The Central government may announce in the upcoming budget a mega order for 50,000 wagons to be supplied by 2027-28, government officials aware of the plan said.
Experts said that the value of the order is likely to be valued at Rs 21,000 crore to Rs 25,000 crore.
“The Indian Railways would like to procure as many wagons as the market can offer over the next few years. These steps are being taken to increase the railways’ market share in transporting cargo to 50 percent by 2030,” said a railway ministry official who did not wish to be identified.
The share of the railways in India’s cargo market is 27 percent, second to about 60 percent for roadways.
The new order, along with the mega tender announced last year, will benefit wagon manufacturers, according to the official. The government will award longer-term contracts to facilitate investment in wagon manufacturing and increase their production capacity by 25 percent, the official said.
Titagarh Wagons, Texmaco Rail, Hindustan Engineering Industries, Commercial Engineer, and Oriental Foundry were the five companies that were awarded contracts worth Rs 23,500 crore to supply 60,000 wagons to the Indian Railways by 2025-26.
Emails sent to the ministry of railways on the wagon-purchase plan were not answered.
The Union Budget for FY24 is scheduled to be presented on February 1.
Loading target
The Central government announced a mega order last year of more than Rs 31,000 crore for the purchase of 90,000 wagons to transport coal, cement, and food grains, among other goods, and achieve a loading target of 5 million tonnes per day.
The railways carried 1,418.1 million tonnes of freight in FY22.
Gross budgetary support for the Ministry of Railways in the budget for FY24 is expected to increase by 20-30 percent from Rs 1.4 lakh crore provided in FY23, the officials said.
“The railways has asked for 30 percent more allocation for the next fiscal year,” a second official said, adding that expenditure is likely to rise to fast-track many infrastructure projects.
“Around Rs 1.02 lakh crore out of the capital expenditure budget has been spent till the end of October,” the second official said.
The budget is likely to include a timeline to lay an additional 100,000 km of rail tracks, including the doubling of existing ones, in the next 25 years.
“The Indian Railways will aim to start construction of around 4,000 km of new tracks in 2023-24 as part of the 100,000 km to be added,” the second official said.
The official said the railways has kept projections for internal revenue for FY24 at almost the same level as in FY23. Internal revenue was estimated at Rs 2,40,000 crore in FY23, which is 19 percent higher than the revised estimate for FY22.
“It will be difficult to accurately project a rise in revenue in 2023-24 when compared to 2022-23,” the official said.
The increase in revenue in FY23 comes from the low base of revenue in FY22, which was affected by the pandemic. Additionally, given the unclear global economic environment and its likely impact on India, it would be difficult to estimate revenue for FY24, the official said.
Merger plan
The Indian Railways is also considering the merger of all its rolling stock, wagon and locomotive manufacturing public sector undertakings into one unit. The process started in September 2021 when the finance ministry asked the Indian Railways to prepare a plan to merge seven public sector companies, as proposed by the principal economic adviser.
“A report has been prepared on the merger of all railways rolling stock and locomotive PSUs and after the approval of the Railway Board, it is likely to be announced in the budget,” the first official said.
The Railway Board is likely to come up with a timeline for the merger of the PSUs, the official said.
“Railway PSUs will be merged one by one, but adherence to timelines will depend on regulatory approvals,” he added.
The finance ministry had also asked the Railway Board to chalk out a plan to downsize operations within the Indian Railways to help organisations focus on their core competencies of running and maintaining railway services.
Former principal economic adviser, Sanjeev Sanyal had highlighted the overlap of operations between RailTel, IRCTC, and Centre for Railway Information Systems (CRIS) in a report titled ‘Rationalisation of Government Bodies, Proposal for Ministry of Railways.’
RailTel provides telecom infrastructure through optic fiber networks along railway tracks, IRCTC (Indian Railway Catering and Tourism Corporation) is the internet ticketing arm of the Indian Railways, and CRIS is an autonomous society that develops software for passenger ticketing, freight invoicing, and passenger train operations.
The report recommended winding up CRIS after handing over the work it does to IRCTC. The report noted that IRCTC’s passenger reservation system is operated by CRIS, for which the company and Indian Railways pay the society.
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