Indian Railways in Budget 2024: Progress or Stagnation?

Context: 

The Indian Railways (IR) is one of the largest railway networks in the world, serving as a crucial mode of transportation for passengers and freight. It plays a significant role in the Indian economy, influencing industries such as steel, cement, and manufacturing.

For many decades, the Railway Budget was presented separately from the Union Budget, making it a highly anticipated event. However, after its merger with the Union Budget in 2017, its visibility has declined. In recent years, railway allocations have been mentioned only in passing, leaving industry experts and analysts to rely on post-Budget announcements to understand the government's plans for the sector.

Capital Expenditure: The Primary Support for Railways

Since the revenue generated by Indian Railways is just enough to cover operational costs, government support through capital expenditure (capex) has been essential for its modernization and expansion. Over the last decade, the government has invested ₹13 lakh crore in railway infrastructure, leading to:

• An increase in railway electrification to 95 percent.
• Expansion of track length and network capacity.
• A record increase in the addition of rolling stock, including locomotives and coaches.
• Development of new railway lines, track doubling, and gauge conversion.

Budget 2024: No Significant Increase in Capital Expenditure

• The anticipated increase in capital expenditure did not materialize.
• The allocation remains at ₹2.62 lakh crore, the same as in the past two years.
• In real terms, this is a reduction due to inflation and rising costs.
• This suggests that the government is reassessing its financial commitments to the Railways.

Challenges Arising from This Situation

• Freight traffic is growing at a rate of just over two percent, despite the expansion of India’s economy.
• Passenger revenue is increasing, but overall passenger numbers remain below pre-COVID levels.
• The Railway’s Operating Ratio (OR), a key measure of financial efficiency, is being kept below 100 through accounting adjustments rather than actual improvements.

Post-Budget Announcements: Key Highlights from the Railway Minister

Since the Budget speech itself did not provide much clarity on railway plans, experts turned to the post-Budget press conference by the Railway Minister for further insights.

Key Announcements

1. Infrastructure Development

• The Minister stated that an average of 150 kilometers of new railway tracks has been laid annually since 2014, which is an improvement over the 113 kilometers per year between 2009 and 2014.
• The government intends to accelerate the construction of new railway lines, track doubling, and gauge conversion.

2. Safety Measures and Allocations

• The budget allocation for railway safety has been increased to ₹1,16,514 crore.
• However, there was no mention of the expansion of Kavach, the automatic train protection system.
• Since its initial implementation in 1,465 kilometers near Secunderabad, no further expansion has been undertaken.
• While the Indian Railways has made progress in eliminating unmanned level crossings, signaling upgrades and safety infrastructure remain areas of concern.

3. Station Redevelopment Projects

• Significant investments were announced under the Amrit Bharat station redevelopment initiative.
• Despite these announcements, only a few stations—including Gandhinagar, Habibganj, Byappanhalli, Cuttack, Ayodhya, and Charlapalli—have seen substantial progress.
• The redevelopment of the New Delhi Railway Station, one of the busiest in the country, has been delayed for nearly a decade due to repeated re-tendering.
• The shift from Public-Private Partnership (PPP) models to Engineering, Procurement, and Construction (EPC) contracts raises concerns about long-term maintenance and cost efficiency.

Electrification: A Noteworthy Achievement with Some Concerns

The government highlighted the success of railway electrification:

• The electrification rate has increased to 294 Route Kilometers (Rkms) per year from 2014 to 2025, compared to 18 Rkms per year between 2009 and 2014.
• India is set to become the world’s first 100 percent electrified railway network.

Challenges Associated with Electrification

• The rapid electrification drive has left nearly 5,000 diesel locomotives, worth ₹30,000 crore, underutilized or idle.
• A significant portion of the electricity used in the railway network is still generated from fossil fuels, raising questions about the actual environmental benefits.

Future Expansion Plans: Ambitious Targets, Unclear Strategy

• The Minister announced that 200 additional Vande Bharat trains will be introduced, but no timeline was provided.
• There was no update on major pending projects, such as:
  • The Western Dedicated Freight Corridor.
  • The Mumbai-Ahmedabad High-Speed Rail (Bullet Train).
  • The conversion of Integral Coach Factory (ICF) coaches to Vande Bharat standards.
• A 7,000-kilometer high-speed rail network supporting speeds of 250 km per hour has been envisioned by 2047, but without a concrete funding or implementation roadmap.

Freight Sector: Lofty Goals Without a Clear Plan

• The Indian Railways is projected to become the world’s second-largest freight carrier, transporting 1.6 billion tonnes.
• However, the railway’s share in India’s overall freight transport is declining, as many businesses prefer road transport over rail due to cost and efficiency concerns.

Key Concerns

• How will the Railways reclaim its lost freight market share?
• What measures will be taken to improve train speeds and passenger comfort beyond incremental additions of second-class coaches?

Conclusion: Progress Without Transformation

The 2024 Budget did not introduce any groundbreaking reforms for the Indian Railways. Instead, it continued with:

• Electrification and station redevelopment projects.
• Incremental improvements, without addressing execution delays.
• Announcements without a detailed roadmap for completion.

What Indian Railways Needs for Real Change

• Faster implementation of safety initiatives like Kavach.
• A well-defined strategy to regain freight market share.
• Financial sustainability measures to reduce dependency on government funding.

For another year, the Budget suggests that Indian Railways is not undergoing true transformation—it is simply continuing forward, waiting for the next major announcement to create renewed interest.