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The Mumbai-Ahmedabad Bullet Train Is Many Things, But It’s Not Free.

India can have as many bullet trains as it wants on these terms from the Japanese, but nobody should be misled into believing they are free. For one, India may have to repay much more than Rs 88,000 crore over a 50-year period because the rupee will most likely depreciate against the Japanese yen over a long period.

Prime Minister Narendra Modi has claimed the bullet train offered to India by Japan is virtually free of cost. A 50-year yen loan amounting to Rs 88,000 crore at 0.1 % interest is being described by the prime minister as free of cost. This is patently absurd.

The Mumbai-Ahmedabad Bullet Train Is Many Things

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Why is this? Simply put, it’s because the exchange rate between the currencies of two countries is determined by their inflation differential. If India’s inflation rate is average 3% over the next two decades and Japan’s inflation rate is zero, as is widely anticipated, then it stands to reason that the rupee must depreciate 3% every year because the rupee’s value is eroding by 3% as against no erosion in the yen. So, the rupee is bound to weaken by over 60% in two decades. This means that on a loan of Rs 88,000 crore, the repayment, in rupee terms, goes up to more than Rs 1,50,000 crore at the end of 20 years.

According to new The Centre is confident of starting the The Mumbai-Ahmedabad Bullet Train Is Many Things on August 15, 2022 to commemorate the 75th year of India’s Independence, a year ahead of its schedule, a senior official of the railway ministry said.

The Mumbai-Ahmedabad Bullet Train

The official news, who is in-charge of the bullet train project, said that while the deadline to launch the train will remain 2023, the railways is focussed to start it keeping in view the Independence Day celebrations in 2022.

Railway Minister Piyush Goyal said that the scheduled date of starting the bullet train is 2023, according to the Japanese.

Prime Minister Narendra Modi believes that Indian engineers have the capability and our workers have the efficiency to complete it a year earlier, he told reporters.

When the Prime Minister lays the foundation stone for the project on September 14, it will also mark the beginning of the project,” Goyal said, adding that the venue of the foundation laying ceremony will be the passenger terminal for the Mumbai-Ahmedabad Bullet Train.

He further said that it was the goodwill of the PM that was instrumental in India getting such cheap loan from Japan for the bullet train.

The 508-km-long Mumbai-Ahmedabad High Speed rail Project (Standard Gauge) is estimated to cost Rs 1,10,000 crore on completion.

Out of the Rs 1,10,000 crore, Japan is giving a loan of Rs 88,000 crore. The interest on this loan is minimal at 0.1 per cent and it is to be repaid in 50 years, with a grace period of 15 years.

Goyal said that the project is expected to provide 12-15 lakh jobs. Around 20,000 in construction, 4,000 direct jobs for running the system and around 20,000 indirect jobs.

“I think for such low expenditure we are not only getting this huge system, but also modern technology which will provide lakhs of jobs in India. With this technology, industry will get a big boost.

While covering the 508-km stretch between The Mumbai-Ahmedabad Bullet Train, the train will stop at 10 stations — Thane, Virar, Boisar, Vapi, Bilimora, Surat, Bharuch, Vadodara, Anand and Sabarmati.

The railway official said the train would take 2 hours and 58 minutes to cover the distance if it took 10 halts, adding that with two halts — at Surat and Vadodara — the travelling time would come down to two hours and seven minutes.

The bullet train will run at an average speed of 320 km per hour with a maximum speed of 350 km per hour.

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