GIFT CITY MAY LOSE COMPETITIVE EDGE
Even as Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe kick off the MumbaiAhmedabad high-speed rail project from Sabarmati station on Thursday, it could lead to Modi’s pet project, Gujarat International Finance Tec-City (GIFT) City, losing its competitive edge as an upcoming financial centre, say experts.
According to G Raghuram, director of Indian Institute of Management-Bangalore, the rise in connectivity could result in commercial activities getting centralised to the larger centre.
“Due to rise in connectivity (resulting from the MumbaiAhmedabad high speed rail project), certain activities tend to get centralised. So, if Mumbai is already an established financial centre, then the GIFT city near Ahmedabad may relatively lose its competitive advantage. People living in Mumbai can simply commute to Ahmedabad and come back,” Raghuram told Business Standard.
GIFT City has been envisaged by Modi as an alternative financial centre to Mumbai, with the country’s first international financial services centre being set up in the special economic zone area of the project.
Further, reiterating his working paper on the dedicated high-speed rail networks, Raghuram stated that the Mumbai-Ahmedabad bullet train project would have to ferry 50,000 passengers to and fro to earn enough to repay the loans with interest on time. Modi and Abe will lay foundation stone for the ~1.1-lakh crore MumbaiAhmedabad High-Speed Rail Project that will have 10 cars and a capacity to accommodate 750 people, which will see the light of the day by 2022 Raghuram had authored a paper titled ‘Dedicated High Speed Railway Networks in India: Issues in Development’ as a faculty member of IIMAhmedabad.
Modi and Abe will be laying the foundation stone for the ~1.1-lakh crore MumbaiAhmedabad High-Speed Rail Project that will have 10 cars and a capacity to accommodate 750 people, which will see the light of the day by 2022. Recently, Minister of Railways Piyush Goyal said that the deadline of December 2023 for the bullet train had been advanced to August 2022 to coincide with India’s 75th year of Independence.
Of the 508-km stretch, 468 km (92 per cent) of the route will be elevated, 27 km (6 per cent) in tunnels, and the remaining 13 km (2 per cent) will be on the ground. The bullet train will also pass through the country’s longest tunnel of 21 km, of which 7 km will be under the sea. The operating speed of the bullet train will be 320 km per hour and maximum speed will be 350 km per hour. The fares for the bullet train would be in the range of ~3,000-5,000 for a ticket. The Bharatiya Janata Party government’s ambitious project is likely to be scaled up soon after commissioning to accommodate 1,200 people in 16 cars.
Assuming a fare of ~6 per km, the paper had estimated that the proposed bullet train between Mumbai and Ahmedabad would have to ferry 88,000-118,000 passengers per day, or undertake 100 trips daily, to be financially viable. Though the fare structure for ~ 1.10 lakh crore is yet to be finalised, the initial estimates suggest that the high speed rail fares are likely to be 1.5 times the existing first class AC train tickets. The current fare of AC first class on Ahmedabad-Mumbai route is in the range of ~1,700-2,300, while flight tickets starts from ~2,000 onwards. This means a traveller will have to pay much more than existing flight ticket prices to travel on bullet trains.
One of the major advantages that the project offers is the reduction of running time from close to eight hours to 2.58 hours. A flight journey on the same route takes only 1.20 hours, making air travel more cost effective and time saving compared to bullet train.