Statsguru: Railway expenditure for FY25 is pegged at Rs 2.6 trillion

The government has allocated more money to the Indian Railways in the latest Budget than in the five years leading up to the pandemic combined. Railway expenditure for the upcoming financial year 2024-25 (FY25) is pegged at Rs 2.6 trillion. The total spending between FY15-19 was Rs 2.2 trillion (chart 1).

Freight earnings are expected to grow 6.5 per cent in FY25. This is faster than the 2.5 per cent expected in the revised estimates for the current year. Passenger earnings are expected to grow faster than freight earnings at 9.6 per cent. This follows a broad trend where passenger earnings have grown faster than freight in the years since Covid (charts 2,3).

The operating ratio represents the amount that the Indian Railways spends to earn every Rs 100. It was spending more money than it was earning during the pandemic. This has since normalised. The operating ratio for FY25 is expected to be 98.22 (chart 4).

Key areas of capital expenditure have all seen a rise in allocation. Money spent on track renewals is up 77 per cent compared to the period before the pandemic. Spendings on rolling stock, which includes train carriages and wagons, are up 87 per cent. Expenditure on construction of new lines is up 284 per cent (chart 5). 

Higher Budget allocations are also reflected in the outperformance of railway stocks. Companies working with the Indian Railways have gained more than 300 per cent on a median basis in this financial year leading up to the Budget on February 1. The broader market represented by the Nifty 50 index was up 25 per cent during the same period (chart 6).