Overall Budgetary support for Railways has gone up “significantly” which has led to lesser requirement for the Ministry relying on external resources and borrowings to fund capex. This reduced reliance on external borrowings “will not have any material impact on ongoing projects”, as Railways is more self sufficient now, Railways Minister, Ashwini Vaishnaw, told businessline.

In Budget 2024-25, the gross Budget allocation for the ongoing fiscal was ₹2,52,000 crore for capex, up 5 per cent y—o-y; while revenue expenditure accounted for was ₹3,393 crore, up nearly 170 per cent.

The Budget estimates last fiscal was ₹2,40,000 crore for capex, and ₹1,267.51 crore for revenue expenditure. Against this, the actual expenditure incurred was ₹2,40,000 crore of capex and ₹3,271.84 crore of Revenue Expenditure.

Reduction in External Borrowings

However, total demand for grants also have provisions for Internal and Extra Budgetary Resources (IEBR) – basically loans or borrowings from external sources that the Railways opt for to fund capex.

The IEBRs go in as capex for projects under Dedicated Freight Corridor Corporation of India Ltd, Bengaluru Suburban Transport Project, Kolkata Metro Rail Corporation, among others.

In FY24, the Budget provisioned borrowings at over ₹52,783 crore; and this meant the Total Demand for Grant was around ₹2,92,783 crore.

In comparison to this, the Railways provisioned for just ₹13,000 crore of borrowings this fiscal; which takes allocation to ₹2,65,000 crore, 10 per cent-odd lower than last year’s Budget provisioning.

According to Vaishnaw, the Railways have actually borrowed less than what was provisioned for.

Borrowings to fund capex by public enterprises and SPVs (IEBR) was “just around” ₹20,000 crore in FY24 (actuals); with total Capex was ₹2,60,000 crore.

“In FY25, our borrowings are far less than FY24 actuals, and there is better Budgetary support – the highest ever. For example, the Extra Budgetary Resource or borrowings have come down from ₹41,000 crore in FY23 to ₹17,000 crore in FY24. It will be brought down further to ₹10,000 crore this year. So this is a good sign ,” he explained.

Incidentally, the Indian Railway Finance Corporation (IRFC) – the market borrowing arm for Indian Railways – will abstain from borrowings, or adding debt, as per the Budget documents. The FY25 will be the second consecutive fiscal when IRFC will not be going to the market for raising funds. In FY24, the organisation did not raise funds, while in FY23 it raised over ₹30,000 crore, as per the Budget documents.

“Most of the projects previously funded through IEBR are now getting Budget support. Hence, there will be no material impact of reduction of IEBR on ongoing projects and their capex,” Vaishnaw said.

Operating Ratios

Operating Ratio for Indian Railways stood at 98.65 per cent in FY24, 20 basis points higher than the provisioned 98.45 per cent. The target in FY25 is to bring it down further to 98.22 per cent.

In FY23, operating ratio was 98.10 per cent.

Operating ratio indicates how much the Railways spend to earn every ₹100.

Earnings

In FY24, freight loading earnings of the Railways was ₹1,69,000 crore, up 5 per cent y-o-y. It stood at ₹1,62,262.90 crore in the year-ago-period. The FY25 Budget estimates (BE) freight earnings at ₹1,80,000 crore, almost flat at FY24’s BE of ₹1,79,500 crore.

Passenger revenue earnings for FY24 increased by 15 per cent y-o-y to ₹73,000 crore. It stood at ₹63,416.85 crore in FY23. The FY25 BE pegs it ₹80,000 crore, up 14 per cent over last year’s estimates.

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