At Rs 2.52 lakh cr, Budget 2024's allocation for Railways remains unchanged from interim Budget, rises 5% on year

The Indian Railways was mentioned only once in the Budget speech of Finance Minister Nirmala Sitharaman on July 23, contrary to the expectations.

The Indian Railways is set to receive a capex push of Rs 2.52 lakh crore for the financial year 2024-25, an increase of 5 percent from Rs 2.4 lakh crore allocated a year ago.

Budgetary allocation to the ministry of railways remained unchanged in the Union Budget for 2024-25 presented by Union finance minister Nirmala Sitharaman on July 23, from the interim Budget that was presented before the general elections.

The finance minister, as part of her budget speech on July 23, did not mention the total outlay for the railways, but the capex allocation reflected in the Budget documents that were released after her speech.

The railway ministry's internal and extra-budgetary resources (IEBR) have fallen to Rs 13,000 crore in 2024-25 from Rs 52,783 crore projected in 2023-24. However, total IEBR for Indian Railways in 2023-24 stood at Rs 20,000 at the end of the financial year.

IEBR includes funds raised through various financing sources, including that through IRFC for capex deployment.

The funds will be spent on building railway tracks, wagons, trains, electrification, signalling, and developing facilities at stations while focusing on safety.

Railway Minister Ashwini Vaishnav told reporters on July 23 that out of the total budget allocation Rs 1.08 lakh will be used to boost railway safety in 2024-25.

"Around Rs 1.08 lakh crore of the total Budgetary allocation will be used to upgrade railway safety systems like upgrading old railway track, improving signaling systems of Indian Railways, creating flyovers and underpasses and installation of Kavach system on Indian Railway network," Vaishnaw said on July 23.

Railway Upgrade and Safety

The government is also expected to invite tenders to cover railway tracks with its collision prevention system, Kavach.

“Kavach '4.0' safety system was approved last week and going forward Kavach installation will be fast-tracked,” the Railway Minister Ashwini Vaishnaw said.

The Budget has allocated Rs 17,651.98 crore for track renewal in 2024-25 vs Rs 16,826.36 crore spent in 2022-23, Rs 4,719.50 crore for gauge conversion vs Rs 4,278.54 crore spent last year, and Rs 29,312.19 crore for doubling vs Rs 35,046.03 crore spent last year.

A sum of Rs 34,602.75 crore has been allotted for new lines as well, compared to Rs 34,410.00 crore spent last year.

Rail minister Ashwini Vaishnaw on July 23 said that 4,275 km of optical fibres have been laid down under Kavach systems in India and the aim is to extend the safety measure to at least 5,000 km over three years.

Kavach uses electronic devices installed in locomotives, signalling systems and on the tracks to control the brakes of trains and alert drivers, based on programmed parameters. If a train exceeds a designated speed limit and the driver fails to intervene, the system automatically engages the train's braking mechanism.

The renewed push for the Kavach system comes in the backdrop of several train collisions.

On June 17, at least nine people were killed and more than as a goods train rammed the Kanchanjunga Express in West Bengal’s Darjeeling district. A year earlier, around 300 people were killed and over thousand injured when two passenger trains and a goods train collided in a horrific accident in Odisha’s Balasore.

Railway Performance

Railway Minister also said that Indian Railways will manufacture 10,000 extra general coaches over and above the 2,500 general coaches announced earlier.

The new general coaches will provide “convenience” to the general category passengers.

Indian Railways has expanded the number of coaches in 46 important long-distance trains, by installing 92 new general category coaches in them, the Ministry of Railways had said earlier this month.

Commenting on the railways’ earnings vis-a-vis operational expenditure (Operating Ratio), the minister said that the target for operating ration has been set as 98.22 percent for 2024-25 from 98.65 percent in 2023-24.

The Budget document shows that the railways’ revenue from the passenger segment rose to Rs 73,000 crore in 2023-24, surpassing the Budget Estimate (BE). The Indian Railways is targeting revenues of Rs 80,000 crore from the segment in 2024-25.

However, the revenue from freight transportation fell short of the BE by around Rs 10,000 crore to come in at Rs 1,64,700 crore for 2023-24. The Indian Railways is targeting revenues from this segment of Rs 1,74,500 crore in 2024-25.

Vaishnaw also said that 5 lakh jobs have been awarded in the 10 years of NDA governance, 20 percent higher than the 4.11 lakh jobs awarded under the 10 years of UPA government.

Dedicated Freight Corridors (DFC)

The budget has allocated Rs 8,155 crore to the Dedicated Freight Corridor Corporation of India (DFCC) for the financial year 2024-25, which is 71 percent lower than the Rs 27,482 crore allocated for FY24.

Out of the Rs 8,355crore of budgetary support, Rs 8,155 crore will be provided by the central government, while Rs 200 crore will be funded through the DFCC's internal accruals, according to budget documents.

In 2023-24, the government had spent Rs 12,241 crore as budget support to the DFCC, in line with the provision made in the budget of 2022-23. Overall, the DFCC spent Rs 14,526 crore as capital expenditure in 2023-24, slightly lower than the Rs 14,865.5 crore spent in the previous year.

The funds will mainly be used to complete the construction of the Western Dedicated Freight Corridor (DFCs).

The railway ministry is targeting 100 percent electrification of its network by July 2024 and laying of at least 2,000 km of new tracks, as well as rolling out the new Vande Bharat trains.

The completion deadline for the DFCs was extended by two years following the pandemic-induced challenges and land acquisition delays.

Both the Dedicated Freight Corridors (DFC) — Eastern and Western Wings — are expected to be completed in 2024. So far, 100 percent or 1,337 km of the EDFC is “operational”, while around 70 percent of the WDFC is ready.

The total cost of the DFCs, including supporting infrastructure like multi-modal parks and train sidings, is pegged at Rs 124,000 crore.

DFCC will also be looking at smaller freight corridors for short distances, where the potential for revenue growth and goods loading is significant, such as corridors between ports and major mining areas.

The national carrier will monetise the upcoming DFC assets for operations and maintenance after commissioning and the Indian Railways will have a National Rail Plan to create a ‘future ready’ Railway system by 2030.

Under Mission 3000, the Indian Railways intends to double its cargo loading to 3,000 million tonnes (mt) by 2027. It is widely understood that DFCs will play a key role in this endeavour.

Vande Bharat Trains

Despite the expectation of the Railway Industry, the Budget for 2024-25 did not have any announcements on Vande Bharat sleeper trains.

Back in February Vaishnaw had said that 10 Vande Bharat sleeper trains will start trial run in the next four-five months following which the commercial operations will start.

“The new car body of the Vande Bharat sleeper trains will have more height, and the roof portion has been redesigned to be aerodynamic, stable and convenient for passengers,” Vaishnaw had said.

All Vande Bharat sleeper trains will be pre-fitted with anti-collision system Kavach, he added.

Internationally, manufacturing cost of one coach is close to Rs 10 crore. However, one Vande Bharat sleeper coach cost comes around Rs 8 crore to Rs 9 crore because the design of the train is indigenous, Vaishnaw said.

Each coach will accommodate 67 passengers approximately and will have stainless steel car-body, crash worthy design elements, automatic exterior passenger doors and sensor-based intercommunication doors.