5. Bullet Train Financials

In October 2015, there was a raging debate among very well qualified friends of mine as to the financial viability of the bullet train proposal in India.

The major worries were the cost of the journey, the repayment capability, and other metrics apart from the fact that each of us were actually lobbying inadvertently to push his view on the need for this project, while, masking it through the gambit of viability.

We left the spreadsheet at a revenue neutral price of  Rs.500 per one-way journey between Ahmedabad and Mumbai, provided that there was time share on the tracks to push goods , say during the night periods. This was a mixed model for passenger cum goods traffic on the same infrastructure!

The link to the spreadsheet and the concluding argument (in  a mail form) on financials giving the assumptions as we left it  is below -

Concluding argument listing assumptions, mitigation etc.

Sample Bullet Train Financial spreadsheet (vintage Aug-Oct 2015)
Sample sheet updated 3 dec 2019 after errors discovered
{The key changes as on 3 dec 2019 were -
1. FE rate updated to Rs.71.6 per dollar
2. Japanese Loan Amount updated to Rs.79000 crores.
3. Freight rate reduced to Rs. 500/ tonne after looking up Indian Railways Freight calculator! see snapshot in link.
The fallout of this was that a goods traffic of 227 Million Metric Tonnes was required per annum between Ahmedabad and Mumbai for a net positive cash flow of Rs. 1500 crores per annum given all other liabilities which are presumed on the higher side to offset short and long term risk. 227 Million Metric Tonnes might be reasonable assumption on this leg as 1016 MMT was carried throughout India in 2016-17 reported by Indian Railways. Those interested may refer to the pages 83 onwards of the Joint feasibility final report by JICA and IR and page 10 of the report published by IR for 2016-17)
4. Repayment of Japanese Loan (Principal and Interest) set to 50 years which is as per original understanding
5. Depreciation has to be charged over 20 years, which for such a large project is a given! 8 years in the original sheet was too aggressive and this perhaps masked the Rs.15 per kg of freight cost!!}

Updated May 2016 - Passenger ticket Rs. 1500/- , Freight Rs.7.50 / Kg , Pass./Freight Revenue Ratio 1:1

Please feel free to download, play around, question assumptions, build alternates, as long as we aim to find a way to get the price of travel lower than the one declared below!

The price as announced recently in the newspaper for only passenger traffic considering about 100 journeys both ways transporting about 100000 passengers per day  is Rs. 1500 ! (as on 3 Dec 2019 various newspaper reports are talking of prices between Rs. 2500 and Rs. 4000 to match air fares and it would be a shame on our capabilities as a nation if this were to come to pass)

I have argued that marginal addition in cost should be incurred to make it feasible to transport goods in a timeshare mode using majority of the same infrastructure which can form a part of the Delhi- Mumbai dedicated freight corridor! The freight revenue will easily offset the additional cost and may even be a revenue spinner as the spreadsheet shows.

This idea has been opposed on technical grounds , so many of my technical ideas will still presume this basis as i would want the lowest cost travel (commensurate with a regime of non-subsidy outside the given infrastructure paradigm)  for this fantastic experience that our countrymen will have! 

Don't they deserve to have one?

Finally, as one friend said, once a vision is bought into, it is only a question of how to make it possible!