Government insiders cited by The Financial Express state that despite efforts to slow down the rate of budgeted capital expenditure on infrastructure, the allocation to the railroads sector in the forthcoming budget is projected to remain high.
Finance Minister Nirmala Sitharaman gave the railways INR 2,52,200 crore in gross budgetary support (GBS) and an extra Rs 10,000 crore in extra-budgetary resources (EBR) in the Interim Budget for 2024–25. The Financial Express was told by a top Ministry of Railways official that GBS is expected to remain at least at this level and may perhaps rise to Rs 2.6 trillion.
According to the business-daily, over the last few years, GBS's proportion of capital expenditure financing has grown significantly while EBR's has decreased. EBR includes borrowing from public-private partnerships, institutional finance, foreign direct investment (FDI), and the Indian Railway Finance Corporation (IRFC). The government may postpone investments if needed thanks to the EBR allocation, but additional fiscal assistance shows a commitment to capital expenditure and prompt spending.
Industry experts said that the railroads are set to become the next major investment focus, with road and highway building spending, which was allotted Rs 2.78 trillion in the Interim Budget, approaching the end of its cycle. With significant expenditures in all facets of the railway infrastructure, including wagons and coaches, signalling, new lines, gauge conversion, and high-speed trains, railway spending is expected to continue significantly reducing logistics costs relative to GDP.
Furthermore, as per the report, the government prioritized safety and passenger comfort this year, which resulted in an increase in railway funding. According to the article, the construction of the Kavach automated train protection system will be accelerated in reaction to the recent train catastrophe in West Bengal.
The official was quoted in the newspaper as stating that the push for infrastructure will continue, with the railroads continuing to be a vital area for investment over the coming ten years. Early worries over the full-year budget's resource shifts toward private consumption have subsided, leaving plenty of room for the ongoing large-scale capital expenditure outlays in industries like roads and railroads.
There is an opportunity to balance spending between increasing consumption and sustaining high capital investment plans, since the Reserve Bank of India (RBI) is expected to give the government a record-breaking dividend of Rs 2.11 trillion, according to the news source.
