Budget 2021: Railways' Capex Allocation Jumps 33%
A woman walks along a rail track near a station in New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

Budget 2021: Railways' Capex Allocation Jumps 33%

Budget 2021 has set a capital outlay of Rs 2.15 lakh crore for Indian Railways in the upcoming fiscal towards expenses of its network. That’s a 33% rise from its revised capex for FY21.

The capital expenditure—incurred on operation, maintenance, administration and repairs, among others—has more than doubled in the last six years.

The expenses will be used to push infrastructure development, throughput enhancement, development of terminal facilities, augmentation of train speed, signaling and safety, Naresh Salecha, member finance on the Railway Board, said during a media briefing after the presentation of the Budget in Parliament.

Indian Railways’ gross budgetary support for FY22 is at Rs 1.07 lakh crore, a fourfold jump from the revised allocation for FY21. For the ongoing fiscal, the budgetary allocation to the railways was revised to Rs 29,250 crore.

Operating Ratio Improves

Operating ratio of Indian Railways improved to its best level in four fiscals as expenditure fell and freight demand rose at a time passenger trains remained non-operational for most part of the year amid the pandemic.

The metric stood at 96.96% in 2020-21 compared with 97.4% a year earlier and the 96.2% forecast, Salecha said.

A measure of expenditure against revenue, the operating ratio is an indicator of the transporter’s efficiency and financial health. An operating ratio of 96.96% means Asia’s oldest rail network spent Rs 96.96 to earn Rs 100.

The ministry, Salecha said, has been able to reduce its working expense by nearly 14%, aiding the operating ratio of Indian Railways.

The world’s fourth-largest rail network, however, is expected to see revenue from ferrying passengers shrink by a third over the last year at Rs 15,000 crore this fiscal. While the railways restarted in a phased manner from May, so far only 70% of the long-distance trains are operating.

Freight revenue rose 9.4% year-on-year as demand for goods, including steel, fertiliser, cement, coal, food, among others, improved.

Indian Railways earns bulk of its revenue (63.4%) from freight and 28% comes from passenger services. Salary and allowances account for most of its expenses at 42.7%, followed by pension fund at 24.5% of the cost, and fuel at 10.9%.

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