The ‘interim’ Budget of the Railways, like the just-presented Budget, also marks an occasion to assess the decadal journey of the Railways — in terms of its financial health in particular. There can be no denying the recent efforts to improve the infrastructure of the Railways, with the gross budgetary support for the behemoth, used for capital expenditure, rising from below ₹30,000 crore in FY15 to about nine times that sum.

Still more remarkable is the sharp drop in reliance on borrowings, which accounted for 60 per cent of the GBS for the Railways till as recently in FY22 but has fallen to 7 per cent this fiscal and projected at about 4 per cent in FY25. Of a sum of over ₹2.5-lakh crore set aside for capex next fiscal, just ₹10,000 crore will be driven by borrowings. This will keep down interest costs of the Railways in the future. The present infrastructure push could yield returns after some years, as it is to be noted that the sharp increase in this respect took place only from FY19, when GBS was a fifth of current levels. Yet, it is a trifle disappointing that freight revenues in FY24 were just 4.3 per cent over FY23 actuals, as against the projected increase of 10.4 per cent. It is counter-intuitive that freight growth should be less than the growth of the economy. The outlays in recent years have gone towards new lines, track renewals and rolling stock. The government has rightly envisaged raising the inter-modal transport share of the Railways in carrying freight from 27 per cent to 45 per cent by 2030, by weaning away freight from energy-inefficient road transport which is estimated to carry 71 per cent of freight in India.

The interim Budget spells out an operating ratio of 98.65 for this fiscal and a projection of 98.22 in FY25. The Railways must meet its operational expenses — notwithstanding its sunk costs as well as the fact that its financials do not reflect the benefits it generates for the rest of the economy. While the reduced reliance on borrowings will curtail operational costs, the absence of a long-term bond market to raise funds viably should be looked into. There should be some periodic appraisal of whether the money invested is being well spent, as it accounts for nearly a quarter of the Centre’s infrastructure outlay.

Capex outlay must also improve passenger experience. The installation of the anti-collision equipment, Kavach, has been proceeding slowly. Railway Minister Ashwini Vaishnaw recently said that only 40 per cent of the Budgetary allocation of ₹800 crore for FY24 had been spent. Kavach has been deployed in 1,465 km and 139 locomotives, against a rail network of about 70,000 km. Even as the cost of installing kavach is about ₹1.2 crore per km, it should be installed in at least half the route length. A preventive approach to accidents could take precedence over transforming old coaches. Passenger comfort too should be given more attention. These steps will make rail travel hold its own against road and air.