Railway Budget and Finance

RAILWAY BUDGET — KEY FACTS:

• Until 2016: separate Railway Budget presented before Union Budget.
• From 2017: merged with Union Budget (recommended by Bibek Debroy Committee, 2016). The 92-year-old tradition of separate Railway Budget ended.
• Today, capital allocation for Railways is part of Union Budget.

KEY FINANCIAL NUMBERS (FY 2024-26):

Operating Ratio (OR): Expenses / Revenue × 100. Lower OR = more profitable.

• IR OR: ~98% (high, due to subsidising passengers from freight).
• Globally, healthy railway OR is ~85-90%.

FREIGHT EARNINGS — KEY COMMODITIES:

Coal is king — single largest commodity. Coal Movement Plan critical for power plants.

PASSENGER FARE STRUCTURE:

• Passenger fares are subsidised by freight earnings.
• Average loss per passenger: ~46% (passenger pays half the actual cost).
• For sleeper class, loss is even higher.
• Suburban: highest loss (mostly subsidised by freight).

Dynamic pricing:

• Tatkal: 30-50% premium for last-minute tickets.
• Premium Tatkal: even higher (almost real-time auction).
• Used selectively on Rajdhani, Shatabdi, Duronto.

RAILWAY CAPEX BREAKDOWN (FY 2024-25):

• New lines: ₹40,000 crore.
• Doubling/tripling: ₹40,000 crore.
• Electrification: ₹8,000 crore.
• Rolling stock: ₹30,000 crore.
• Track renewal: ₹15,000 crore.
• Signaling & telecom: ₹6,000 crore.
• Stations: ₹25,000 crore (incl. Amrit Bharat Station Scheme).
• Vande Bharat & HSR: ₹15,000 crore.
• Workshops & manufacturing: ₹10,000 crore.
• Others: ₹60,000 crore.

RAILWAY FINANCING SOURCES:

1. Internal Resources (operating surplus).
2. Budgetary Support (Govt allocation).
3. Extra-Budgetary Resources (EBR):
   • IRFC bond issuance.
   • JICA / World Bank loans.
4. Private investment (PPP for stations, freight terminals).

KEY FINANCIAL REFORMS:

Bibek Debroy Committee (2015):

• Recommended merging Railway Budget with Union Budget.
• Restructuring Railway Board.
• Separating policy from operations.

Suresh Prabhu Reforms (2014-17):

• Mission Raftaar: increase speeds.
• Mission Zero Accident.
• Mission Electrification.

Piyush Goyal Reforms (2017-21):

• Mission Speed Up.
• 100% electrification target.

Ashwini Vaishnaw Reforms (2021-present):

• Vande Bharat rollout.
• KAVACH deployment.
• Amrit Bharat Station Scheme.
• Privatization initiatives.

HISTORICAL: RAILWAY BUDGET (pre-2017):

• First Railway Budget: 1924-25 (Acworth Committee recommendation).
• Final Railway Budget: 2016-17.
• Reasons for merger:
  • Loss of relevance (Railways = 15% of Centre's capex).
  • Inefficient separate accounting.
  • Bibek Debroy's findings.

STATE RAILWAY SUPPORT:

States co-fund some lines (50-50 cost sharing in some cases):

• E.g., Punjab funded part of Amritsar metro project.
• Kerala for some new lines.

TICKETING REVENUE — TRENDS:

• IRCTC: 90%+ of bookings now online (via website / app).
• Daily ticket sales: ~22 lakh.
• E-ticketing revenue ~₹65,000 crore/year.

KEY INSTITUTIONS — RAILWAY FINANCE:

• IRFC (Indian Railway Finance Corp): raises debt for IR.
• Railway Board: policy + budget allocation.
• Comptroller of Railway Accounts: financial reporting.

EXAM HOOKS:

• Railway Budget merged with Union Budget: 2017 (after 92 years).
• Bibek Debroy Committee: recommended merger.
• Operating Ratio ~98% (high; passenger losses subsidised by freight).
• Coal: ~45% of freight revenue.
• Total Railway capex (FY25): ₹2.52 lakh crore.
• Passenger fares subsidised by ~46%.
• IRFC raises debt for rolling stock.
• JICA + World Bank: major lenders for big projects.