Railways’ passenger revenues to grow 14% in FY25; freight seen to dip

At the same time, the government is expecting the revenues from goods segment to stagnate in the current fiscal. It is estimated that the goods segment receipts will be at Rs 1,74,500 crore in FY25, slightly lower than Rs 1,74,590 crore in the previous year. In fact, this amounts to a dip in real terms, after taking inflation into account. “Despite the record amount of freight being carried over the past year, including the transportation of coal rakes which accounts for a bulk of freight loading, the conservative freight estimates suggest that there’s a stiff competition from segments such as road, air and inland waterways,” said a research analyst at leading brokerage.

The budget numbers also indicate a heightened efforts at reducing cross-subsidisation of passenger segment by passenger receipts.

In FY24, Indian railways achieved the highest-ever freight loading of 1,591 million tonnes (MT). Overall, the government is expecting the railways’ revenues at Rs 2.73 trillion, a growth of 5% from the previous year’s estimates.

Meanwhile, the budget has provided higher allocations to anti-collision system Kavach, national high-speed rail project, and production of electric locos and wagons. In a post-budget intercation, the railways minister Ashwini Vaishnaw said that the Kavach system has got Rs 1,112.57 crore in FY25, which is almost double of Rs 557.96 crore allocated in the interim budget early this year.

Even though the budget documents show that the total allocation for railways safety fund stands at Rs 45,000 crore (similar to the FY24 budget), Vaishnaw said that nearly Rs 1.08 trillion will be used for safety-realted activities such as installing of Kavach system, improving signalling systems, replacing of old tracks, etc.

Recently, two train incidents in Uttar Pradesh and West Bengal had turned the focus on rail safety measures. The minister said that the national transporter is in the process of installing the latest ‘Kavach 4.0’ at a fast pace.

In a note, Elara Capital said that the budget is positive for the rolling stock manufacturers as the target for electric locos have been increased by a quarter (as compared to interim budget) to 1,600 whereas the target for coaches is set at 8,405 (8% higher) and wagons at 38,000 which is 46% higher than interim budget. Additionaly, the budget has proposed transit-oriented development plans for 14 large cities with a population of over 3 million.

In terms of capex support, including the extra budgetary support, the allocation has jumped marginally (about 2%) to 2.65 trillion for FY25.