Japan’s Bullet Train Troubles with India

The Mumbai-Ahmedabad Bullet Train project, according to an exposé that appeared in the Japanese magazine Sentaku, is a boondoggle, which means: a fraudulent, wasteful or an unnecessary use of money and time. The article alleges that the project, which was to be modelled after Japan’s Shinkansen system, is already a major cause of anxiety to the Japanese government and business firms involved because of the rising costs of the project, which is an outcome of the ‘haphazard policies of the Indian government’. The newspaper article suggests that Japanese taxpayer’s money is being squandered in the bullet train project. .

Highlights of Sentaku’s exclusive report are as follows:

The construction, the cost of which is set at 880 billion rupees, is mainly to be funded by yen-denominated loans from the Japanese government with an annual interest rate of .1 percent repayable in 50 years.

At the heart of the problem is land acquisition for the project, which is moving at a glacial pace, forcing the project to adopt a more expensive route – one that could cost 3x as much originally anticipated. Why?

The Maharashtra government’s recent decision to waive off the outstanding loans of the tens of thousands of farmers who marched to Mumbai came with a clause that could have deleterious effects on the future and eventual completion of the bullet train project. The article says, that under a section called the ‘Bullet Train’ the agreement stipulates that the ‘wishes of landowners will be fully taken into account in connection with the construction of the high-speed railway’. Any deviance from this agreement to could spur protests everywhere.

And that is exactly what is happening. Again, a little month after the farmers marched to Mumbai, under the banner of the ‘Long March’, fresh protests are being planned again. The fragile relationship between the government and the farmers may derail the high-speed rail project. This is a cause of much worry for the Narendra Modi government that had unilaterally shaved one year off the construction intending for the project to be operation by 2022 instead of the intended date of 2023 to celebrate India’s 75th Independence year.

The total distance of the rail is 505 km, earlier only 28 percent or 144 km was to be elevated railroad and the rest to be built by acquiring land for embankments along the tracks. In recent reports accessed by Sentaku, the yen-denominated loans do not cover the acquisition of land and the Indian side, to cut its costs, has reduced the amount of land to be acquired. Instead of the earlier 28 percent now, over 90 percent of the track will be elevated, which will increase the total cost by billions.

There are a host of other problems that the Japanese are facing. The Shinkansen system has largely been accident-free and that was what won them the project along with the low-interest rates they were offering to the Indian railways. The readiness to invest in India was premised on the promise that other high-speed rail projects all over India would be contracted to them. Instead, the recent technical issues faced by the trains have led to a serious crisis of credibility, which threatens future contracts. According to Sentaku, the Indians are looking at other option and have not narrowed down on giving the contract to Japan, other European and Chinese firms are also contesting for the bid. This is worrisome for the public and private sector of the Japan, which has invested so much in the Bullet train project.

What does this do to India’s global image? It makes it an unreliable country to do business with.