By – Suryaansh Gupta
Abstract
The Mumbai Ahmedabad High Speed Rail Project is a crucial infrastructural leap in India’s independent history. A country dominated by trains running with an average speed of less than 80 kilometres per hour which has initially attempted to upgrade to Vande Bharat trains capable of running at upto 180 kilometres per hour now has its sights set on moving directly to high-speed bullet trains employing Japanese technology. However, even with the cost of the project reaching almost 2 lakh crores, this project seems to be beneficial to public interests rather than being an attempt to win some political points.
Introduction
The Mumbai–Ahmedabad High-Speed Rail Project (hereinafter MAHSRP) is one of the most technically ambitious transport infrastructure undertakings in India’s post-independence history. This under construction corridor is approximately 508 kilometres in length, making use of the Japanese Shinkansen technology, which can reach speeds up to 320 kilometres per hour while reducing the journey between these two cities to approximately two hours. In scale, engineering complexity, and political visibility, the project cannot be compared to any other domestic undertaking.
Traditional trains are affordable but slow; air travel is fast but expensive for most Indians. A high-speed corridor is an acceptable middleground, one that is comparable to flights while maintaining lower costs. The desirability of improved connectivity between two of India’s most economically important cities is not particularly up for debate. However, the question is whether an investment of this scale is necessary given India’s current infrastructure priorities and public finance constraints.
Therefore, an examination of costs and comparative benchmarks is required, along with potential benefits, which would be focused on positives which are not directly commercial profits, but holistic interests. The project involves unprecedented capital expenditure as well as land acquisition across three states, significant environmental intervention, foreign financing obligations, and substantial opportunity costs. Its justification must therefore rest on whether anticipated public benefits are proportionate to the financial and social burden it imposes.
Cost Analysis
Initial estimates of the MAHSRP in 2015 were in the region of ₹97,636 crore. This was later raised to around ₹1.08 lakh crore, and recently it has been further increased to ₹1.98 lakh crore. On a per-kilometre basis, the cost has increased from roughly ₹192 crore to around ₹390 crore. To further evaluate, the rationale for this figure and the increase in the costs must be ascertained. Additionally, it must be understood that this project is a completely new infrastructural challenge. The corridor is not merely an upgrade of existing rail infrastructure. It is the creation of a new and different mode of transportation, with technical standards higher than traditional railways.
The structural design further increases this cost. Approximately 90% of the corridor is planned on elevated viaducts, which is substantially more expensive in civil engineering terms as compared to construction on ground level, but the design has other benefits. It eliminates the need of railway crossings, reduces land requirements, and avoids disrupting agricultural land and drainage systems that a ground level alignment would inevitably affect. In addition to this, the railway line passes through a 21-kilometre underground tunnel, 7 kilometers of which is below the Thane Creek, as the original elevated corridor would have caused significant destruction of Mangrove forests and flamingo habitats. This has also resulted in the costs increasing significantly, as tunnel boring machines and engineering expertise required are expensive.
Land acquisition across the two states and one UT of Maharashtra, Gujarat and Dadar and Nagar Haveli amounted to a total area of approximately 1,390 hectares, which is higher than original estimates. The excess expenses include the compensation costs for additional acquisition of land, and the expenditure on related litigation. Several other cost components were ascertained only after detailed engineering replaced preliminary analysis, including inflation, exchange rate movements, and the operational gap between a project as conceived and a project as executed. Also, the programme’s aim of transferring high-speed rail technology to domestic manufacturing and building institutional capacity for future corridors raises upfront costs, with the benefit of long-term value. Future bullet train corridors are likely to become cheaper if India successfully standardises designs, domesticates manufacturing, trains a specialised workforce, and reuses construction methods developed during the Mumbai–Ahmedabad project.
Comparative Cost Assessment
The closest comparison would be Indonesia’s Jakarta–Bandung high-speed rail project. It too was a first high-speed railway line in a similar developing Asian country. With a length of approximately 142 kilometres and at a cost of around US$7.3 billion, it cost roughly US$51 million per kilometre. Like the MAHSRP, it too encountered cost overruns and problems with land acquisition
The Indonesian case illustrates a pattern that appears consistently across such first-time high-speed rail projects. Initial costs run high due to absence of domestic suppliers, lack of trained workforce, or less regulatory experience exists. Every component of the project must be built from scratch or imported. The MAHSRP operates in precisely this context. It is also interesting to note that despite incorporating a far greater proportion of elevated construction and technically demanding underwater tunnelling, the Indian corridor’s per-kilometre cost of approximately US$41 million (198000 crore, which is $20.84 billion, comes out to $41 million per kilometer for 508 km) remains below Indonesia’s. This shows that the cost of MAHSRP is not outlandish or excessive, for the project.
Viability
The project connects two of India’s most economically significant cities through an economically active region Surat, Vadodara, and the wider industrial belt between Mumbai and Ahmedabad strengthen the need for this rail corridor. Isolating the economic and geographical factor, this project has its basis in strong economic utility.
However, there still exists a difference between financial and broader economic viability. From a strictly commercial basis, the corridor is unlikely to fulfil expectations, like current metro projects and railway lines, which usually run in losses. High-speed rail involves, as discussed, a significant upfront amount, and the ticket revenue alone is unlikely to recover full capital costs within any commercially meaningful timeframe, particularly if fares are set at levels accessible to a wide ridership. This is not unusual. High-speed rail systems globally depend on public support, concessional financing, and long-term state backing. Evaluating the HSRP against a commercial profitability standard misrepresents what public infrastructure is designed to do.
Since strict commercial viability does not seem to be fulfilled, broader economic and strategic returns must be examined. A mode of transportation promising reliable two-hour connectivity between Mumbai and Ahmedabad could lead to reduced pressure on competing transport systems and stimulate development of the area around each of the 12 stations, including construction of tourist destinations. Additionally, the project also generates significant levels of employment during all phases of planning and execution. More significantly, the project represents India’s first serious attempt to develop indigenous capacity in high-speed rail construction, operation, and regulation, which may result in compounding benefits in the future, if all major cities of the country are eventually connected through these corridors.
Despite the potential benefits, the returns are not guaranteed. They depend on the total number of passengers that would make use of this corridor, which can only be boosted if fares are appropriately ascertained and if the stations are accessible. At present, this route is forecasted to have around 40,000 passengers per day, increasing to 202,000 by 2053.
The concessional Japanese loan, extended at an interest rate of 0.1% with a 15 year moratorium, with a 50 year repayment period, is one of the project’s most significant supporting factors. It significantly reduces burden on the government, and offsets the payment to decades later, where the inflation rate would inevitably cross the interest rates, leading to repayments at values far below what has been invested at present. This largely negates the opportunity cost argument extended, sustained only because the entire cost is not covered, but 80% of it. However, the money is mostly from Japan, which India can only make use of to construct these corridors. The money utilised is not balanced by reductions in other departments. The funds, accessible at negligible interest rates make this decision, in my opinion, a no brainer.
Conclusion
The Mumbai–Ahmedabad High-Speed Rail Project is neither self-evidently wasteful nor automatically transformative. It is a defensible but demanding investment whose justification has become progressively harder to sustain as costs have escalated. At the original 2015 estimates and with concessional Japanese financing, the case was substantially stronger. At a revised figure approaching ₹1.98 lakh crore, the burden of justification is considerably heavier, still supported largely due to the existence of the Japanese loans.
About the Author
Suryaansh Gupta is a fourth-year law student at Jindal Global University and a member of the Economics and Finance Cluster of Nickeled & Dimed. He is an avid reader and a problem solver. He also is deeply passionate about aviation and politics (which sometimes overlap).