Economic Viability of Bullet Trains

Mumbai –Ahmedabad bullet train will be the first bullet train in India which would reduce the time required to travel to 3 hrs, with help of Japanese investment in technology and finance.
Many questions have been raised regarding its viability for following reasons:

• Only handful of high-income countries have high-speed rail (HSR), many have failed or abandoned it due to its economic non-viability. South Korea’s Seoul-Busan HSR caters to almost 70% of the population, yet struggles with viability.
• Many business analysts have predicted that the repayment amount will amount to ₹1.5 lakh crore over 20 years allowing for exchange rates and comparative inflation.
• As per the analysis by IIM Ahmedabad, least 1 lakh passengers at fares of ₹4,000-₹5,000 would be required daily for the project to break even for this 1 lakh crore project. This would make the tariff high and affordable only for rich.
• The train fare is higher than airfare between the two destinations.
• Past experiences have shown that technology absorption has been low in the country.
• Social and Environmental cost associated with the project is high.
• The amount associated with bullet train can be invested in railways for upgradation and maintenance.

Certain benefits have been associated with the project like:

• Bullet trains will make the stations en route hubs for economic and industrial growth.
• Though construction may involve some pollution but operations are energy efficient unlike air travel.
• It will increase investment in infrastructure, ignite the economy, and create jobs.
• India will join the exclusive club of nations having High speed railway.

Thus it is necessary that project is made financially viable and upgraded using in house expertise or else it will defeat the purpose of such a huge investment.