Bullet trains in India are kind of unviable right now. One train will need to carry almost 118,000 passengers per day to break even

A bullet train is expected to run between Mumbai and Ahmedabad stations in India, but a report from Indian Institute of Management Ahmedabad (IIM-A) has shown that in order to be financially viable, the train would need to carry 88,000 to 118,000 passengers per day, which would mean a total of 100 trips daily.

The report is titled, "Dedicated High Speed Railway (HSR) Networks in India: Issues in Development," and it says that if the Railways set the ticket price at Rs 1500 for a 300-km drive per person fifteen years after the operation, it will have to ferry between 88,000 and 110,000 passengers every day so that it is able to repay the loans with interest on time.

Also read: Indian Railways To Test Semi-high-speed Delhi-Agra Train on July 3

The loan in question is the concession loan of Rs 97,636 crore at an interest rate of 0.1% that Japan has offered to fund about 80% of the project cost. The repayment period of this loan is 50 years, which would begin from the 16th year of operation.

For the remaining 20% that would be funded by the centre, the authors of the report, G Raghuram, professor of the institute's Public Systems Group, and Prashanth Udayakumar, another faculty member, had assumed 8% average rate of interest. The total distance covered by the train will be 534 kilometres.

The paper assumes two scenarios by keeping operating cost at 20% and 40% of the railways’ revenue.

"So if the Railways earn Rs 100 revenue, Rs 20 or Rs 40 will go for maintenance, and remaining surplus money will go for cash payment of loan with interest. Now, to cover the loan with operating cost in two scenarios, we consider passengers travelling an average 300 kilometres. In this case, we will need 88,000-118,000 passengers respectively for both the scenarios," Raghuram said.


"Typically one train carries 800 passengers, so to carry 88,000 passengers daily, you will need to take a total 100 trips, or 50 trips each way. So, we need three trains every hour in each direction," he said.

Talking of the positives, "there are many positive benefits and externalities of the HSR which would be useful in India's overall aspirational development," they said. "These externalities include technology percolation into other domains, economic development, game-changing sense of connectivity, and national pride due to cutting-edge infrastructure," they added. "In such a context, it is a good idea to begin and learn," the paper states.