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India’s Japan-backed train project in trouble?

With farmers not willing to give up their land, one of Narendra Modi’s most ambitious projects is falling off-track.


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Updated: June 13, 2018

India’s ambitious project to replace the colonial-era railway trains by swank Japanese bullet trains seems to have derailed.

Prime Minister Narendra Modi laid the foundation stone for a high-speed line in autumn last year during a visit by his Japanese counterpart, Shinzō Abe, to the western state of Gujarat.

The line is to connect Ahmedabad (Gujarat’s capital) and Mumbai (India’s financial capital) and will cut travel time from eight hours to three. Funded by low-interest Japanese loan, it is expected to be ready for flagging off by August 15, 2022 to commemorate India’s 75th independence day.

But will it?

Senior Congress leader Ahmed Patel has expressed reservations over the way farmers’ land – around one-fifth of the entire train route – was being acquired for the project, PTI reported.

“For long, the rights of farmers and farm labourers over agriculture land were being trampled upon by large and powerful interests,” Patel, a member of the Upper House of Parliament, wrote in a letter to the Prime Minister.

In the long run, India intends to launch six more high-speed rail corridors. Trains are a popular mode of travel in populous India and Modi had promised superfast trains when he campaigned for the 2014 general elections. The project would have generated the much-needed jobs in the country.

However, with the land acquisition target set for December going awry, Modi’s most ambitious projects is in a bind.

Modi’s office is now monitoring the project week-to-week, as Indian officials seek to reassure Tokyo that the hurdles can be overcome through intense negotiations with sapota and mango growers in Maharashtra, Reuters reported.

More than four-fifths of the project’s US$17 billion cost is to be funded by a 0.1 per cent interest-rate loan from Japan that many see as part of a deepening economic relationship between the two countries to checkmate Chinese influence in Asia.

The project has been criticised on other fronts as well.

“The apparently concessional rates of interest at which Japan lends for such projects appear less remarkable when compared to the prevailing interest rates in Japan. For example, when Japan provided 30-year loans for the Delhi Metro project in 1997 at an interest rate of 2.3%, its own 10-year domestic risk-free interest rate was also around 2.3%, i.e. the yield on the 10-year Japanese government bond (JGB),” a report in The Mint pointed out.

The Wire, too, reported that the Japanese loan for India’s bullet train was a rip off.

“If the rupee’s purchasing power has dipped from 19.77 yen in 1985 to 1.72 yen today, then after 50 years can a rupee buy anything more than just a fraction of a yen?”



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Lamat R Hasan
About the Author: Lamat is an Associate Editor at Asia News Network.

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