“Once the loan agreement is signed, we will appoint a general advisor to issue tenders for civil contracts based on the final technical and conceptual report,” the source added. Japan`s loan at an interest rate of 0.1% for high-speed rail is not exceptional considering Japan`s low interest rates of 0.05% and domestic economic conditions. Earlier, the National High Speed Rail Corporation (NHSRC) had denied media reports, saying that Japan`s International Cooperation Agency (JICA) had suspended funding for the Mumbai-Ahmedabad High Speed Railway, also known as the high-speed rail corridor between cities. And now let`s move on to the technical feasibility and profitability of operating a high-speed train over a distance of 507 km Ahmedabad/Mumbai. This is Japan`s second export (in 53 years) of Shinkansen technology to Taiwan, where it has not succeeded. Japan has not transferred technology to Taiwan. Japan obviously wants to constantly monitor the maintenance of the line and other operational requirements in order to ensure its track record and punctuality without accidents. It is therefore unlikely that Japan will transfer the technology to India. A study by IIM Ahmedabad showed that 100 daily trips between Ahmedabad and Mumbai would be needed to make high-speed rail financially profitable. Approximately 35 trips would be planned. Now that the hype around the high-speed train has lingered, it`s time to do some cold math. India will borrow 150,000 Japanese crores [the equivalent today of 88,000 crore] that bear 0.1% interest, with a lock-in period of 15 years repayable in 50-60 years. It looks seductive, indeed.
Prime Minister Narendra Modi is said to have spoken on this subject: credit is “in a way free”. The Prime Minister was clearly not properly informed, as the following analysis will show.