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Indian Railways likely to get boost in capital expenditure in upcoming Budget

Indian Railways

The Indian Railways is likely to see a major surge in capital expenditure in the upcoming interim budget scheduled for February 1, according to a report by Business Today.

Analysts in the report predict that Finance Minister Nirmala Sitharaman may set aside additional funds to launch a substantial transformation of the national transportation system.

This transformation is expected to comprise the introduction of modern and high-speed trains, along with advanced safety measures.

The Interim Budget for the fiscal year 2024-25 is likely to allocate between Rs 2.8-3 lakh crore for the Railways, aiming to maintain the momentum of capital expenditure, in contrast to the Rs 2.4 lakh crore provided in the previous budget estimate for 2023-24.

In the financial year 2023-24, the budgetary support stood at approximately Rs 1.6 lakh crore, with capital allocation reaching around Rs 2.45 lakh crore.

The gross budgetary support experienced an increase to Rs 2.4 lakh crore, while the total capital allocation amounted to Rs 2.6 lakh crore.

Analysts from Prabhudas Lilladher, Icra, and Elara Capital anticipate a sizeable increase in capital expenditure in the upcoming Budget, particularly due to the stress of modernizing the railways.

“We expect adequate allocations towards the infrastructure sectors such as roads, highways, and railways in 2024-25. The defense outlay — on R&D and acquisitions — may be enhanced further, amid the government’s focus on encouraging the development and production of emerging technologies,” noted Icra as mentioned in the report.

Icra also indicated its expectation for interest-free capital expenditure loans to states to continue in the fiscal year 2024-25, with the sum reaching Rs 1.3 lakh crore in the last budget.

The rating agency has set a target for gross capital expenditure at Rs 10.2 lakh crore in 2024-25.

Elara Capital expressed that the government’s focus on capital spending, especially for railways, roads, and defense, is likely to continue, although at a moderate pace.

They project a 20 percent rise in capital expenditure for the fiscal year 2024-25.

The Railways, known for substantial investments in capacity improvement projects such as dedicated freight corridors, electrification, and high-speed trains, reported an operating ratio of 98.1 percent in FY23, showcasing improved operational efficiency compared to 107.39 percent in FY22.

With ambitious goals, including the production of 400 Energy Efficient Vande Bharat trains, the Railways anticipates allocating an additional budget of Rs 40,000-60,000 crore for the fiscal year 2024-25 to ensure the smooth execution of their extensive project pipeline.

Presently, there are 41 Vande Bharat trains in operation, marking the Railways’ preparedness for a transformative phase.

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