Interim Budget: The forthcoming interim budget, which is due on February 1, is anticipated to increase capital expenditures for Indian Railways. According to analysts, Finance Minister Nirmala Sitharaman might set aside additional money to support a major overhaul of the country's transport infrastructure, which would include the installation of more modern, high-speed trains and improved safety precautions.
To maintain its capital expenditure momentum, the Railways would likely receive an allocation of Rs 2.8-3 lakh crore in the Interim Budget 2024–25, as opposed to the Rs 2.4 lakh crore proposed in the 2023–24 (Budget Estimate).
The capital allocation in 2023–24 was around Rs 2.45 lakh crore, whereas the budgetary assistance was approximately Rs 1.6 lakh crore. While the total capital allocation was Rs 2.6 lakh crore, the gross budgetary support increased to Rs 2.4 lakh crore in 2023–2024 last year.
Given the increased focus on modernizing the railways, analysts at Prabhudas Lilladher, Icra, and Elara Capital have predicted that the 2019 Budget will see a sizable increase in capital expenditure.
In 2024–2025, we anticipate sufficient funding for the transportation infrastructure, including roads, highways, and railroads. The government's emphasis on promoting the development and manufacturing of emerging technologies suggests that the defense budget, which includes both R&D and acquisitions, may be increased even more, according to Icra.
According to the rating agency, interest-free capital expenditure loans to governments are anticipated to persist in 2024–2025. In the previous budget, the amount was Rs 1.3 lakh crore. And as per ICRA, the goal for gross capital expenditure in 2024–2025 is set at Rs 10.2 lakh crore.
"Considering that we anticipate a Rs 75,000-crore gap in capital expenditure for 2023–2024, this suggests a modest year-over-year growth of 10% as opposed to the growth of more than 20% observed in each of the post–Covid years.
In 2024–2025, the overall expenditure is projected to increase by 5% to Rs 47.4 lakh crore. As a result, spending would become even higher quality, with the percentage of capital expenditures in total spending predicted to increase from the anticipated 20.5% in 2023-2024 to 21.5% in 2024–25.
According to Elara Capital, capital spending has been given top priority by the government, particularly on roads, trains, and the military. It anticipates that this focus will persist, albeit slowly.
"We anticipate a 20% increase in capital expenditures in FY25E on the strength of a 30.5% growth in FY24E, which is less than the 37.4% growth that was forecast. We also don't rule out reducing the Rs 30,000 crore budgeted amount for the interest-free, 50-year loan from the Centre to the states. 60% of the Center's total capital expenditures are expected to go into defense, railroads, and highways, the statement stated.
The Railways have been making significant investments in electrification, doubling and quadrupling capacity, establishing specialized freight lanes, and launching a variety of high-speed trains.
The national infrastructure builder and transporter recorded an operational ratio (OR) of 98.1% in FY23 as opposed to 107.39% in FY22. One definition of an operating ratio is an indicator of operational efficiency. As a result, a smaller ratio is preferable.
The Railways have set lofty targets, one of which is to work with its technological partners to produce 400 Energy Efficient Vande Bharat trains. As of right now, the Railways are ready for a revolutionary phase, with 41 Vande Bharat trains operating. For the fiscal year 2024–2025, they plan to set aside an extra budget of Rs 40,000–60,000 crore in order to guarantee the efficient completion of their large project pipeline.
The government has allocated Rs 10,000 crore for the Rashtriya Rail Sanraksha Kosh, Rs 45,000 crore for the Railway Safety Fund, and Rs 35,000 crore for new lines in 2023–2024. As part of the government's plan to run 400 of these trains, this capital infusion has resulted in the introduction of numerous new Vande Bharat trains.
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