Indian Railways maps the way to bridge widening gap in capex and revenues

The Indian Railways (IR) does not internally generate even 5 paise of every rupee earmarked for its annual capital expenditure (capex). And since the gross budgetary support has been falling short of expanding capex needs each year, the dependence of the country’s biggest transporter on extra budgetary resources (EBR) has been increasing.

In the last five years, the annual capex has nearly doubled to Rs 2.15 lakh crore in 2021-22 budget estimates. The arrival of COVID-19 on Indian shores last year made matters worse since train services remained completely suspended for months, dealing a crippling blow to revenue generation. Given this state of affairs, IR now finds itself under increasing pressure to augment revenue.

A parliamentary standing committee examining the demand for grants of IR for the current fiscal has ticked it off for just 3.4 percent of capex being funded from internal revenue generation. For the last five years, not once have IR’s revenue crossed the 3.5 percent mark vis-à-vis capex. The parliamentary panel has also suggested that there be a “prudent adjustment” of passenger fares and also that the central government should take over the pension burden of IR.

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