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GIFT City may lose edge over Mumbai-Ahmedabad high speed rail: Expert

Vinay Umarji & Sohini Das/Ahmedabad 14 Sep 17 | 01:28 AM

Prime Minister of Japan, Shinzo Abe being welcomed by Prime Minister Narendra Modi on his arrival at Ahmedabad airport in Gujarat. Governor of Gujarat, O P Kohli and Chief Minister Vijay Rupani are also seen (Photo: PTI)

Even as Prime Minister Narendra Modi and his Japanese counterpart Shinzo Abe kick off the Mumbai-Ahmedabad high speed rail project from Sabarmati station on Thursday, it could lead to Modi’s pet project, Gujarat International Finance Tec-City (GIFT) City, lose its competitive edge as an upcoming financial centre, say experts.

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According to G Raghuram, director of Indian Institute of Management-Bangalore, the rise in connectivity could result in commercial activities getting centralised to the larger centre.

“Due to rise in connectivity (resulting from the Mumbai-Ahmedabad high speed rail project), certain activities tend to get centralised. So, if Mumbai is already an established financial centre, then GIFT city near Ahmedabad may relatively lose its competitive advantage. People living in Mumbai can simply commute to Ahmedabad and come back," Raghuram told Business Standard. 

GIFT City has been envisaged by Modi as an alternative financial centre to Mumbai at Gandhinagar, with the country’s first international financial services centre being set up in the special economic zone area of the project.

Further, reiterating his working paper on the dedicated high speed rail networks, Raghuram stated that the Mumbai-Ahmedabad bullet train project would have to ferry 50,000 passengers to and fro to earn enough to repay the loans with interest on time. Raghuram had authored the paper titled ‘Dedicated High Speed Railway Networks in India: Issues in Development’ as a faculty member of IIM-Ahmedabad. 

Modi and Abe will be laying foundation stone for the Rs 1.1-lakh crore Mumbai-Ahmedabad High-Speed Rail Project that will have 10 cars and a capacity to accommodate 750 people, which will see the light of the day by 2022. Recently, Minister of Railways Piyush Goyal said that the deadline of December 2023 for the bullet train had been advanced to August 2022 to coincide with India’s 75th year of Independence. 

GIFT City has been envisaged by Modi as an alternative financial centre to Mumbai

Of the 508-km stretch, 468 km (92%) of the route will be elevated, 27 km (6%) in tunnel, and the remaining 13 km (2%) will be on the ground. The bullet train will also pass through the country’s longest tunnel of 21 km, of which 7 km will be under the sea. The operating speed of the bullet train will be 320 km per hour and maximum speed will be 350 km per hour. The fares for the bullet train would be in the range of Rs 3,000-5,000 for a ticket. The Bharatiya Janata Party government’s ambitious project is likely to be scaled up soon after commissioning to accommodate 1,200 people in 16 cars.

Assuming a fare of Rs 6 per km, the paper had estimated that the proposed bullet train between Mumbai and Ahmedabad would have to ferry 88,000-118,000 passengers per day, or undertake 100 trips daily, to be financially viable. 

Raghuram, however, maintained that India should experiment with the project for several reasons, including proliferation of high-end Japanese technology and enhancement of connectivity for smaller cities on the Mumbai-Ahmedabad corridor.

“It will provide game-changing connectivity which will spur economic growth because people can stay in suburbs and little further away. Frequency of lot of service providers’ movements will be enhanced. The entire corridor will see growth in economic activities. Due to this high-end technology that the project will acquire will have a positive impact on other industries because you have to make high quality equipment and technology. The benefit will accrue not just to Ahmedabad and Mumbai but also to smaller cities such as Nadiad, Anand, Bharuch and Vapi, which will see a tremendous sense of connectivity being brought in," said Raghuram.

India and Japan are also likely to sign the loan agreement of $12 billion, at a minimal interest cost of 0.1%, for a 50-year period, including a 15-year moratorium. While the right of way is under finalisation, land acquisition requirement will be low, as most of the project will be elevated, with a 21-km tunnel and 7 km of undersea tunnel. The stretch will have 12 stations – Mumbai, Thane, Virar, Boisar, Vapi, Bilimora, Surat, Bharuch, Vadodara, Anand, Ahmedabad, and Sabarmati. Of these, Mumbai will be an underground station.

Raghuram observed that with the project largely being above ground, land acquisition may be “less of a problem". “When you go above ground, the land acquisition is less of a problem because you only need footprint for pillars. And large part of the footprint is already available on the existing Indian Railways corridor. Only when you enter the city centre, they may have to deviate," Raghuram added.

The project is being implemented by a special purpose vehicle, National High Speed Rail Corporation with equity participation from the Ministry of Railways, state governments of Maharashtra and Gujarat. Goyal had stated that the project is expected to provide 1.2-1.5 million jobs, of which around 20,000 will be in construction, 4,000 direct jobs for running the system, and around 20,000 indirect jobs. 

An memorandum of understanding with Japan International Cooperation Agency (JICA) has been signed in December 2015 for the follow-up studies by JICA on technical standards, regulations, station area development, review of final location survey, safety and human resource development. The studies, which started in March 2016, are likely to be completed by mid-2019.

Meanwhile, a Rs 600-crore high-speed rail training centre for the first bullet train project will be set up in Vadodara.

GIFT of progress

“If Mumbai is already an established financial centre, the GIFT city near Ahmedabad may relatively lose its competitive advantage. People living in Mumbai can simply commute to Ahmedabad and come back," said IIM-A directorModi and Abe will lay foundation stone for the Rs 1.1-lakh crore Mumbai-Ahmedabad High-Speed Rail Project that will have 10 cars and a capacity to accommodate 750 people, which will see the light of the day by 2022

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