China's Shiny Bullet Trains Are Drowning in Debt—Here's How India Can Dodge the Same Disaster!
What's wrong with this?
China borrowed a lot of money to construct its high-speed rail (HSR) network, frequently putting pride in the country and speed ahead of real demand. The revenue generated by ticket sales on many bullet train routes is insufficient to pay for operating expenses, let alone the repayment of the enormous loans. Rising debt, underutilised trains, and squandered funds that could have been used for other public purposes were the outcomes. Only a few major routes (such as Beijing-Shanghai) are profitable, and many lines are still unprofitable despite fare increases and cost-cutting measures.
What India Can Learn
India is constructing its own bullet train projects, such as the line between Mumbai and Ahmedabad. India can stay out of China's debt trap by doing the following:
Only construct where there is a high demand: Pay attention to routes that see a lot of daily traffic, not just for political or show purposes.
Employ wise, affordable financing: Japan provided a long-term, low-interest loan to finance India's main bullet train, which makes repayments simpler and less hazardous than China's high-interest borrowing.
Be mindful of currency risks: Given that the loan from India is in yen, a declining rupeWatch out for currency risks: Since India's loan is in yen, a weaker rupee could make repayments more expensive in the future. Careful planning and hedging are needed.
Make trains locally: Building trains in India saves money, creates jobs, and reduces reliance on imports.
Expand slowly and carefully: Start with one successful line, see how it works, and only then build more. Don't rush into a nationwide network.
Let private companies share the risk: Public-private partnerships can help make sure projects are run efficiently and don't become a burden on taxpayers.
Do a proper cost-benefit check: Every new project should be studied to make sure it's really needed and will be used enough to pay for itself.
China's bullet train boom is turning into a trillion-dollar debt disaster, with many lines running empty and unable to pay off their loans. India can avoid this fate by building carefully, borrowing wisely, and always asking: 'Will this line really pay for itself?' That's the only way to enjoy fast trains without drowning in debt.
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