Home / Budget / Budget Expectations /  From asset monetisation to new Vande Bharat trains, key focus areas for Indian Railways in Union Budget 2023

In the Union Budget 2022, Finance Minister Nirmala Sitharam focused on the Gati Shakti National Master Plan and it is likely that the same would continue to be a priority of the Government in this year’s budget. With India having taken over the G20 presidency recently, one could expect the Finance Minister to focus on measures towards India’s transition to green energy, particularly in relation to green hydrogen and EVs. As always, the Government would continue to emphasize on capital expenditure for roads and railways. The need of the hour would be to boost PPPs in the sector and also improve accessibility to long-term debt for projects.

The National Monetisation Pipeline (“NMP") launched in August 2021 envisaged the asset recycling of 400 railway stations and 90 passenger trains. The NMP had noted that the commercial potential of the Indian Railways assets remains largely under-utilized. Budget 2023 ought to make a more concerted effort at attracting private players by offering more commercially viable terms. In line with the National Hydrogen Mission, Indian Railways may also take a lead in adopting hydrogen power trains in line by putting in place the necessary regulations and standards for transporting green hydrogen and its derivatives. The Finance Minister is also likely to focus on track upgradation with the expected introduction of the super-fast Vande Bharat trains, according to Sujjain Talwar, Co Founding Partner, Economic Laws Practice

While there is significant capital expenditure being planned for the Railways, which is likely to generate more employment opportunities, the Railways should come out with a clear policy on how to reduce its carbon footprint. The expansion of capacity whether on account of freight or passenger should be planned in a manner that allows Railways to procure more Renewable Energy so as to reduce its dependence on locomotion based on Fossil Fuels. Since Railways is a deemed Distribution Licensee which procures power primarily for its own requirement, it has a greater ability to absorb Renewable Energy and as such a separate dispensation for the same should be planned, according to Sanjay Sen, Senior Advocate, Supreme Court of India.

Railway sector definitely has high expectations from the budget for adequate allocations for modernisation of railway infrastructure (including trains, tracks, stations etc.), move to electric locomotives (even hydrogen trains perhaps) and importantly would say for some scheme/incentive arrangement to push private participation through the right PPP model in the entire chain of railway infrastructure, according to Pallavi Bedi, Partner, Phoenix Legal.

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