Bullet train will need 100 daily trips to be financially viable, shows study

AHMEDABAD: The proposed bullet train between Mumbai and Ahmedabad will have to ferry 88,000-118,000 passengers per day, or undertake 100 trips daily, for the Railways to keep it financially viable, according to a report by the Indian Institute of Management Ahmedabad (IIM-A).

The report states if

Railways set the ticket price at `1,500 for 300-km drive per person 15 years after the operation, it will have to ferry between 88,000 and 110,000 passengers every day to ensure it repays the loans on time.

Japan has offered a concessional loan of `97,636 crore to fund 80% of the project.

For the remaining 20%, the authors assume an 8% average rate of interest (on `20,000 crore to be funded by IIM-A submitted a report on the viability of the proposed bullet train between Mumbai and Ahmedabad. The findings: passengers per day need to be ferried to keep it viable trips will have to be made per day at a ticket price of `1,500 for 300 km per person to ensure loans are paid on time

Centre). Japan has offered a 15-year moratorium on loan, so revenue concerns will arise from the 16th year. The paper was jointly authored by faculty members G Raghuram, professor of the institute’s Public Systems Group, and Prashanth Udayakumar.

Fifteen years after the train becomes operational, the paper assumes two scenarios loan has been offered by Japan to fund 80% of the project cost with a repayment period of 50 years beginning from the 16th year of operation at an interest rate of 0.1%.

by pegging operating cost at 20% and 40% of revenue. “If Railways earn `100, `20 or `40 will go for maintenance, and remaining for cash payment of loan. To cover the loan with operating cost in two scenarios, we consider passengers travelling an average 300km. So we will need 88K-118K passengers respectively for both scenarios,” Raghuram said.