Budget 2024: Not much hope for Indian Railways

The interim Union Budget 2024-25 has neither generated much hope either for improving railways operations or in terms of services to commuters, though Union finance minister Nirmala Sitharaman has announced three major economic railway corridor programmes to be implemented, and 40,000 normal bogies to be converted to Vande Bharat standards. 

The budget has earmarked a capex of only Rs 2.55 lakh crore for the Indian railways, which is just marginally higher than the Rs 2.4 lakh crore announced in last year’s budget. It has dashed the hopes of many who were expecting a big push to railway infrastructure. 

The dashed hope was reflected in the stock market just after the budget presentation, when several stocks of companies related to the railways started trading lower. Investors had expected a concrete big push and had big expectations, as was evident from the morning stock market ahead of the budget presentation, when in rail stocks trade associated with railways showed a positive momentum.

The capex in railways was expected to increase substantially, given the number of infrastructure modernisation projects under implementation, as well as thanks to the Lok Sabha elections in April-May. Common people expected more trains, bogies, and public amenities, but they are now bound to be disheartened. The railways, in fact, is financially in very bad shape, perhaps not in a position to do much more. 

Net revenue has been estimated at Rs 2,800 crore for the financial year 2024-25, which is unrealistic at a time when it has been declining. Actual revenue in 2022-23 was Rs 2,517.38 crore, which declined to Rs 2,210 crore in 2023-24 Budget estimate, and further declined to Rs 2,000 crore in 2023-24 (revised estimate). Its operating ratio was 98.65 per cent in 2023-24 (RE). 

The actual total receipt of Indian Railways was Rs 240,176.96 crore in 2022-23 (actual), which was estimated to rise to Rs 265,000 crore in 2023-24 (BE), but was found to be Rs 258,600 crore in 2023-24 (RE). As against this, total expenditure has been on the rise, which were Rs 237,659.58 crore in 2022-23 (actual), Rs 262,790 crore in 2023-24 (BE), and Rs 256,600 crore in 2023-24 (RE). Now, the interim budget 2024-25 has estimated it to rise to Rs 275,700 crore. 

Given this dismal performance, Sitharaman has only made vague announcements that three major economic railway corridor programmes will be implemented, namely — energy, mineral and cement corridors, port connectivity corridors, and high-traffic density corridors. These projects have been identified under the PM Gati Shakti scheme for enabling multi-modal connectivity, intended to improve logistics and reduce costs, she emphasised. Given the revenue position and minor increase in capex, implementation will not be smooth, perhaps even impossible.

Nevertheless, Sitharaman asserted that the resultant decongestion of high-traffic corridors will also help in improving operations of passenger trains, resulting in safety and higher travel speed for passengers. Together with dedicated freight corridors, these three economic corridor programmes will accelerate our GDP growth and reduce logistic costs, she said. 

Given the nature of the three economic corridors, it will further the unequal and lopsided development of the country, since all three corridors are for specific areas, where there a certain level of development already exists. It will, therefore, remain a matter of great concern for the people of the lesser developed states or regions of the country, which may not fit into these schemes. These corridors are not inclusive programmes, which the less developed or backward regions badly need. 

As for passenger traffic, there is nothing much. Sitharaman has announced that 40,000 normal rail bogies will be converted to Vande Bharat standards to enhance safety, convenience and comfort of passengers. It is again an eyewash for people, who have suffered several rail disasters in the last few years, none of them owing to unsafe bogies, but for security lapses including faulty signalling and rail track systems. The interim budget has nothing much in this regard.

It means that common people have been a dealt a raw deal, since the way the railways has been implementing its programme has been taking rail travel beyond the reach of common people at several levels, including costlier travel and non-availability of enough trains and coaches for the less expensive classes.

The government has been focusing on costlier rail travel in the last few years, and the number of such trains and bogies are being made available for those who can afford them. Vande Bharat is one of the examples which have become a priority area for the government. The interim budget reveals that Vande Bharat is now among the government’s key priorities. The others as announced will be an expansion of key rail infrastructure, and projects such as Metro Rail and Namo Bharat to additional cities. 

It may be recalled that Vande Bharat trains were unveiled by the minister for railways at the post-budget 2023-24 media briefing. These trains are designed for longer journeys, spanning over 800 km. Production of these trains is underway at ICF Chennai. It was expected that the government would introduce a sleeper version of Vande Bharat and production level would be greatly enhanced. However, the government chose to convert the 40,000 bogies into Vande Bharat, which may impact low-cost journeys for poor and disadvantaged people.

IPA Service, read the unedited article here