100 Trips A Day Will Make Modi Govt’s Bullet Train Financially Viable: IIM study

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4:44 pm 18 Apr, 2016

As per an IIM-Ahmedabad study, Modi government’s ambitious bullet train between Mumbai and Ahmedabad will have to undertake 100 trips daily, to keep it financially viable.

The research paper states that if the ticket price of the train is set at Rs 1500 for 300 km drive per person fifteen years after the operation, it will have to ferry between 88,000 and 110,000 passengers every day to ensure that it repays the loans with interest on time.

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To make the dream of the bullet train a reality, India needs to spend Rs 98,000 crore. Japan has offered an assistance of over Rs 79,000 crore for a period of 50 years with a 15 years moratorium with the interest rate of 0.1 per cent. What this means is that India does not need to start repaying the loan immediately. It will have to do so fifteen years down the line.

The author assumes that revenue concerns for the Indian Railways will arise from the 16th year.

The Japanese shinkansen, or bullet train, takes 2 hours and 25 minutes between Tokyo and Shin-Osaka, and has a top speed of 270km/hour tsunagujapan

The Japanese shinkansen, or bullet train, takes 2 hours and 25 minutes between Tokyo and Shin-Osaka, and has a top speed of 270km/hour tsunagujapan

So fifteen years after operations, the paper assumes two scenarios by pegging operating cost at 20 per cent and 40 per cent of revenue.

“So if the Railways earn Rs 100 revenue, Rs 20 or Rs 40 will go for maintenance and remaining surplus money will go for cash payment of loan with interest. Now, to cover the loan with operating cost in two scenarios, we consider passengers travelling an average 300 kilometres. In this case, we will need 88,000-118,000 passengers respectively for both the scenarios,” according to G Raghuram, professor of the institute’s Public Systems Group.

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indianexpress


“Typically one train carries 800 passengers, so to carry 88,000 passengers daily, you will need to take a total 100 trips, or 50 trips each way. So, we need three trains every hour in each direction,” he said.

As per the paper, “there are many positive benefits and externalities of the HSR which would be useful in India’s overall aspirational development.”

“These externalities include technology percolation into other domains, economic development, game-changing sense of connectivity, and national pride due to cutting-edge infrastructure,” the paper said.

A bullet train in China passes over Yongdinghe Bridge on the world's longest high-speed rail line, running 1,428 miles dallasnews

A bullet train in China passes over Yongdinghe Bridge on the world’s longest high-speed rail line, running 1,428 miles dallasnews

It also says that in such a context, it is a good idead to begin and learn, looking at the successful HSR in countries such as Japan, China, Spain, France, and Russia.

The paper also states that the Mumbai-Ahmedabad route is a good choice for the first route, since it connects India’s first and seventh most populous cities, with significant economic development in the 500-km corridor between them. It also said that the low cost Japanese financing has been a great catalyst.

In terms of future network growth, this segment can be part of extension to Jaipur and Delhi, it states.

Watch the crazy fast Japanese Shinkansen train:

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