Budget 2023: Thinking Big on the Indian Railways

New Delhi: The Capital Outlay of the Indian Railways in the Union Budget 2023-24 has been pegged at Rs 2.40 lakh crore. The allocation is approximately nine times the budgetary Outlay of India's public transporter in 2013-14 and approximately double the allocation of last year. 

The messaging comes through clearly: That the Narendra Modi government - in the coming fiscal - will be more intensely focused on the task of infrastructure development and rolling stock modernisation. 

Provisioning has been made for the manufacture of an unbelievably high number of 1000 additional and smaller eight-coach Vande Bharat trains. 25 Hydrogen trains will be built, apart from 150 Mainline Electric Multiple Unit (MEMU) air-conditioned trains - to be called the Vande Metros. 

This year's budget also enlists proposals to manufacture 3000 additional electric locomotives, to be built at the railway's facility at Dahod and Varanasi. 

In addition, 55,000 New design wagons are also proposed to be procured under the Public Private Partnership mode. The increase in the outlay for rolling stock is approximately 150 per cent more as compared to the revised estimates for 2022-23. The budgeted increase in expenditure is almost 10 per cent more as compared to this year. Impressive enough is this situation.  

There are, however, areas of concern. In the last nine years, as former ministry official SK Luthra points out, rail revenues have increased a mere 1.6 times, while a nine-fold increase in Capital Expenditure has been witnessed. 

"Revenue growth has not been commensurate with increased investments. This is not an encouraging trend in terms of the financial health of the Indian Railways," Luthra added.

Former ICF general manager Sudhanshu Mani views matters from a slightly different perspective. "Apparently, the government's thinking is that investments are good for the overall economic activities including manufacturing and services. The political leadership does not seem to be taking an isolated view of rail revenues. But, of course, there are concerns about the ability of the public transporter to generate revenues at par with investments."

At a post-budget press conference, Railways Minister Ashwani Vaishnaw said that there was a deficit in the budget all these years. And that a hike in allocation would help the Railways realise its potential.

Former Railway Board member Subodh Jain flags concerns over the less-than-expected hike in the outlay for track renewal activity - a task that is critical for ensuring that the Vande Bharat trains achieve their speed potential of 160 kmph. 

"After adjustments for inflation, the hike on track renewal would actually work out to a negligible increase", Jain said.  

At the same time, Jain expects that the task of integrating metro rail stations with the Indian Railways will gather pace in the coming year after the budgetary allocations for such schemes.

The budget earmarks an allocation of Rs 40,184 crore for the National High-Speed Rail Corporation (NHSRC), which is overseeing the Modi government's flagship scheme of constructing the Mumbai-Ahmedabad High-Speed Rail. 

Of this, Rs 19,529 will come by way of budgetary support, while an additional Rs 20,592 crores will be raised through Extra Budgetary Resources. On rolling stock acquisition/modernisation, Rs 37,581 crores has been allocated - up from Rs 7,977 crore allocated in the 2022-23 budgetary estimates. 

Besides, Rs 31,850 crore has been allocated for New Line projects, Rs 30,749 crore for doubling of lines and Rs 17,296 crore for Track Renewal. An allocation of Rs 27,482 crores has been earmarked for the Eastern and Western Dedicated Freight Corridor projects.

Projections on internal revenue generation of the Indian Railways for 2023-24 have also been pegged higher: At Rs 2.65 lakh crore, as against Rs 2.42 lakh crore projected in the revised estimates of 2022-23.