What does the Budget offer Railways?

The erstwhile Railway Budget, presented a couple of days before the Union Budget, was once a grand spectacle where the Indian Railways (IR), awaited its moment of glory. But since its merger with the general Budget in 2017, the IR has been reduced to a mere footnote. In fact, in the last Budget in July 2024 as also in the one presented on February 1, it did not even get a passing mention.

Knowing that the disappointing financial numbers of IR will not be touched upon, rail watchers, industry and markets clung to one lifeline — capital expenditure (capex). With the IR’s own earnings barely covering operational costs, the government’s increase in budgetary support to the IR has kept the show running. Over the last decade, a staggering ₹13 lakh crore has been pumped into modernising infrastructure — electrification has soared to 95%, track length has expanded, and rolling stock has seen record additions. And yet, the returns are underwhelming. Freight traffic is crawling at just over 2% growth, despite India’s booming economy, and while passenger revenue is rising, patronage remains below pre-COVID levels. This Budget delivered more of the same accounting jugglery to keep the Operating Ratio (OR) below 100. It also did not mention any discussion on past announcements. The much-anticipated capex push failed to materialise beyond last two years’ ₹2.62 lakh crore, which in real terms is a correction downwards, signalling that even the government is pausing to reassess.

Post-Budget conference

In the absence of any more signs in the Budget, one can only draw clues from the post-Budget press conference given by the Railways Minister. The Minister said that immense thrust has been given for the development of infrastructure, modernisation of stations and trains, enhancement of connectivity, safety and comfort of passengers, and that construction of new railway lines, doubling and gauge conversion and addition of new rolling stock would proceed at an accelerated pace. He added that since 2014, an average of 150 km of new tracks have been laid annually as compared to the average of 113 km annually from 2009-2014. This is a positive announcement as the enhancement of rail network and elimination of saturation will help in improving mobility and connectivity.

The Minister further announced that safety-related initiatives will receive an enhanced budget allocation of ₹1,16,514 crore. While the IR has done well in grade separation work, the most pressing safety issue today is the proliferation of Kavach. There was no mention of any increase in Kavach coverage for 2025-26. In fact, since the initial rollout of 1,465 km near Secunderabad, not a single kilometre has been added. While the Minister continued with proclamations of massive investment in Amrit Bharat station redevelopment projects, tangible outcomes are visible only at Gandhinagar, Habibganj, Byappanhalli, Cuttack, Ayodhya, and Charlapalli. A stark example of the IR’s lacklustre execution is the New Delhi station — one of the busiest and most high-profile stations — whose much-hyped transformation into a world-class hub has been stuck in an endless cycle of re-tendering for nearly a decade. With all redevelopment now being carried out in an Engineering, Procurement, and Construction (EPC) mode, following the failure of Public-Private Partnership (PPP) projects, a key question remains: how will these edifices be maintained when Railway expenses are outpacing earnings?

Mere spectacle

The Minister mentioned that the IR has achieved an average electrification rate of 294 Rkms per year from 2014-25 — 16 times higher than the 18 Rkms per year achieved during 2009-14 — with India slated to become the only 100% electrified and thus the “greenest” railway in the world. This raises some uncomfortable questions — has this electrification spree outpaced necessity, rendering approximately 5,000 diesel locomotives worth ₹30,000 crore idle or underutilised? Furthermore, much of the electricity powering in IR still comes from fossil-fuel-based plants.

It was declared that 200 more Vande Bharat trains would be introduced; without any mention of a timeline. There has also been no word on major pending projects such as the Western Dedicated Freight Corridor, the Mumbai-Ahmedabad High-Speed Rail, or the conversion of Integral Coach Factory (ICF) coaches to Vande Bharat standards. Instead, we were treated to a grand proclamation, that India aims to build a 7,000-km high-speed rail network supporting speeds of 250 kmph by 2047. A vision distant and devoid of clear-cut strategy, it seems no more than a daydream than a roadmap.

The real sleight of hand, however, was the declaration that the IR is poised to become the world’s second-largest freight carrier, touching 1.6 billion tonnes of cargo. Given India’s size, this number in isolation is meaningless. The real questions remain: how will the IR reclaim its eroding freight share? Can it improve train speeds and comfort beyond token second-class coach additions?

For yet another year, the Budget suggests that the IR is not on track to transformation — it is merely chugging along, waiting for the next headline -grabbing announcement to arrive.

The writer is leader of the Vande Bharat project and an independent consultant.