Budgetary allocation for Indian Railways is expected to hit record levels in 2024-25 as the government gears up to support a major makeover for the national transporter with additional modern and faster trains and improved safety features.
The capital expenditure (capex) for the railways is likely to be increased by about 25% from the 2023-24 budget estimate, two people aware of the development said. That would take the budgetary allocation to more than ₹3 lakh crore in 2024-25.
ALSO READ: Union Budget 2024 to focus on 5 key social sections
The railway ministry had sought an increase in its planned capex for long-term infrastructure projects of freight corridors and speedier trains, as well as modernising the fleet with new-age trains, wagons and locos, one of them said.
The increased capex would also go towards rolling out 300-400 Vande Bharat trains in different formats, including one with sleeper coaches, as well as overhauling the signalling systems.
The safety budget of the railways is expected to be almost doubled to help it accomplish its Mission Zero Accidents faster, this person said. The safety budget has remained stagnant for the past two years at around ₹11,000 crore.
The finance and railway ministries did not reply to queries until press time.
“Higher plan capex allocation for [Indian] Railways is the need of the hour as the national transporter reaches a critical stage of implementing key infrastructure projects,” said Subodh Jain, a former member of the Railway Board.
ALSO READ: Union Budget 2024: Centre likely to give report on National Pension Scheme on February 1
“The government supported (the railways) with an over 50% increase in gross budgetary support in 2023-24, and the expectation is that absolute support would touch new levels next year, even though the growth may be half of last year’s numbers,” he said.
Of the total capital allocation of around ₹2.45 lakh crore for Indian Railways in the 2022-23 budget, the Centre’s gross budgetary support stood at around ₹1.6 lakh crore.
Gross budgetary support swelled to ₹2.4 lakh crore in 2023-24, when total capital allocation for the railways stood at ₹2.6 trillion. The expectation is that over 90% of the capital allocation would flow through the government’s gross budgetary support in 2024-25 as well.
Gross budgetary support is the actual amount that a government body receives from the general budget.
Indian Railways needs to be adequately funded so it can build new infrastructure. With the Centre finding it easier to borrow at attractive rates from the market, it is expected that capital spending of key infrastructure sectors, including railways and roads and highways, would come from the government’s gross budgetary support.
This support for the railways has been steadily increasing—to ₹1.17 lakh crore in 2021-22 from ₹70,250 crore in 2020-21, ₹69,967 crore in 2019-20 and ₹55,088 crore in 2018-19.
After decades of supporting revenue expenditure, gross budgetary support over the last few years has focused on supporting the railways’ capex.
The people privy to the government’s thinking said that of the higher gross budgetary support extended to Indian Railways in the budget, a good portion may be kept for the Ahmedabad-Mumbai bullet train project, work on which is going on at full pace for both Gujarat and Maharashtra tracks.