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Business News/ Budget / News/  Railways  receives  1.10 tn  budget  allocation  in boost  to  capex
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Railways  receives  ₹1.10 tn  budget  allocation  in boost  to  capex

The budget has given specific thrust to special projects such as DFCs and high-speed rail projects

The railways now has the highest ever capital expenditure plan of ₹2.15 trillion, including ₹1.07 trillion in budgetary support (Mint)Premium
The railways now has the highest ever capital expenditure plan of 2.15 trillion, including 1.07 trillion in budgetary support (Mint)

The Union budget has allocated 1.1 trillion for the Indian Railways, out of which 1.07 trillion will be utilized for capital expenditure for 2021-22 to expand rail infrastructure in India.

Railway board chairman and chief executive Suneet Sharma said the railways now has the highest ever capital expenditure plan of 2.15 trillion, which includes 1.07 trillion from budgetary support and the remaining from internal resources and extra budgetary resources. The total capex for 2020-21 is 1.61 trillion.

“With this increase in capex, Indian Railways will be the driver of the Indian economy. The thrust of the annual plan 2021-22 is on infrastructure development, throughput enhancement, development of terminal facilities, augmentation of the speed of trains, signaling systems, improvement of passengers/users’ amenities, and safety works of road over/under bridges," the railway ministry said.

The railways will also monetize dedicated freight corridor (DFC) assets for operations and maintenance, after commissioning. This process will begin after the completion of DFC projects. “We will discuss with federal think tank NITI Aayog, the department of disinvestment and asset monetisation and will go forward with it," Sharma said.

The western and eastern DFCs are expected to be commissioned by June 2022. The 263.7-km Sonnagar-Gomoh stretch of the eastern DFC will be taken up in 2021-22 under the public private partnership (PPP) model. “The Gomoh-Dankuni section of 274.3 km will also be taken up in soon. We will undertake future DFC projects such as the east coast corridor from Kharagpur to Vijayawada, the east-west corridor from Bhusaval to Kharagpur to Dankuni, and the north-south corridor from Itarsi to Vijayawada," Sitharaman said, while presenting the budget for FY22.

The ambitious infrastructure project is expected to increase the speed of goods trains and cut logistics costs.

The budget has given specific thrust to special projects such as DFCs and high-speed rail projects, said Jagannarayan Padmanabhan, director and practice lead, transport and logistics, Crisil Infrastructure Advisory. “There is also significant focus in garnering resources through PPP mode which hitherto has been a challenge. Railways along with roads and highways continue to garner the lion’s share in the capital expenditure among all sections of the infrastructure sector."

The operating ratio of Indian Railways is expected to improve by the end of the current financial year to 96.96%, despite the disruption caused by covid. The operating ratio, expenses as a portion of revenue, is pegged at 96.15% for FY21. This is lower than the revised estimate of 98.36% for 2019-20.

A lower operating ratio can be attributed to lower expenditure on account of a fall in working expenses, as well as a sharp fall in pension liabilities. Pension liability was budgeted at 53,160 crore in the beginning of the current fiscal. However, the revised estimate stood at 523 crore as the national transporter made an arrangement with the finance ministry to defer this expense.

“Last year was exceptional because of covid, as a result of which passenger trains did not run. Our projections hence went haywire. Before this, we have been taking full pension liabilities. When we could not meet such liabilities, we came to an arrangement with the finance ministry so that a separate fund was given to us, which we have to repay in a couple of years," a railway ministry official explained.

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Published: 01 Feb 2021, 08:23 PM IST
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