Budget 2021: Indian Railways gets Rs 1.1 trn budgetary support for FY22

FM says Railways has a National Rail Plan for India 2030, to create a future-ready rail system by 2030. Bringing down logistic cost for industry is at the core to enable Make in India

The Indian Railways has set its eyes on long-term infrastructure projects of freight corridors and speedier trains as it gets the highest ever gross budgetary support (GBS) from the Union Budget.

According to a rail ministry presentation, capex for 2021-22 is pegged at Rs 2.15 trillion. This estimate takes into account GBS of Rs 1.07 trillion, internal resources of Rs 7,500 crore, and external budgetary resources raising Rs 1.00258 trillion.

This is significantly higher than the GBS of earlier years. GBS for 2020-21 stood at Rs 70,250 crore. GBS was at Rs 69,967 crore in 2019-20 and Rs 55,088 crore in 2018-19. “Capex in the Budget is almost double. It’s a record level of capex is to ensure that we create a system where we are looked at as an organisation which believes in deliverance,” said Suneet Sharma, newly appointed chairman, Railway Board.

During 2021-22, the railways will be spending Rs 40,932 crore in laying new lines and Rs 26,116 crore in doubling existing lines. According to a Rail Ministry presentation, Rs 37,270 crore of GBS will be allocated for investment in public sector undertakings, joint venture projects and special purpose vehicles. 

The Dedicated Freight Corridor Corporation of India will be getting an allocation of Rs 16,086 crore while the National High Speed Rail Corporation Limited will be allocated Rs 14,000 crore of GBS.

The Indian Railways had suffered during the Covid-19 pandemic with passenger revenues plummeting. Traffic revenue was revised down from Rs 2.25 trillion in the Budget 2020-2021 to Rs 1.46 trillion in the revised estimates. 

There was a significant fall in passenger revenue that was revised downwards from Rs 61,000 crore to Rs 15,000 crore in 2020-21. To keep finances in check the railways also tried to lower expenses. Ordinary working expenses were revised downwards from Rs 1.62 trillion in the Budget Expenditure for 2020-2021 to Rs 1.41 trillion in the revised expenditures.

Pension expenditures and other fixed costs could not be cut as drastically and remained high at Rs 51,000 crore in the revised expenditure. To meet costs, the Railways has reported a special loan for Covid related resource gap of Rs 79,398 crore in the revised estimates.

“Wages are nearly 75 per cent of all Rail expenditure. There were increased operating losses because of Covid-19 which has been adjusted as a loan rather than budgetary grant. This loan needs to eventually be returned as against a grant,” a sector watcher said.

On the whole, the Indian Railways reported a slight improvement in the operating ratio (OR) for the fiscal year 2020-2021. The operating ratio — which measures expenses as a proportion of revenue — is considered the most important indicator for assessing the performance of the Railways.

The OR for fiscal 2020-2021 is reported at 96.96, an improvement over the 98.41 OR reported for fiscal 2019-2020. The OR for the fiscal 2020-2021 has been pegged at 96.15. This means the Indian Railways will spend Rs 96.15 for every Rs 100 it earns.

Elaborating on the projects that the Indian Railways will be focusing on in the fiscal 2021-2022 and beyond, Finance Minister Nirmala Sitharaman said: “The Indian Railways prepared a National Rail Plan for India 2030. The plan is to create a future ready railway system by 2030. Bringing down the logistic cost for industry is at the core of the strategy to enable Make in India.”

Sitharaman said the Western Dedicated Freight Corridor and Eastern Dedicated Freight Corridor will be commissioned by June 2022. These projects and their completion timelines have been announced in the Vision 2024, a subset of the National Rail Plan 2030. 

“Broad gauge route kilometres (RKM) electrified is expected to reach 46,000 RKM 72 per cent by end of 2021, from 41,548 RKM on October 1, 2020. 100 per cent electrification of Broad-gauge routes will be completed by December 2023,” Sitharaman added.