Rail capex rises 5% to Rs 2.52 lakh cr for electrification, dedicated freight corridor: Budget 2024

Indian Railways

The Indian Railways is set to receive a capex push of Rs 2.52 lakh crore for the financial year 2024-25, an increase of 5 percent from Rs 2.4 lakh crore allocated a year ago.

The finance minister, as part of her interim budget speech on February 1, did not mention the total outlay for the railways, but the capex allocation reflected in the budget documents that were released after her speech.

The annual expenditure will be funded through budgetary support of almost Rs 2.52 lakh crore in FY25, against a revised budgetary support of Rs 2.4 lakh crore for FY24.

The railway ministry's internal and extra-budgetary resources (IEBR) have fallen to Rs 13,000 crore in 2024-25 from Rs 52,783 crore in 2023-24. IEBR includes funds raised through various financing sources, including that through IRFC for capex deployment.

The funds will be spent on building railway tracks, wagons, trains, electrification, signalling, and developing facilities at stations while focusing on safety.

The railways needs funds for a number of projects, including laying of rail tracks, gauge conversion, electrification, and signalling, apart from improvement in rolling stocks.

The interim budget has allocated Rs 4,155 crore to the Dedicated Freight Corridor Corporation of India (DFCC) for the financial year 2024-25, which is 85 percent lower than the Rs 27,482 crore allocated for FY24.

Out of the Rs 4,155 crore of budgetary support, Rs 3,955 crore will be provided by the central government, while Rs 200 crore will be funded through the DFCC's internal accruals, according to budget documents.

So far in 2023-24, the government has provided Rs 12,241 crore as budget support to the DFCC, in line with a provision of Rs 12,241 crore made in the budget of 2022-23. Overall, the DFCC spent Rs 14,526 crore as capital expenditure in 2023-24, slightly lower than the Rs 14,865.5 crore spent in the previous year.

The funds will mainly be used to complete the construction of the Western Dedicated Freight Corridor (DFCs).

The railway ministry is targeting 100 percent electrification of its network by July 2024 and laying of at least 2,000 km of new tracks, as well as rolling out the new Vande Bharat trains.

Overall, the railways was allocated around Rs 2.45 lakh crore of funds in 2022-23 through various financing sources, including funds raised through IRFC for capex deployment.

Dedicated Freight Corridors (DFC)

The completion deadline for the DFCs was extended by two years following the pandemic-induced challenges and land acquisition delays.

Both the Dedicated Freight Corridors (DFC) — Eastern and Western Wings — are expected to be completed in 2024. So far, 100 percent or 1,337 km of the EDFC is “operational”, while around 70 percent of the WDFC is ready.

The total cost of the DFCs, including supporting infrastructure like multi-modal parks and train sidings, is pegged at Rs 124,000 crore.

Railway Upgrade and Safety

The government is also expected to invite tenders to cover 4,000-5,000 km of railway tracks with its collision prevention system, Kavach.

By June 2024, the IR plans to cover around 3,500 km of railway tracks and around 500 locomotives with Kavach.

The Budget has allocated Rs 17,150 crore for track renewal in 2024-25 vs Rs 17,296.84 crore in 2022-23, Rs 4,533.76 crore for gauge conversion vs Rs 4,600 crore last year, and Rs 30,000 crore for doubling vs Rs 30,749.40 crore last year.

A sum of Rs 36,091.21 crore has been allotted for new lines as well, compared to Rs 31,850 crore allotted last year.

As per the revised estimates of the central government, Rs 16,826.36 crore will be spent for track renewal, Rs 4,278.54 crore will be spent for gauge conversion, and Rs 35,046.03 crore will be spent for doubling in 2023-24. A sum of Rs 34,410 crore will be spent on setting new lines as well in 2023-24.

The national carrier will monetise the upcoming DFC assets for operations and maintenance after commissioning and the Indian Railways will have a National Rail Plan to create a ‘future ready’ Railway system by 2030.

Under Mission 3000, the Indian Railways intends to double its cargo loading to 3,000 million tonnes (mt) by 2027. It is widely understood that DFCs will play a key role in this endeavour.

DFCC will also be looking at smaller freight corridors for short distances, where the potential for revenue growth and goods loading is significant, such as corridors between ports and major mining areas.

The Dedicated Freight Corridor Corporation of India (DFCCIL), in the first phase of the DFC project, is constructing the 1,504 route km of the Western DFC and 1,856 route km of the Eastern DFC.

The DFC covers nine states, spans 77 districts and involves approximately 11,000 hectares of land acquisition. Although it was given the go-ahead by the Union Cabinet in 2006, the project saw huge delays due to land acquisition problems and cost overruns.

The Eastern DFC will start from Sahnewal, and before terminating at Dankuni, West Bengal, it will pass through Haryana, Bihar, Uttar Pradesh and Jharkhand.

On the other hand, the Western DFC connecting Dadri in Uttar Pradesh to JNPT in Mumbai will pass through Gujarat, Maharashtra, Rajasthan and Haryana.