The
Hindu: National: Tuesday, December 25, 2018.
Seek
clarity on loan share, benefit to State; CM-led panel hasn’t met since Feb.
2017
The
Narendra Modi government’s Mumbai-Ahmedabad bullet train project may turn out
to be a loss-making proposition and burden Maharashtra’s already dwindling
finances, the latest information obtained by an activist under the Right to
Information (RTI) has revealed.
As
per the RTI response, a State Transport Department report has highlighted
several objections raised by various departments over the economic viability of
the Shinkansen train, which could result in losses in the form of wasted Floor
Space Index (FSI) and delayed loan repayment in the absence of proper
frameworks.
Unutilised
FSI
In
its assessment, the State Urban Development Department (UDD) said some part of
the FSI at the station proposed at Bandra Kurla Complex (BKC) in Mumbai could
“remain unutilised because of the height restrictions, leading to revenue
losses”. “Hence, a conscious decision must be taken in this regard even as the
Railways have said there is no impediment to the construction viability of the
financial centre. However, the clauses in this regard must be specifically
incorporated so that no objections are raised by the Railways later on,” a note
from the UDD reads.
Both
Planning and Finance departments have called for a thorough study of bullet
train economics in other countries before a decision is taken on its
feasibility in India. Additionally, the departments said the Centre must
clarify the formula for sharing the loan burden if the project remains
loss-making for a long period of time. Since the State is coping with serious
loss in income and further burden of loans, the impact of this project on
government finances needs to be considered, both departments said.
High
chance of losses
“The
estimated annual return of the project is less than the expenditure, hence the
chances of losses are high. [We] need clarifications regarding sharing of such
losses and expenditure,” the State Finance Department said in its note.
Activist
Jeetendra Ghadge, who had filed the RTI application with the State Home
Department, said it was “shocking” that the government had cleared a project
which has no practical benefit for the State and would add financial stress.
“The State government has clearly rushed into approving the project under
pressure from the Central government, without even looking at its feasibility
or the interests of its own State,” he said.
Moreover,
the documents show that the ministerial committee headed by Chief Minister
Devendra Fadnavis has not met to discuss the project since being incorporated
in February 2017. The committee was tasked with carrying out an in-depth study
of the Japan International Cooperation Agency report and the project’s
feasibility. “The Home Department, in the RTI response, has said there has been
no meeting conducted by the subcommittee till now,” Mr. Ghadge said.
The
Transport Department’s report was prepared on January 3, 2017, and presented to
the State Cabinet soon after. It sought r clarity on the responsibilities of
the State and Centre regarding expenditure on land acquisition and
rehabilitation, and competitive tender process for reducing the expenditure.
The report further demanded clarity on the number of passengers going from Maharashtra
to Gujarat for business/jobs to ascertain the benefit of the project.
Liability
of State
The
Finance Department had also forewarned that the Central government should bear
the burden of the loan to the special purpose vehicle (SPV), without the State
government bearing any guarantee towards the SPV. How the loan will be availed
is yet to finalised. “[This was an issue] faced by the Pune Metro, when the
World Bank refused loan to the SPV, even though the Centre and State had 50:50
equity. These aspects need to be borne in mind. In essence, the loan must be
taken by either the Central government or SPV without any guaranty by the
State,” it said.
The
train, with a capacity of 750 passengers, will travel at speeds between 320
km/hr and 350km/hr and is expected to reduce travel time between Ahmedabad and
Mumbai to three-and-a-half hours or less from the present eight. The project is
expected to be completed in seven years.
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