JICA Bumps To Bullet Train
By Shivaji Sarkar
The ambitious Mumbai-Ahmedabad Bullet Train project, once a symbol of India’s leap into advanced infrastructure, is now mired in delays, cost overruns, and environmental controversies. Japan, a key investor through the Japan International Cooperation Agency (JICA), has grown wary of the project’s trajectory due to escalating costs and inadequate environmental safeguards.
Approved in December 2015, the ¹ 1.08 lakh crore high-speed rail project was initially aimed for a 2023 launch. However, land acquisition hurdles, especially in Maharashtra, and financial constraints have pushed deadlines repeatedly, with only a partial launch from Surat to Bilimora now targeted for 2026. The project’s cost has surged by ¹ 15,000 crore, a steep climb for an economy grappling with a seven-quarter GDP slowdown to 5.4 per cent.
Despite Railways Minister Ashwini Vaishnaw’s efforts, including a visit to Japan in September, progress remains sluggish. Japan’s reluctance to commit to revised timelines has prompted India to explore European alternatives for suppliers and technology. This shift, coupled with internal directives to float global tenders, underscores India’s urgency to salvage the project.
The project’s compliance with environmental and social norms remains under scrutiny. Environmentalists have criticised the absence of comprehensive environmental impact assessments and advisory committees mandated by JICA for “Category A” projects, which involve significant societal and ecological disruptions. Reports highlight violations, including inadequate public consultations and the bypassing of legal requirements for social and environmental evaluations.
Gujarat’s 2016 amendments to land acquisition laws and the Supreme Court’s relaxation of environmental clearance norms have further exacerbated concerns. Activists argue these changes undermine safeguards meant to protect displaced communities and fragile ecosystems.
The central government is keen to showcase progress before the Gujarat Assembly elections in 2027. However, delays in resolving critical issues threaten this timeline. Critics speculate that the project, if completed, might end up being a costlier version of the existing Vande Bharat trains rather than a transformative leap in Indian rail infrastructure.
While the Bullet Train remains a flagship vision, its current state reflects broader challenges in balancing infrastructure growth with environmental and financial sustainability. Studies have found that expensive trains have poor ridership. Vande Bharat and similar trains often go half empty. Comparable travel cost on bullet is estimated to be high and not remunerative for bullet train. The Railways are considering having indigenous coaches of Vande Bharat type to replace the Japanese high-tech Shinkansen coaches.
The bullet train is not the first example of a foreign-funded infrastructure project that has run afoul of international social and environmental standards. In Gujarat itself, the Tata Power-owned Mundra Ultra Mega Power Project in Kutch has been in the midst of such a controversy since 2011. The US-based International Finance Corporation funded the project with an aid of US dollars 450 million, but villagers living around the power plant have now sued the IFC for alleged large-scale environmental damages caused by the project. In 2015, a lower court in the United States held that international funding organisations are entitled to “absolute immunity” from lawsuits in that country. However, in May this year, the US Supreme Court agreed to take up an appeal case by the project-affected villagers.
With an annual outgoing EMI of ¹ 6,802 crore but a lower estimated revenue, the Mumbai-Ahmedabad bullet train project is set to become a big liability to the exchequer. The JICA loan is given in Japanese Yen (JPY) and has to be paid back in JPY. If the Yen appreciates the loan amount will increase significantly in rupees, if the rupee appreciates, the loan amount will decrease significantly. For example, if 12 years ago, Re 1 was 1.39 JPY and today it has depreciated to 1.86 JPY, now if it appreciates again and goes back to 1.4 JPY, then the loan amount simply goes up by Rs 52,571 crore. Even though it looks like a low-interest loan, currency fluctuation can change the whole game.
The analysis also factors in the total number of passengers which will travel along the entire Mumbai to Ahmedabad route, as well as Surat to Mumbai or Surat to Ahmedabad route, which could be double of 17,900 passengers, considering passengers travel to and fro. The proposed fare for one side travel was ¹ 3,000, which is 1.5 times the rate of a first class train ticket.
In a best-case scenario where all passengers are travelling from Mumbai to Ahmedabad and back, the bullet train will generate an annual revenue of ¹ 3,920 crore, but the yearly loan liability is Rs 6,802 crore, so there will be a shortfall of Rs 2,882 crore. Conservative estimates peg revenue at Rs 2,499 crore per year, revenue shortfall Rs 5,103 crore in the first year itself.
The estimated cost of operations was Rs 412 crore per year in 2014, but by 2028 it will become more than double, at over Rs 800 crore. It further goes on to say that Indian Railways with all 13000 passenger trains including First Class, 2AC, 3AC, Rajdhani, Shatabdi, and Vande Bharat could only earn Rs 63,300 crore in the last year. Delhi metro with a daily ridership of 46 lakh people clocked revenue of Rs 3,088 crore last year.
If we look at bookings of last summer, most cheaper trains are fully booked, and Vande Bharat and Tejas Express have lots of seats available. Already, 33 trains are running on the route. Moreover, a ticket price of ¹ 3,000 was determined when cost of construction was ¹ 1.1 lakh crore.
There are problems. The new plan is to produce coaches and have signalling systems of Indian railways instead of Shinkansen. There are still three years. There are international commitments to JICA and diplomatic issues with Japan. What are being discussed are partial truths. The project could get a bit more delayed, but the Indian Railways expects that most of the original plans would be on track with some modifications. The project may be completed beyond 2027 and may be on time for 2029 Lok Sabha elections. The operation cost is likely to go up and the railways have to reconfigure the fares to be charged to make it more affordable and sustainable. — INFA