Budget: Railway capex stays flat; revenue receipts set to cross Rs 3 trn

Finance Minister Nirmala Sitharaman has kept the outlay provided for capital expenditure (capex) in the Railways at Rs 2.65 trillion, almost the same as the 2024-25 budget estimate

For the second consecutive year, the Indian Railways, which had a separate Budget until 2016, could not find any significant mention in this year’s Budget speech.

 

Finance Minister Nirmala Sitharaman has kept the outlay provided for capital expenditure (capex) in the railways at Rs 2.65 trillion. This is the same as the 2024-25 budget and revised estimates for the sector.

 

Interestingly, revenue receipts for railways are expected to cross Rs 3 trillion for the first time in history. 

 

The 2025-26 capex includes government budget support or general revenues, pegged at Rs 2.52 trillion; Rs 10,000 crore from extra-budgetary resources; Rs 3,000 crore from internal resources; and Rs 200 crore from the Nirbhaya Fund.

 

 

In 2023-24, the actual capex was seen at Rs 2.62 trillion.

 

However, in a positive development for the national transporter, total receipts, comprising revenues from passengers, goods, other coaching, sundry receipts, and Railway Recruitment Boards, have seen an increase of 8 per cent to Rs 3.02 trillion in the budget estimate for 2025-26. This is up Rs 23,100 crore from Rs 2.79 trillion in the revised estimates for 2024-25. 

 

When asked about the capex falling flat, Railway Minister Ashwini Vaishnaw said this is the optimum level of capex and railways will have a consistent path sustaining the capex at this level. 

 

Vaishnaw also brushed aside concerns over a possible fare hike owing to higher revenue receipts.

 

The likely revenue from passenger segment was kept at Rs 92,800 crore, up 13 per cent from Rs 82,000 crore in the revised estimates for FY25.

 

On freight, the Budget is targeting a 4 per cent hike to Rs 1.88 trillion. 

 

The rise expected in AC three-tier review is pegged at Rs 37,115 crore, up 23 per cent from revised estimates of FY25.

 

“There is no fare hike on the cards. The increase in passenger revenue will be driven by growth in passenger volumes on the railways. Passenger numbers have been increasing each year, and this year, the total passengers are expected to rise to 7.5 billion. Next year, this number will be around 7.8-7.9 billion passengers. So, revenue growth will purely be on the passenger count,” Vaishnaw said.

 

The operating ratio, which is a major parameter of the financial health of railways, is targeted at 98.43 per cent of the budget estimates for 2025-26, compared to 98.9 per cent in the revised estimates for 2024-25 and 98.43 per cent in the actual form for 2023-24.

 

This means that the national transporter will be spending Rs 98.43 for every Rs 100 that it will be earning.

 

“In the last two years, around Rs 5.3 trillion has been given to the railways, which is an enormous amount to fund the massive infrastructure projects. However, the challenging part is achieving the revenue target of Rs 3 trillion set for the year, which shows an addition of Rs 8,000 crore in freight, and a rise of over Rs 12,000 crore in passenger revenue. One of the main options to achieve this rise in passenger revenue can be through rationalisation of fares, which did not happen since 2013,” said Mohammed Jamshed, former Member-Traffic of railways.

 

The only mention about the sector in the Budget speech was with regard to the relaxation of norms for maintenance, repair, and overhaul (MRO) in the railways.

 

The Budget extended the sops already on offer to the aviation and shipping sectors for MROs.  

 

“In July 2024, the Budget, to promote the development of domestic MROs for aircraft and ships, had extended the time limit for the export of foreign-origin goods that were imported for repairs from six months to one year and further extendable by one year. I now propose to extend the same dispensation for railway goods,” Sitharaman said in her speech.