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 Rs 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 Rs 97,636 crore to fund 80% of the project. For the remaining 20%, the authors assume an 8% average rate of interest (on Rs 20,000 crore to be funded by 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 by pegging operating cost at 20% and 40% of revenue. “If Railways earn Rs 100, Rs 20 or Rs 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.