Rail and transport industry expects ₹3 lakh crore boost in interim budget 2024-25

NEW DELHI : As the eagerly awaited Interim Budget for 2024-25 approaches, all eyes are on the potential windfall for Indian Railways. Analysts are speculating that Finance Minister Smt. Nirmala Sitharaman is poised to provide a substantial boost in capital expenditure, paving the way for a significant transformation in the national transportation system. The anticipated allocation of Rs 2.8-3 lakh crore for Railways in the upcoming budget signals a commitment to maintaining the momentum of capital expenditure, surpassing the Rs 2.4 lakh crore provided in the 2023-24 Budget Estimate.

In the fiscal year 2023-24, the budgetary support for Railways was around Rs 1.6 lakh crore, with a capital allocation of approximately Rs 2.45 lakh crore. The surge in gross budgetary support to Rs 2.4 lakh crore and a total capital allocation of Rs 2.6 lakh crore highlighted the government’s focus on railway modernization. Analysts from Prabhudas Lilladher, Icra, and Elara Capital project a significant jump in capital expenditure in the upcoming budget, aligning with the emphasis on modernizing railway infrastructure.

ICRA, a prominent rating agency, anticipates continued interest-free capex loans to states in the fiscal year 2024-25, building on the Rs 1.3 lakh crore allocated in the last budget. Setting the target for gross capital expenditure at Rs 10.2 lakh crore, Icra expects a 10% year-on-year growth, a moderate pace compared to the robust expansion witnessed in the postCOVID years.

Elara Capital underscores the government’s focus on capital spending, particularly in railways, roads, and defense. Despite projecting a more moderate growth pace for FY25E capital expenditure, they anticipate a 20% rise, reflecting a sustained commitment to key sectors. The allocation of 60% of overall capex to roads, railways, and defense is indicative of the government’s strategic priorities.

The Indian Railways, as a key infrastructure builder, has been channeling investments into capacity improvement initiatives, including dedicated freight corridors, electrification, and high-speed trains. The operating ratio (OR) for FY23 improved to 98.1%, showcasing enhanced operational efficiency compared to 107.39% in FY22.

Looking ahead, the Railways aims to produce 400 Energy Efficient Vande Bharat trains in collaboration with technology partners, marking a transformative phase for the national transporter. With an additional budget allocation of Rs 40,000-60,000 crore expected for the fiscal year 2024-25, the Railways is gearing up for the seamless execution of its ambitious project pipeline.

The government’s allocation of Rs 35,000 crore for new lines, Rs 45,000 crore for the Railway Safety Fund, and Rs 10,000 crore for the Rashtriya Rail Sanraksha Kosh in 2023-24 has already fueled the introduction of numerous Vande Bharat trains. This strategic capital infusion aligns with the government’s vision to operate 400 such trains, signaling a commitment to modernizing and expanding the country’s rail network.

As the Indian Railways anticipates a substantial boost in capital expenditure in the upcoming Interim Budget, the nation braces for transformative changes in its transportation landscape. The allocation of funds to key sectors, coupled with ambitious goals and modernization initiatives, underscores the government’s commitment to building a robust and efficient rail infrastructure. The Railways’ extensive project pipeline and the emphasis on quality spending bode well for the future, promising enhanced connectivity, safety, and operational efficiency.