This is a question worth INR 1.1 lakh crore hence deserves an unbiased analysis with open minds . So lets analyse the stats and then put up the narrative rather than letting the pre-decided narrative influence the whole write-up .
After a little research over the internet I managed to gather below list of questions which needs to be answered :-
1)Can a nation of poor ,hungry , jobless ,homeless people afford a luxury of INR 1.1 lakh crore ?
A question decorated with heavy words representing the weakest in the society strikes the moral chord of one’s conscience easily . But if we go by this logic then all the government bus services should stop till each corner of the nation has roads . All the trains should stop till each city of the country has a railway network . These are weak arguments with no substance . Undoubtedly nation building includes irradicating poverty ,providing homes ,generating jobs alongwith creating the world class infrastructure to remain in race against other developing nation but these all happens hand-in-hand and none waits for the other .
2)Shouldn’t we put this amount to renovate the existing traditional railways ?
We must understand that the budget allocated for traditional railways would not be impacted at all . It is as good as arguing that we should not build IITs ,IIMs ,AIIMs and divert that amount for the betterment of railways . Though both the traditional and the bullet trains would fall under Railways ministry but they have nothing in common right from budget ,tracks ,implementation to governing bodies .
80% percent of the amount will be funded by Japan while Indian Railways will have to create equity equivalent to left over 20% .
3)Why should whole of India pay for luxury of Gujarat and Mumbai ?
Re-iterating the already stated fact that – 80% percent of the amount will be funded by Japan while Indian Railways will have to create equity equivalent to left over 20% . This 20% will be borne by Gujarat and Maharashtra state governments .
4)Economics of Ahmedabad-Mumbai bullet train .
In total 35 services will be operated daily .
Each way it becomes = 35 * 2 = 70 trips daily .
Now each train will carry approx 1300 t0 1600 passengers
Total passengers daily = 70 * 1450 = 101500 (considering trains running on full capacity. Estimated cost of ticket = INR 3000/-
Revenue generated per day = 3000 * 101500 = 30,45,00,000(INR 30 crores approx.)
Revenue generated yearly = 30 * 365 = INR 10950 crores .
Considering profit to be 20% -> total profit yearly = INR 2000 crores
Around INR 19000 crores has to be borne by Railways . To recover this amount in first 15 years of non-payment of interests ,Railways need to generate INR 1266 crores yearly which is very much with in the reach .
After 15 years the principal amount to be paid would beapprox. INR 2000 crores yearly in addition to the interest (79 crores) . By the time 15 years passes the system ,processes , business models would be stabilised . Alongwith the main business model of generating revenue from tickets there would surely be earnings from other models such as advertisements ,vendors etc .
The calculations indicate that it is not going to be a flopshow . If handled professionally and remains corruption free then finances can be managed . In addition to the first train India would be getting the technology to manufacture its own Bullet train on other routes , which will cost less and will generate similar revenues hence creating a bigger margin for profit .
Note : While doing the calculations we have not considered multiple factors :-
a)Yen to INR depreciation or vice versa – taking into account the last 5 years of yen vs INR performance we notice that INR has deppreciated . Current conversion rate from INR to Yen is 1.76 while five years back it was around 1.9 . Either ways this factor is hardly going to impact .
b)We have assumed ticket cost to be INR 3000 which is expected minimum . Ideally ticket might vary from INR 3000 to INR 5000 depending upon the kind of coaches being introduced .This factor goes in favour .
c)Trains running on full capacity – this factor can not be forecasted . Around 4 lakh people travel daily from Ahmedabad to Mumbai . One in four persons are required to travel in Bullet trains to run full on capacity . Bullet trains will divert a major chunk of air traffic as it is not only equally fast but also offers viability of getting into the train from multiple stations adding to the traffic .
Hence India is prepared economically , technologically , logistically ,psychologically to witness its first bullet train to be functional from 2022 . The only negative factor which even China is facing would be that with the advent of Bullet trains traditional trains on that route would take a hit and slowly will have to be reduced which will force poor to take a bullet train and shell out more in case of an urgency .