It might get the go-ahead if the Defense department pushes for it. This project seems to be mainly getting the push from the Defense department, and the tourism aspect is only being used to project it in a more favorable light. Even the Kashmir Valley railway link is going through now mainly because of the Army's support as they would need the railway route in case of any conflict at the border. Railways provide them with a better, faster supply chain than roads in such situations.
That said, a BG line may be too expensive for the island route. A light railway with MG may provide the best trade-off between cost (construction and operations) and traffic volume....
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The number of tourists is relatively less, but there is a lot of scope for having a light railway operating MG rail bus services ( or even a chartered train/rail bus) that can operate with good revenues.
Though on a much smaller scale, railways did prove to be useful on these islands at one time. With unbiased planning and execution, they can prove useful again!