By Sudhanshu Mani & Ramakrishnan TS,

The Union Budget is a pivotal event that presents indices like expenditure, receipts, and deficits while outlining the government’s vision, achievements, and course corrections. However, gone are the days when Indian Railways (IR), with its own dedicated budget, too held centre stage during the Budget season. Since its merger with the central Budget, IR’s presence has dwindled to mere mentions — so much so that in the last Budget, presented in July 2024, the finance minister did not spare it even a single sentence.

The rail budget figures, too, hold little intrigue. The available data suggests that IR’s financial health remains stagnant. Freight traffic, the primary revenue engine of IR, is crawling at a meagre 2%-plus growth this year — despite India’s economy expanding at around 6% and the transportation sector growing even faster. Meanwhile, passenger revenue may be rising at 7% compound annual growth rate, yet overall patronage remains stubbornly below pre-Covid levels.

The lone source of excitement for rail watchers, industry, and markets continues to be the capital expenditure (capex) grant from the government, which has been steadily increasing since 2014. With IR generating little to no surplus for investments, the government argues that its finances should not be viewed in isolation. Instead, its aggressive investment strategy — funded through general budgetary support — is positioned as a crucial driver of national economic growth, leveraging rail transport’s........

© The Financial Express