• Since the merger of the Railway Budget with the Union Budget in 2017, the Indian Railways (IR), once a highlight of the pre-Budget period, has been relegated to a minor mention. In both the July 2024 Budget and the February 2025 Budget, IR was not explicitly referenced, signaling its diminishing prominence in financial discourse.
• Given that the Railways’ financial challenges were unlikely to be addressed, industry analysts and railway enthusiasts focused on one key aspect—capital expenditure (capex).
• With IR’s revenue barely covering operational expenses, the government’s financial support has sustained its functioning. Over the past decade, ₹13 lakh crore has been invested in infrastructure modernization, leading to 95% electrification, an expansion of track length, and a record increase in rolling stock.
• However, the outcomes remain unimpressive. Freight traffic growth stagnates at just over 2%, despite a flourishing economy, while passenger revenue rises, yet patronage remains below pre-pandemic levels.
• This year’s Budget continued accounting maneuvers to keep the Operating Ratio (OR) below 100, without revisiting previous commitments. Furthermore, the anticipated capex boost did not materialize beyond the last two years’ ₹2.62 lakh crore, effectively marking a slowdown and indicating that even the government is reconsidering its approach.

Post-Budget Conference

• With little clarity in the Budget speech, insights could only be gathered from the post-Budget press conference led by the Railways Minister. He emphasized a strong focus on infrastructure development, modernization of stations and trains, improved connectivity, enhanced safety, and passenger comfort.
• He further highlighted that, since 2014, an average of 150 km of new railway tracks have been laid annually, compared to 113 km per year between 2009-2014. This expansion is crucial in reducing congestion and enhancing rail mobility.
• An allocation of ₹1,16,514 crore was announced for safety-related measures. While grade separation projects have progressed well, the primary safety concern remains the implementation of Kavach, an indigenous anti-collision system.
• However, there was no mention of its expansion in 2025-26. Since the initial deployment of 1,465 km near Secunderabad, no further coverage has been added.
• Meanwhile, investments continue in the Amrit Bharat station redevelopment projects, but visible progress has been seen only in select locations such as Gandhinagar, Habibganj, Byappanhalli, Cuttack, Ayodhya, and Charlapalli.
• The prolonged delays in modernizing New Delhi station, despite being a high-profile project, reflect execution inefficiencies.
• With station redevelopment now being conducted under the Engineering, Procurement, and Construction (EPC) model, following the failure of Public-Private Partnership (PPP) initiatives, a crucial question arises—how will these projects be sustained when Railway expenditure continues to outstrip revenue?

More of a Spectacle

• The Railways Minister proudly stated that India has achieved an average electrification rate of 294 Rkms per year from 2014-25, a 16-fold increase compared to the 18 Rkms per year achieved between 2009-14.
• This progress positions Indian Railways as the first 100% electrified network, making it the “greenest railway” in the world.
• However, this aggressive electrification drive raises concerns—has it outpaced actual necessity, leaving 5,000 diesel locomotives, worth ₹30,000 crore, idle or underutilized?
• Additionally, much of the electricity powering IR still comes from fossil-fuel-based plants, casting doubts on its environmental sustainability.
• The announcement of 200 additional Vande Bharat trains lacked a concrete timeline. Furthermore, key pending projects such as the Western Dedicated Freight Corridor, the Mumbai-Ahmedabad High-Speed Rail, and the conversion of Integral Coach Factory (ICF) coaches to Vande Bharat standards remain unaddressed.
• Instead, the government unveiled an ambitious vision of developing a 7,000-km high-speed rail network supporting 250 kmph speeds by 2047.
• However, without a clear roadmap, this appears to be more of a lofty aspiration than a tangible plan

• Capital expenditure (Capex) refers to the funds used by an organization, government, or business to acquire, upgrade, or maintain physical assets such as property, equipment, infrastructure, and machinery.
• These expenditures are typically long-term investments meant to enhance the productive capacity or lifespan of assets, contributing to the organization’s future growth and development.
• When an entity invests in capital expenditure, it is generally for assets that will be used for more than one year. Unlike operational expenses, which cover day-to-day operational costs such as salaries or utilities, capital expenditure is focused on building or improving assets that will provide long-term value.
• For instance, a company might spend money on buying new machinery, building a new factory, or developing software systems, all of which are intended to generate returns over several years.
• For governments, capital expenditure often involves large-scale projects such as the construction of roads, bridges, schools, or hospitals, or the purchase of equipment for public services like transport, defense, or energy. These investments play a crucial role in stimulating economic growth by creating jobs, improving infrastructure, and boosting productivity.
• Capital expenditures are usually considered as a one-time cost and are typically recorded on the balance sheet as assets. Over time, these assets are depreciated (or amortized in the case of intangible assets) on the income statement, spreading the initial cost over their useful life.
• Governments or businesses often allocate a specific portion of their budget or revenue to capital expenditure, balancing it with their operating expenses to ensure they can meet their long-term goals while managing immediate costs effectively