◆Due to M-state political change， Bullet train goes off track， so does investor interest?!
【Mumbai】For foreign investors spooked by the vagaries of doing business in India, from the UPA's infamous retrospective tax to the Supreme Court's Rs 133,000 crore AGR-blow to telecom companies in October, the recent events in Maharashtra have to be deeply disturbing since, apart from the Rs 120,000 crore bullet train, several other large infrastructure projects worth lakhs of crore rupees are likely to be reviewed.
No one even expected a regime change in Maharashtra since, as expected, the BJP-Shiv Sena did very well in the assembly elections; indeed, once the two fought the election together, it was assumed that all tensions between them had been resolved, or put on hold. So, most were taken aback when, after an odd BJP-Ajit Pawar dalliance, the Sena-NCP-Congress formed a government.
With the Shiv Sena always opposed to the bullet train, the same (incorrect) questions are once again being asked. Given how the Railways is badly strapped for cash—the latest CAG report underscores this—and how it needs over Rs 1 lakh crore for upgradation, why not spend this money on doing that instead of an elitist bullet train that will be used by a small fraction of those using trains? Appealing as the logic is, it is completely flawed since the Japan International Cooperation Agency (Jaica) loan—at a 0.1% interest, and payable over 50 years—is for the bullet train; since Jaica is not going to sanction the same loan for the Indian Railways, the one is not a substitute for the other.
Interestingly, most of those who argue that the bullet train is elitist never tire of praising China's bullet-train rollout; also, keep in mind that when construction first began—December 1, 2003—of the 2,078-km Shanghai-Wuhan-Chengdu line, China's per capita income was under $1,300; today, when India starts construction of the Ahmedabad-Mumbai stretch, its per capita income is over $1,800.
Since the Shiv Sena government has not banned the bullet train project—it has asked for a review—but has halted work on the Rs 15,000 crore metro shed, it is clear the Narendra Modi-led central government has some room for manoeuvre; whether this means more central aid to the state, assistance with farmer loan waivers, or less strict action against cooperative banks that the state's ruling politicians have an interest in is not clear.
But, while negotiating with Maharashtra chief minister Uddhav Thackeray, Modi would do well to keep in mind that, after the project cancellations in Andhra Pradesh—the capital city was cancelled, and various renewable power projects are in all manner of trouble—and the plethora of problems investors have with the central government, the last thing he wants is another blow to shaky investor confidence.
Bullet train goes off track, so does investor interest
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