Railways allocation may rise as Economic Survey bats for rapid capex growth

With an eye to push for a major makeover for the Indian Railways, the government may offer a booster dose to the national transporter by raising its capital expenditure plan for next fiscal to record levels. 

The Economic Survey 2021-22 tabled in Parliament on Monday has batted for the rapid growth of capex in the railway over the next decade to keep the transporter future-ready and undertake projects that help the railway system to emerge as an engine of national growth.

“The next 10 years will see a very high level of capex in the railway sector as capacity growth has to be accelerated such that by 2030 it is ahead of demand… The capex outlay for 2021-22 is ₹2,15,000 crore which is more than five times the 2014 level. As more projects are taken on hand and several sources of capital funding are developed, the capex will increase further in coming years and the railway system will actually emerge as an engine of national growth,” the Survey said.

Up to 2014, the capex on the railway was barely ₹45,980 crore per annum and consequently the railway was charecterized by high levels of inefficiency and highly congested routes unable to meet the growing demand, the Survey noted. Post-2014, a conscious effort was made to improve the railway sector by substantially increasing the capex, it added.

The National Rail Plan formulated by the government lays down the road map for capacity expansion of the railway network by 2030 to cater to growth up to 2050. It envisages the creation of a future-ready railway system that is able to not only meet the passenger demand but also increase the modal share of railways in freight to 40-45% from the present level of 26-27%.

The target of 40-45% modalshare for railways is necessary from the perspective of sustainability and also from the national commitments made globally for reducing emission levels.

Unlike growth, which is linear, capacity grows in surges depending on project completion timelines, the Survey said. As per the National Rail Plan, the freight ecosystem is expected to grow from the present level of 4700 MT to 8200 by 2030. At present the railway capacity is barely able to carry 1220 MT which is around 26-27% of the modal share. The Plan provides a pipeline of projects, which on completion will increase railway capacity to capture 45% of freight traffic.

Since the railways is already having a large number of sanctioned projects that need to be completed before taking up new projects, it has been planned to increase railway capacity in two surges, said the survey. The first surge is to be provided by the Vision 2024 plan to prioritize and complete sanctioned projects so that railway capacity does not fall far behind the targeted modal share such that by the time capacity is finally created, the traffic would have shifted to another mode.

To prevent further bleeding away of modal share, railway capacity enhancing projects have been categorized as Super Critical and Critical. 58 projects have been identified as Super Critical and are targeted for completion by December2022. 68 projects have been identified as Critical and have been targeted for completion by March 2024. These projects are focussed at increasing capacity on routes that serve major mineral, industrial hubs along with ports and major consumption centres.

In addition to these critical projects, the Ministry of Railway has also targeted 100% electrification of its network by December2023 upgrading Delhi-Mumbai & Delhi-Kolkata corridors to 160 kmph and also elimination of level crossings on the Golden Quadrilateral/Golden Diagonal routes. On completion of Vision 2024 projects, in the second half of the decade, the aim is to commission new Dedicated Freight Corridors and also High Speed Passenger Corridors, besides multitracking and signalling upgradation of congested routes.