entire track so that land acquisition hurdles, as well as people and animals potentially wandering in front of carriages speeding at 350 kilometers (217 miles) an hour, make the option of an elevated link attractive, the report said.

Moreover, there are also signals that the global prices of commodities, which have remained benign for the last two years, may be firming up. This also is likely to push up the cost of the project.

Earlier last month, a high-level delegation led by NITI Ayog vice-chairman Arvind Panagariya had met Japanese officials in Tokyo to finalise key issues relating to the project.

That was the second meeting of the joint committee set up to execute the bullet train project.

During the meeting, the committee was to finalise the schedule of the project, terms related to the appointment of general consultant and procurement conditions.

Besides Panagariya, the Indian delegation comprised A K Mital, Chairman Railway Board, Shaktikanta Das, Secretary Department of Economic Affairs, S Jaishankar, Foreign Secretary, and Ramesh Abhishek, Secretary, Department of Industry Policy and Promotion.

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Updated Date: Jun 14, 2016 14:09:24 IST