MC Exclusive: Govt likely to increase railway budget by 15-18% in FY26 to accelerate rollout of Vande Bharat, high-speed bullet trainsets

During calendar year 2024, Indian Railways introduced 62 Vande Bharat services. As on December 26, 2024, a total of 136 Vande Bharat train services were running across the Indian Railways's network, the Ministry of Railways had said in a press release on December 29.

Moneycontrol was the first to report that Indian Railways had planned to introduce around 60 Vande Bharat Express trains across 14 states and two Union Territories in 2024.

Apart from the delivery of Vande Bharat trainsets, the Indian Railways is expects to take deliveries for the around 60,000 Linke-Hofmann-Busch (LHB) coach wheels and around 30,000 wagons in 2025.

The expected hike in GBS comes after the increase in budgetary allocation in Union Budget 2024-25 by just five percent to around Rs 2.52 lakh crore from 2.4 lakh crore a year back.

Emails sent to the Indian Railways remained unanswered till the time of publishing this report.

Mega order for wagons

In the upcoming budget, the central government is likely to announce a mega order for wagons to be supplied by 2028-29, government officials aware of the plan said. Experts said that the order is likely to be worth Rs 20,000 crore-Rs 25,000 crore.

The share of the railways in India’s cargo market is 27 percent. Roadways account for about 60 percent.

The new order, along with the mega tender announced in 2021, will benefit wagon manufacturers significantly, according to the official. The government will award longer-term contracts to facilitate investments in wagon manufacturing and increase their production capacity by 25 percent, the official said.

Titagarh Wagons, Texmaco Rail, Hindustan Engineering Industries, Commercial Engineer Works , and Oriental Foundry were the five companies that were awarded contracts worth Rs 23,500 crore in 2021 to supply 60,000 wagons by 2025-26.

In 2021, the central government had announced a mega order worth more than Rs 31,000 crore for 90,000 wagons to transport coal, cement, and foodgrains, among other goods, and to achieve a loading target of 5 million tonnes per day.

India's first dedicated railway test track, under construction in Rajasthan, with an investment of Rs 820 crore, is expected to be completed by December 2025.

The 60-km track will enable advanced testing of rolling stock which includes high-speed trials for bullet trains, and introduce new capabilities in railway infrastructure. Once it becomes operational, the track will accommodate speeds of up to 230 kmph, marking a milestone for high-speed rail testing in India.

Budgetary allocations and expenditure

The Ministry of Railways has spent 76 percent of its allocated budgetary capital expenditure for FY25 in the first nine months of the financial year, according to estimates from Indian Railways.

The ministry has spent Rs 1.91 lakh crore from the gross budgetary support, Rs 824 crore from external resources, and Rs 8,733 crore from extra-budgetary resources (public-private partnership) on infrastructure creation.

In total, the ministry has spent Rs 2.02 lakh crore of the budgeted Rs 2.65 lakh crore, as of January 5, a government official said. As of December 31, the railways’ capital expenditure (capex) execution was Rs 4,975 crore more than the previous year.

At the same time, in the preceding financial year, the ministry had spent 75 percent of its budgeted capex. In recent years, the ministry has changed its practice to ensure the front-loading of capex, reversing the earlier trend of failing to meet its budgeted infrastructure spending.

Of the Rs 2.52 lakh crore allotted to the ministry from the central government coffers, Rs 81,713 crore has been spent on capacity augmentation, which is 68 percent of its allocated budget for new lines, doubling, and expansion works.

Expenditure on safety-related works, such as level crossings, over- and under-bridges, track renewals, bridges and signalling has already reached 82 percent of the allocated budget of Rs 34,414 crore.

Vande Bharat trains

Till now, Indian Railways has awarded contracts for 402 Vande Bharat trains, with deliveries scheduled to be completed by March 2027.

The introduction and expansion of Vande Bharat trains are aimed at providing faster, more efficient, and more comfortable rail transportation for passengers. The railways had received its highest-ever allocation of Rs 2.4 lakh crore for 2023-24.

Vande Bharat is a semi high-speed train, with 16 self-propelled coaches. They do not require an engine. This is called a distributed traction power system, which is increasingly becoming the norm the world over for passenger train operations. Distributed power enables higher acceleration and deceleration compared to loco-hauled trains, which take much longer to reach top speed or to gradually come to a halt.

These trains have improvements in terms of better seating, an anti-bacterial system in the air- conditioning system, and the ability to hit 160 km/h in 140 seconds.