Mumbai-Ahmedabad bullet train project was dropped in 2005: 'Needed to be subsidized'

By Rajiv Shah 
There is strong flutter in the top Government of India (GoI) officialdom on viability of the Japan-funded bullet train project, agreed upon by Prime Minister Narendra Modi and Japanese PM Shinzo Abe in Ahmedabad. As a reflection of this flutter, Delhi bureaucrats are circulating a Facebook post of an ex-GoI official, which tells the internal story of how the costly project was considered not feasible in the past.
The flutter has come close on the heels of a report appearing in a section of the media, quoting a 2016 Indian Institute of Management-Ahmedabad paper, that 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.
The GoI official, Jawed Usmani, said in his 2015 in his Facebook post that due to "an appropriate decision taken by the Prime Minister's Office (PMO) in the year 2005, India avoided being tricked into buying an over-priced bullet train toy."
"Instead", said Usmani, who is chief information commissioner, the Right to Information watchdog of Uttar Pradesh, and previously served as the state chief secretary, "Japan signed on the dotted line to provide assistance for development of railway and industrial infrastructure in accordance with India's needs and priorities" -- the Dedicated Freight Corridor (DFC).
Former senior advisor to the World Bank, Usmani, recalling what exactly happened when he served as joint secretary, PMO, in mid-2000s, said the Indo-Japan MoU on "high speed rail corridor between Mumbai and Ahmedabad using the Japanese Shinkansen (Bullet train) technology", estimating to cost Rs 98000 crore, proposed to be funded largely by a concessional Japanese loan, was assessed as "not good value for money."
He said, "Japan has been pursuing the Mumbai-Ahmedabad bullet train project for a long time as it gives them an opportunity to market their over-priced technology and utilize their idle high speed train manufacturing capacity. They had pushed very hard for this project prior to the visit of Prime Minister Junichiro Koizumi to India in April 2005, and they had found surprisingly willing partners in the Railway Board and the Ministry of External Affairs (MEA)".
"RK Singh then Chairman of the Railway Board, and Rajiv Sikri, Secretary (East), MEA, were enthusiastic supporters of the project. However, the matter required formal clearance of PMO before inclusion in the agenda of the foreign dignitary's visit", Usmani, who in the PMO looked after economic sector issues, and was a key participant in meetings to discuss issue, said.
"RK Singh and Sikri argued strongly in favour of the bullet train, essentially on the ground that India would benefit from transfer of technology. I opposed the concept, arguing that there are many other railway projects of higher priority and that investment of Rs 50,000 crores (the estimated cost in 2005) on the bullet train would be a complete misallocation of scarce resources", he noted.
"The issue was clinched when I asked RK Singh whether he would have chosen to invest Rs 50,000 crore on the bullet train if the Japan loan funds were not available and the money was to be provided from the Railway budget. Surprisingly, he stated that under those circumstances, he would not choose to make the investment", Usmani said.
Referring to Rakesh Mohan, then Finance Secretary, Usmani said, he, too, declared against the bullet train project even if the Japanese provide grant assistance instead of a loan, "because based on international experience, in all likelihood the Mumbai-Ahmedabad bullet train will not meet operational costs and would need to be subsidized forever."
The result was, said Usmani, the Japanese push for the bullet train project did not succeed. The Railways, instead, "identified a much more important infrastructure project -- the Dedicated Freight Corridor Project (DFCP) between Delhi and Mumbai and between Delhi and Howrah, which was posed to the Japanese as a deliverable of PM Koizumi's visit."

The DFCP was clinched, he said, "when Prime Minister Manmohan Singh made a visit to Japan in October 2008", with the Japanese counterpart Taro Aso pledging that loan to be provided for the realization of the western corridor of the DFCP."As for its eastern corridor, it was later taken up with World Bank funding under a proposal forwarded by the UP government in 2013, approved in principle by Manmohan Singh.