News Brief

Increased Material Price, Fluctuating Yen And GST Push Bullet Train Project Cost To Over Rs 1.67 Lakh Crore

Arun Kumar Das

Jul 30, 2022, 11:21 AM | Updated 11:20 AM IST


A bullet train (Photo via NHRSCL Website)
A bullet train (Photo via NHRSCL Website)
  • With the increased material cost of cement, steel and land besides GST, the 508 km long high speed train project is slated to hover around Rs 1.67 lakh crore and likely to touch Rs 2 lakh crore by the time of completion.
  • Delayed by more than five years, India's first bullet train project cost overrun has touched Rs 1.67 lakh crore as of now because of the higher land acquisition price, increased input cost, the fluctuating Yen and GST.

    Though the bullet train project was initially planned for completion by 2023, the project has witnessed multiple extensions since then. If the pace of execution is any indication, the timeline for completion of the bullet train project is likely to go beyond 2028.

    The Mumbai-Ahemdabad High Speed Rail Corridor suffered delays under the Uddhav Thackeray-led Maha Vikas Aghadi government, which had labelled the project as "vanity". The lack of political will meant that land acquisition for the project was delayed.

    With the return of the BJP in Maharashtra, the state administration has shifted the focus to completing the land acquisition. As per the reports, only 150 hectares out of the required 298 hectares had been acquired in Maharashtra until this April.

    After taking office on 30 June, the Shinde-Fadnavis government expedited the land acquisition process in Maharashtra. The new government also granted all clearances for the Mumbai-Ahmedabad High-Speed Rail Corridor in the state.

    The project was sanctioned in December 2015 at an estimated cost of Rs 108,000 crore with 80 per cent Japanese funding as an easy loan.

    With the increased material cost of cement, steel and land besides GST, the 508 km long high speed train project is slated to hover around Rs 1.67 lakh crore and likely to touch Rs 2 lakh crore by the time of completion.

    The ambitious project moved at a snail's pace due to the maximum delay in land acquisition as the physical progress is only about 20 per cent till May 2022, according to the Railways Ministry data.

    The expenditure by National High Speed Rail Corporation Ltd (NHSRCL), the implementing agency of the project, is Rs 28,442 crore as of June-end this year, which is about 25 per cent of the original cost.

    According to the Railways, the cost of cement, steel and land acquisition have gone up many times since 2015 when the project got sanctioned.

    Since the JICA loan is in Japanese currency Yen, the fluctuation in global price has also affected the cost. Besides, the implementing agency has to incur the cost of about Rs 20,000 crore due to the GST.

    NHSRCL maintains that the revised cost can be determined only after the award of all the contracts and completion of land acquisition. The project involves three states including Maharashtra, Gujarat and Dadra and Nagar Haveli.

    As per the progress report, in Gujarat and Dadra and Nagar Haveli, NHSRCL has awarded all contracts for Civil, Bridges and Track for construction of viaduct, bridges, stations and track for the entire alignment of 352 km.

    In Maharashtra, bids were invited for Bandra-Kurla Complex (BKC) Station and cut and cover tunnel of one this month. The first trial is expected to be held between the 49 km long Bilimora-Surat section in Gujarat in 2026-27.

    Also Read: Railways Gear Up For Mass Production Of Axles And Wheels For Wagons And LHB Coaches

    Arun Kumar Das is a senior journalist covering railways. He can be contacted at akdas2005@gmail.com.


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