Budget trims allocation to regional air connectivity scheme UDAN

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. 

The allocation for government's regional air connectivity scheme UDAN has been pegged lower in the Union Budget 2024-25.

Finance Minister Nirmala Sitharaman in her budget speech on July 23 did not mention the total outlay for the Civil Aviation Ministry, but the allocation reflected in the budget documents that were released after the speech in the Parliament.

In the budget for FY25, the government has earmarked Rs 502 crore for the scheme, down from Rs 1,244.07 crore (BE FY24) and a revised estimate of Rs 850 crore.

UDAN is a regional airport development programme under the Centre’s regional connectivity mission, is aimed at refurbishing under-served airports to make air travel more affordable.

In the recent years, the Centre has been improving regional air connectivity through UDAN, which focuses on linking Tier-2 and Tier-3 cities.

Even though the budget speech itself didn’t mention a broad allocation towards the sector, the government earmarked Rs 2,357.14 crore as capital expenditure for the Ministry of Civil Aviation in the current fiscal year.

This is down by 19.33 percent when compared to 2023-24 actual spending of Rs 2,922.12 crore by MoCA.

Reacting to the Union Budget, MoS Civil Aviation Kinjarapu Rammohan Naidu said, "Stress has been given to job creation, employment generation, the private sector, and FDI. I want to thank PM Modi who had promised to take care of Andhra Pradesh and in the budget he has done that."

The Finance Minister said that the Indian aviation sector has been galvanised in the last 10 years and the number of airports in the country have risen to 149.

Out of the total allocation, Rs 1,158.79 crore has been earmarked for AI Asset Holdings Ltd for servicing loans transferred to the special purpose vehicle (SPV) for the financial restructuring of Air India.

AI Asset Holding has spent Rs 713.92 crore in 2023-24 for the same.

A sum of Rs 554.47 crore has also been set aside for the medical benefits of retired Air India employees, down from Rs 641.30 crore in last Budget.

In addition, under Internal and Extra Budgetary Resources (IEBR), the Centre has allowed the Airports Authority of India to raise Rs 3448.14 crore, slightly higher than the Rs 3427.70 the AAI had raised last year.

IEBR includes resources raised by public sector units through profits, loans and equity.