Budget 2025 Must Focus On Railways Capex, Efficiency

It has been reported that the hike is likely to be 15-20 per cent. If that indeed fructifies, it would raise the total allocation for the Railways to an all-time high of over Rs 3 lakh crore for 2025-26. The increase in capex will go a long way improving the transport sector but the improvement will also be predicated upon greater efficiency.

Consider this: There are 213 major infrastructure projects worth Rs 150 crore or more in the railway sector, originally anticipated to cost Rs 4,12,942.26 crore. By the end of November 2024, they were expected to require Rs 6,45,136.67 crore for completion, which means cost overruns of over 56 per cent.

In contrast, the cost escalation for all 1,742 major infrastructure projects was 19.27 per cent — Rs 31,03,301.37 crore against the originally estimated expenditure of Rs 26,01,870.34 crore. There is a need for a steep decline in cost and time overruns of projects in the railway sector.

Finance Minister Nirmala Sitharaman may consider linking capex with efficiency.

Even improved infrastructure has not translated into much less travel time for railway passengers. For instance, in 1973, the Rajdhani Express took 17 hours and 20 minutes to reach Delhi from Kolkata, with a maximum speed of 120 kmph. Today, with a maximum speed of 130 kmph, it takes 17 hours and 15 minutes. Unfortunately, the average speed remains stuck at 84 kmph. 

Indian Railways officials recently claimed that around 23,000 track kilometres (TKM) of the total 1.03 lakh TKM of Indian Railways’ network are now fit to run trains at 130 km/h.

Also, 54,337 TKM can accommodate speeds up to 110 kmph. Indian Railways has reportedly been striving to enhance track and signaling infrastructure to support higher train speeds on the network.

Some major stretches on the Golden Quadrilateral are also being upgraded to allow for semi-high-speed trains with maximum speeds of up to 160 kmph. That may be true, but this will impress regular passengers only when the claims made by the officials get translated into reality.

Passenger safety is another big concern. There was a major rail mishap in Odisha in 2023, killing 290 and injuring many more. Three major accidents in the first half of 2024 resulted in 17 deaths. Besides, there was a derailment on every fifth day last calendar year. It is thus undeniable that safety needs urgent attention.

There has been a lot of discussion on Kavach, an indigenously developed Automatic Train Protection (ATP) system. A highly technology-intensive system, Kavach involves the installation of Station Kavach at each and every station, block section, RFID tags throughout the track length, telecom towers throughout the section, laying of optical fibre cable along the track, and provision of Loco Kavach on each and every locomotive of Indian Railways.

Kavach has already been deployed on 1,548 km on South Central Railway and North Central Railway. Presently, work is in progress on the Delhi-Mumbai and Delhi-Howrah corridors, totaling about 3,000 km. Sitharaman may use fiscal means to incentivise the adoption of Kavach.

The key focus areas for Railways include fast capacity augmentation, modernisation of rolling stock and maintenance, improving quality of services and energy efficiency. The Economic Survey 2023-24 said, “In line with this, investments are prioritised in areas like dedicated freight corridors, high-speed rail, modern passenger services like Vande Bharat, Amrit Bharat Express, Aastha Special Trains, high-capacity rolling stock and last-mile rail linkages.”

The expected rise in capital expenditure is likely to take care of these requirements.

However, there is also pressure on Sitharaman to increase revenue expenditure. In September last year, Chairman & Chief Executive Officer Railway Board Satish Kumar talked about manpower shortages and sought additional staff “urgently” to ensure the safe operation of trains.

In a letter to the Ministry of Finance, he wrote, “For effective monitoring and execution of various projects, maintenance of new assets, and the smooth and safe operation of trains, there is an urgent requirement for additional manpower in Indian Railways.”

Kumar’s contention sounds counterintuitive, for we have been told for decades that Indian Railways is grossly overstaffed. But even if more manpower is needed, it would be prudent to involve private enterprise. In fact, private sector participation in railway operations has been suboptimal.

GatiShakti Multi-Modal Cargo Terminals (GCTs) are one area in which private companies play a big role. GCTs are being built on railway and non-railway land, based on demand from industry and the potential of cargo traffic.

As many as 354 locations (327 on non-railway land and 27 on railway land) have been identified across the country. Till the end of October 2024, 91 GCTs were commissioned.

However, other than that, private players have not been as involved as they should have been. The Finance Minister will do well to nudge Indian Railways to augment private sector participation in the operations. Quite apart from curbing revenue expenditure, this will also help Railways shed its statist mindset.

(The author is a freelance journalist. Views are personal.)