It does reduce the travel time between Chennai and Bangalore, but economically it might not be very attractive. There is considerable traffic from both Chennai and Bangalore to places like Kuppam, Jolarpettai, Vaniyambadi etc on the present route. The proposed short-cut however does not have any major towns between Katpadi and Bangarpet. The 50km or so extra distance in the current route is more than compensated by the extra coverage.
Also the area is very hilly and the straight line route will have some large gradients. Constructing a track through this is not a problem, but being hilly and full of gradients, the capacity and MPS of this line will be less. Whatever is gained in distance is lost...
more... in speed.
Also, due to the hilly section, there will be considerable deviations from the straight route and this will increase the route length also by at least 10-15 km. In the end it might only be 30-40km difference and with speed restrictions, making the current route more attractive on all terms.
That said, this is a good proposal as it not only brings Bangalore closer to Chennai, but also to CTO, Tirupathi.