Union Budget 2023: Highlights of Railway budget for FY2023-24 and Industry reactions

New Delhi, India (Urban Transport News): Union Finance Minister Smt. Nirmala Sitharaman has allocated Rs 2.40 lakh crore for railways which is nine times higher than budget 2013-14.

“Capital outlay of Rs 2.40 lakh crore has been provided for Railways; This highest ever outlay is about nine times the outlay made in FY 2013-14,” Sitharaman said in her budget speech in Parliament.

This is the highest-ever allocation of funds to the railway sector. This year’s railway budget is expected to focus on the completion of incomplete projects and also on the development of infrastructure. The focus will be on getting high-speed trains operational soon.

With increased passenger expectations, the railways is planning to refurbish more than 1,000 coaches of premier trains such as Rajdhani, Shatabdi, Duronto, Humsafar and Tejas. The interiors of these coaches will be improved with a modern look and for enhanced passenger comfort.

A significant allocation is likely to be made to replace old tracks as the railways plan to speed up trains and launch Vande Bharat Express in more destinations. Aimed at attracting tourists, the railways is proposing to manufacture 100 more Vistadome coaches.

In the budget, the government has proposed manufacturing of 35 hydrogen fuel-based trains, 4,500 newly designed automobile carrier coaches with side entry, 5,000 LHB coaches and 58,000 wagons.

The funds allocated will cater to laying new tracks, increasing the number of semi-high-speed Vande Bharat trains, introducing hydrogen-powered trains as well as the Ahmedabad-Mumbai bullet train project.

The railways was allocated Rs 1.4 lakh crore in the Union Budget for 2022-23, of which Rs 1.37 lakh crore was earmarked for capital expenditure and Rs 3,267 lakh crore for revenue expenditure.

Highlights of Union Budget 2023-24 (Railways)

• Revenue: Railways’ internal revenue for 2022-23 is estimated at Rs 2,40,000 crore, an increase of 19% over the revised estimates for 2021-22.  In 2021-22, revenue is estimated to be 7% lower than the budget estimate.
• Traffic revenue:  Total revenue from traffic for 2022-23 is estimated to be Rs 2,39,600 crore, an increase of 19% over revised estimates for 2021-22.  Freight revenue is estimated to be Rs 1,65,000 crore in 2022-23, an increase of 14% over the revised estimates for 2021-22.  The passenger revenue is estimated to be Rs 58,500 crore, an increase of 32% over a low base in 2021-22 (due to COVID-19).  In 2021-22, passenger revenue is estimated to be 27% lower than the budget estimate, whereas freight revenue is estimated to be 5% higher than the budget estimate.
• Expenditure:  The total revenue expenditure by Railways for 2022-23 is projected to be Rs 2,34,640 crore, an increase of 17% over revised estimates for 2021-22.  In 2021-22, revenue expenditure is estimated to be 5% lower than the budget estimate.  In 2022-23, capital expenditure is projected at Rs 2,45,800 crore, an increase of 14% over the revised estimates for 2021-22.  The revised estimates for capital expenditure in 2021-22 are marginally higher than the budget estimate.
• Operating Ratio: The operating Ratio is a ratio of working expenses to the receipts from traffic.  A lower ratio implies better profitability and availability of resources for capital spending.  In 2022-23, the Railways’ Operating Ratio is estimated to be 96.98%.  This would be an improvement over the operating ratio of 98.93% in 2021-22 (revised estimates).  An operating ratio of 96.15% was estimated at the budget stage in 2021-22. 

Key annoucements

• Indian Railways will develop new products and efficient logistics services for small farmers, and small and medium enterprises.  It will also take steps towards the integration of postal and railway networks to provide seamless solutions for the movement of parcels.
• 100 PM-GatiShakti Cargo Terminals for multimodal logistics facilities will be developed over the next three years.  
• Multimodal connectivity between mass urban transport and railway stations will be facilitated on priority.
• 400 new-generation Vande Bharat trains will be manufactured over the next three years.
• 2,000 km of the network will be brought under Kavach, the indigenous technology for safety and capacity augmentation.
• The ‘One Station-One Product’ concept will be popularised to help local businesses and supply chains.

Industry reactions

"The Union Budget's robust allocation for railways and focus on infrastructure development is a significant step towards boosting the country's transportation sector. It aligns with our goal of enhancing urban mobility and sustainable transit solutions. This budget sets a promising path for India's railway sector and overall economic growth," commented Mrs. Mamta Shah, MD & CEO, Urban Infra Group.

“The inclusive, growth-oriented Budget builds on the foundation of previous years and is consistent with the Government’s efforts to maintain macro-economic stability while focusing on growth. The increase in investments in capital infrastructure, including ‘Green Growth’, sustainable cities and railways & transport infrastructure will give the necessary boost to the domestic economy. I also welcome the enhanced support for MSMEs, exports, domestic manufacturing and value-add, technology and youth, which are all imperative to maintain India’s economic growth,” commented Sunil Mathur, Managing Director and Chief Executive Officer, Siemens Limited, India.

"India’s economic growth rate is the result of a resilient economy and prudent fiscal policies of the government. The Union Budget for 2023-2024 continues its focus on this path and the commitment to ‘green growth’ approach, will further boost the economy. Infrastructure is the most critical aspect of any economy and the highest ever capital investment outlay of 10 lakh crores is most commendable. Combined with the enhanced capital outlay of Rs 2.40 lakh crore provided for railways, these steps will go a long way in upgrading infrastructure, assets, systems, and facilities by leveraging technology and promoting a sustainable approach," commented Olivier Loison, Managing Director, Alstom India.

"Indian railway is a labor intensive and is one of the largest employment providers. Rail transportation is energy and cost efficient. Capacity building will increase passenger travelling and movement of goods, and the capital outlay of Rs 2.40 lakh should accelerate India’s growth," commented Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co.