Demand for Grants 2023-24 Analysis

Railways
The Railways finances were presented on February expenditure is estimated to be financed through
1, 2023, by the Finance Minister Ms. Nirmala budgetary support from the central government
Sitharaman along with the Union Budget 2023-24. and 7% from extra budgetary resources. In
Indian Railways is a commercial undertaking of the comparison, in 2022-23, their contributions are
central government.1 The Ministry of Railways estimated at 65% and 33%, respectively.
administers Indian Railways and policy formation
▪ Operating Ratio: Operating Ratio is ratio of
through the Railway Board.
working expenses to the receipts from traffic.
Expenditure of Railways is financed through: (i) its A lower ratio implies better profitability and
internal resources (mainly freight and passenger availability of resources for capital spending.
revenue), (ii) budgetary support from the central In 2023-24, the Railways’ operating ratio is
government, and (iii) extra-budgetary resources estimated to be 98.45%. This is marginally
(primarily borrowings but also includes higher than operating ratio for 2022-23 as per
institutional financing and public-private revised estimates (98.22%). In 2021-22,
partnerships). Railways’ working expenses operating ratio was 107.39%.
(salaries, pension, and asset maintenance) are met
through its internal resources. Railways generate Diminishing revenue surplus
some surplus, which is not enough to cover its In recent years, Railways’ revenue earnings have
capital expenditure plans (such as construction of barely been able to keep up with its revenue
lines and procurement of wagons). Capital expenditure (Figure 1). Between 2013-14 and
expenditure is supported by the grant from the 2023-24, Railways’ revenue expenditure is
central government and extra-budgetary resources. estimated to grow at an annualised rate of 7.2%,
This note looks at the proposed expenditure of faster than its revenue receipts (annual growth of
Railways for 2023-24, and the state of its finances 6.3%). Revenue expenditure includes spending on
over the last few years. items such as salaries, pension, fuel, and
maintenance of assets. In 2023-24, as per budget
Highlights
estimates, Railways is expected to observe a
▪ Revenue: Railways’ internal revenue for marginal surplus of Rs 2,210 crore (which would
2023-24 is estimated at Rs 2,65,000 crore, an finance less than 1% of its capital expenditure).
increase of 9% over the revised estimates of
Figure 1: Railways’ Revenue Surplus (Rs crore)
2022-23. In 2022-23, revenue is estimated to
25,000
be 1% higher than the budget estimate (see 19,228
20,000 16,838
Table 1 on next page).
15,000 11,749
▪ Traffic revenue: In 2023-24, traffic revenue 10,000 4,913
is estimated to be Rs 2,64,600 crore, 5,000 1,666
3,774
1,590 2,547 2,393 2,210
comprising 99.8% of the total revenue. 68% of
0
the traffic revenue is estimated to come from
freight services (Rs 1,79,500 crore), and -5,000
another 26% from passenger services (Rs -10,000
70,000 crore). Both passenger and freight -15,000
-15,025
revenue are estimated to increase by 9% over -20,000
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22

2023-24 BE
2022-23 RE

the previous year.

▪ Revenue Expenditure: The total revenue
expenditure in 2023-24 is projected to be Rs
2,62,790 crore, an increase of 9% over revised Sources: Union Budget documents of various years; PRS.
estimates of 2022-23. Expenses towards
salaries and pension are estimated to comprise In 2021-22, Railways observed a revenue deficit of
64% of the total revenue expenditure. Rs 15,025 crore. In 2019-20 and 2020-21 (COVID
year), Railways managed to observe a revenue
▪ Capital expenditure in 2023-24 is estimated surplus by reducing the appropriation towards
at Rs 2,60,200 crore, an increase of 6% over pension fund. The gap in resources for pension for
the previous year. There is a significant these years was filled through a special loan of Rs
change in the pattern of financing capital 79,398 crore from the central government in 2020-
expenditure. In 2023-24, 92% of capital 21. During these three years, Railways’ passenger
Saket Surya February 16, 2023
saket@prsindia.org
PRS Legislative Research ◼ Institute for Policy Research Studies
3rd Floor, Gandharva Mahavidyalaya ◼ 212, Deen Dayal Upadhyaya Marg ◼ New Delhi – 110002
Tel: (011) 2323 4801, 4343 4035 ◼ www.prsindia.org
 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

Table 1: Overview of Railway Receipts and Expenditure for 2023-24 (Rs crore)
% Change % Change
2021-22 2022-23 2022-23 (2022-23 BE 2023-24 (2022-23 RE
Actuals BE RE to 2022-23 BE to 2023-24
RE) BE)
Receipts
1 Passenger Revenue 39,214 58,500 64,000 9% 70,000 9%
2 Freight Revenue 1,41,096 1,65,000 1,65,000 0% 1,79,500 9%
3 Other Traffic Sources 10,896 16,100 13,693 -15% 15,100 10%
4 Gross Traffic Receipts (1+2+3) 1,91,206 2,39,600 2,42,693 1% 2,64,600 9%
5 Miscellaneous 161 400 200 -50% 400 100%
6 Total Internal Revenue (4+5) 1,91,367 2,40,000 2,42,893 1% 2,65,000 9%
7 Budgetary Support from Government 1,17,276 1,37,300 1,59,300 16% 2,40,200 51%
8 Extra Budgetary Resources 71,066 1,01,500 81,700 -20% 17,000 -79%
9 Total Receipts (6+7+8) 3,79,709 4,78,800 4,83,893 1% 5,22,200 8%
Expenditure
10 Ordinary Working Expenses 1,56,506 1,70,000 1,81,000 6% 1,88,574 4%
11 Appropriation to Pension Fund 48,100 60,000 56,000 -7% 70,516 26%
12 Appropriation to Depreciation Reserve Fund 0 2,000 1,000 -50% 1,000 0%
13 Total Working Expenditure (10+11+12) 2,04,606 2,32,000 2,38,000 3% 2,60,090 9%
14 Miscellaneous 1,785 2,640 2,500 -5% 2,700 8%
15 Total Revenue Expenditure (13+14) 2,06,392 2,34,640 2,40,500 2% 2,62,790 9%
16 Total Capital Expenditure 1,90,267 2,45,800 2,45,300 0% 2,60,200 6%
17 Total Expenditure (15+16) 3,96,659 4,80,440 4,85,800 1% 5,22,990 8%
18 Net Revenue (6-15) -15,025 5,360 2,393 -55% 2,210 -8%
19 Operating Ratio 107.39% 96.98% 98.22% 98.45%
Note: RE: Revised Estimates; BE: Budget Estimates.
Sources: Expenditure Profile, Union Budget 2023-24; PRS.

services were disrupted due to COVID-related of these 17 zones have observed an operating ratio
restrictions, which led to lower revenue than usual. of more than 100% in all five years between 2016-
A large part of Railways’ costs are committed in 17 and 2020-21 (see Table 12 in annexure).
nature, which cannot be rationalised in the short
Figure 2: Operating Ratio
term. Hence, over last three years, Railways had to
depend on budgetary support from the government 140%
and borrowings to finance its recurring expenses. 120%
Deterioration in Operating Ratio: Operating 100%
ratio represents the ratio of working expenses (such
80%
as fuel and salaries) to traffic earnings. A higher
ratio indicates poorer ability to generate a surplus. 60%
As per actuals presented in the budget document, 40%
operating ratio was 107.4% in 2021-22. This
implies that in 2021-22, Railways spent Rs 107 to 20%
earn Rs 100 from traffic operations. If accounting 0%
adjustments were to be ignored, operating ratio of
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22

2023-24 BE
2022-23 RE

Railways has been higher than 100% between

2018-19 and 2020-21. CAG observed that if
advances for the next financial year were not
accounted as receipts, operating ratio in 2018-19 Operating ratio as per budget documents
would have been 101.8%, instead of 97.3%.
Similarly, in 2019-20 and 2020-21, operating ratio Operating ratio, if no accounting adjustments were
would have been 114.2% and 131.6%, respectively, made*
if the apportionment for pension fund was as per Note: *In 2018-19, certain advances for 2019-20 were included
in receipts. In 2019-20 and 2020-21, less than required amount
the requirement. For administrative purposes, was apportioned to pension fund.
Railway is divided into zones. As per CAG, nine Sources: CAG, Union Budget documents of various years; PRS.

February 16, 2023 -2-

 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

Inability to generate a significant surplus has

Railways’ share in freight of cars rises
required Railways to rely on budgetary support
from the central government and extra budgetary Railways’ freight services are used to transport cars from
resources for capacity augmentation and factories to the point of distribution. Railways’ share in the
investments. This has in turn required it to set total domestic freight of cars has seen a significant increase
aside earnings for servicing debt, the liability for in recent years.5 It increased from 1.5% in 2013-14 to 16%
in 2021-22.5
which is on a rise. Inadequate surplus has also led
to less than required provisioning for replacement Figure 4: Railways’ share in freight of cars
of old assets and safety-related works. In the 20%
16.0%
following sections, we discuss these challenges and 14.7%
implications in further detail. 15% 11.2%

Modest growth in traffic volume 10% 7.1%

4.5%
Railways’ primary source of earnings is operation 3.6% 4.1%
5% 1.5% 2.1%
of freight and passenger services. In 2023-24, 94%
of revenue receipts are expected from these 0%
operations, with freight’s contribution at 68% of

2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
revenue receipts. While freight traffic is estimated
to grow at 5% over the revised estimates for 2022-
23, passenger traffic is estimated to grow at 11%.
Sources: “Indian Railways registers growth in automobile traffic”,
Over the last decade, both rail-based passenger and Press Information Bureau, Ministry of Railways, September 12,
freight traffic have grown at a modest rate. 2022; PRS.
Between 2013-14 and 2023-24, freight traffic is
expected to grow at an annualised rate of 3.5%. Figure 5: Passenger Traffic Volume (in Billion
Passenger traffic in 2023-24 is expected to remain Passenger Kilometre)
lower than the levels observed between 2013-14 1,400
and 2016-17. This is mainly due to lower traffic 1,159 1,147 1,143 1,150 1,178 1,157 1,112
1,200 1,051 1,003
estimated in the second class (ordinary). Excluding 1,000
this class, passenger traffic is estimated to grow at
800
an annualised rate of 2% between 2013-14 and 590
2023-24. 600
400 231
Figure 3: Freight Traffic Volume (in Billion Net 200
Tonnes Kilometre)
0
1000 942
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22

2023-24 BE
2022-23 RE
872 899
900
800 693
739
708 720
666 682 654
700 620
600 Sources: Union Budget Documents of various years; PRS.
500 The Draft National Rail Plan envisages increasing
400 the modal share to 45% by 2050.2 For this target, it
300 has proposed an investment plan worth Rs 38 lakh
200 crore for the period between 2021-22 and 2050-51.2
100
0 Railways classifies its network into: (i) high-
density network routes (HDN) and (ii) highly-
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22

2023-24 BE
2022-23 RE

utilised network routes (HUN).2 HDN routes

comprise 16% of the total network and carry 41%
of the total traffic.2 HUN routes comprise 35% of
Sources: Union Budget Documents of various years; PRS. the total network and carry 40% of the total traffic.2
As per the Draft National Rail Plan, about 80% of
In 2017-18, Railways’ modal share in freight HDN routes and 48% of HUN routes see above
transport is estimated at 28%, down from 30% in 100% capacity utilisation, implying significant
2011-12.2,3 The reasons for a lower share include: network congestion.2 As per the plan, the current
(i) inadequate capacity augmentation leading to average speed for Railway freight is about 25 km
unmet demand and sub-optimal speed, (ii) higher per hour.2 This is targeted to be raised to about 50
tariffs, (iii) negligible diversification in freight km per hour with development of dedicated freight
basket, and (iv) competition from road which corridors and increasing number of lanes in
provides better end-to-end connectivity.4 existing network.2

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 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

Table 2: 80% of HDN and 48% of HUN routes Figure 6: Profit (+)/Losses (-) from passenger
at over 100% capacity (2017-18) and other coaching services vis-a-vis freight
Capacity Utilisation
services (Rs crore)
Network Type 80,000
70%- 100%-
<70% >150% 60,000
100% 150%
High-Density 40,000 50,812
2% 18% 58% 22% 45,923
Network (HDN) 20,000
39,956
28,745 17,252
Highly Utilised
24% 36% 35% 13% 0
Network (HUN)
Others 69% 22% 9% 0% -20,000
Sources: Draft National Rail Plan, Ministry of Railways; PRS. -40,000
-37,937
Freight concentrated in few bulk goods -60,000 -46,025
-55,020
-80,000 -63,364
Most of the freight traffic of railway comes from a -72,169
few bulk goods such as coal, iron, and cement. The

2016-17

2017-18

2018-19

2019-20

2020-21
freight basket has remained largely unchanged over
the last 15 years (Table 3). Coal freight alone
constitutes more than 40% of the traffic volume
and traffic revenue. This dependence may present Passenger and other Coaching Services
a challenge for Railways in the long-run, as India Freight Services
aims to transition away from coal as the main Net Profit from Traffic Operations
source of power generation. Sources: CAG; PRS.
Table 3: Composition of freight traffic volume NITI Aayog (2016) had observed that cross-
(in Net Tonne Kilometre terms) subsidisation of passenger services by freight
2010-15 2015-20 2022-23 2023-24 services has resulted in higher freight tariffs.6 In
Commodity
Average Average RE BE 2018, NITI Aayog highlighted higher freight tariffs
Coal 43% 41% 43% 43% as one of the reasons for a sub-optimal share of
Iron and Steel 13% 15% 14% 15% Railways in freight.7 Losses in passenger services
Cement 9% 9% 9% 9% are primarily caused due to: (i) passenger fares
being lower than the costs, and (ii) concessions to
Container Service 7% 7% 7% 8%
various categories of passengers (senior citizens,
Foodgrains 10% 8% 9% 7% National award winners etc.).6 Railways classifies
Fertilizers 6% 6% 5% 5% these provisions as social service obligations.6 The
Petroleum, Oil, and Standing Committee on Railways (2020) had
4% 4% 3% 3% recommended that both freight and passenger fares
Lubricant
should be rationalised prudently.8 It observed that
Other Goods 8% 8% 10% 10%
any fare increase needs to take into account the
Sources: Union Budget Documents of various years; PRS.
competition from other transport modes such road
Persistent losses in passenger services and air.8 The Committee recommended that the
social service obligations of Railways should be
Railways is estimated to earn about 26% of its revisited.8 Budget support is provided only for
revenue in 2023-24 from passenger services. losses on strategic lines. In 2023-24, this
Passenger traffic is categorised into suburban and contribution is estimated at Rs 2,216 crore.
non-suburban traffic. Suburban trains are
passenger trains that help move passengers within Table 4: Profit (+) /Loss (-) from various classes
cities and suburbs. Majority of the passenger of passenger services (Rs crore)
revenue (96% in 2023-24) comes from the non- Class 2017-18 2018-19 2019-20 2020-21
suburban traffic (or the long-distance trains). AC-1st Class -165 -249 -403 -719
As can be seen in Figure 6, losses in operation of AC 2 Tier -604 -908 -1,378 -2,995
passenger services have been increasing in recent AC 3 Tier 739 318 65 -6,500
years. After 2016-17, the profit from freight have AC Chair Car 98 243 -182 -1,079
not been enough to cover the widening losses from
Sleeper Class -11,003 -13,012 -16,056 -20,134
passenger services. In 2019-20, for earning one
rupee from passenger and other coaching services, Second Class -11,524 -13,214 -14,457 -17,641
Railways spent about two rupees and 10 paise. Ordinary Class -16,568 -19,124 -20,450 -11,438
Except AC 3 tier and AC chair car, all other classes EMU Suburban
-6,184 -6,754 -6,938 -7,799
of passenger services have observed losses in every Services
year between 2017-18 and 2020-21 (Table 4). Sources: CAG; PRS.

February 16, 2023 -4-

 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

Declining share of non-fare revenue Figure 8: Expenditure on salaries and pension as

% of revenue receipts
Other than revenue from operation of passenger
and freight services, Railways’ revenue includes: 70% 60%
(i) sundry earnings including earning from renting, 60% 50% 48%
leasing of buildings, catering services, and 50% 42% 41% 41% 41% 40%
advertisements, and (ii) miscellaneous receipts
40% 34%
including sale of tender documents, liquidated
damages, and receipts by Railway Recruitment 30% 34%
Board. Till 2016-17, dividends from public sector 20% 28% 27%
24% 25% 25% 23% 23%
undertakings of Railways used to be part of sundry
10% 18%
earnings of Railways. From 2017-18, it is credited
to the general revenue of the central government. 0%

2015-16

2016-17

2017-18

2018-19

2019-20

2020-21

2021-22

2023-24 BE
2022-23 RE
In 2023-24, Railways is estimated to have sundry
earnings of Rs 8,000 crore, an increase of 13% over
the revised estimates for 2022-23. In 2023-24,
sundry earnings are estimated to comprise 3% of Staff Costs Pension Expenditure
revenue receipts, significantly lower than 2017-18 Sources: Union Budget Documents of various years; PRS.
and 2018-19 (4.9% and 3.7% respectively). CAG
The Committee on Restructuring Railways (2015)
(2022) observed that there is a considerable scope
had observed that the Railways’ expenditure on
for increasing revenue generation from
staff is extremely high and unmanageable.11 As of
advertisements and commercial utilisation of
March 2021, Railways has a total of 15.14 lakh
railway land.9 In September 2022, the Union
sanctioned posts, out of which around 2.94 lakh
Cabinet approved revisions to Railways’ land
posts are lying vacant, i.e., there is a vacancy of
policy to encourage long-term leasing for logistics-
about 19%.12 If all of these posts were to be filled,
related activities.10
staff costs for Railways would be higher than the
Figure 7: Sundry earnings over the years current level.
10,000 5% As of March 2021, Railways has 15.54 lakh
As % of Revenue Receipts

pensioners.13 The number of pensioners is higher

Amount in Rs crore

8,000 4%
than the number of current employees. The
6,000 3% Standing Committee on Railways (2017) had
4,000 2% observed that the pension bill may increase further
in the next few years, as about 40% of the Railways
2,000 1% staff was above the age of 50 years in 2016-17.14
0 0% The Standing Committee on Railways (2020) noted
that the new pension scheme implemented in 2004
2017-18

2018-19

2019-20

2020-21

2021-22

2023-24 BE
2022-23 RE

to reduce the pension bill will show results only

around 2034-35.8 The Standing Committee (2022)
recommended that central government should
Sundry Earnings
Sundry Earnings as % of Revenue Receipts consider providing support for pension expenditure
Sources: Union Budget Documents of various years; PRS. from general revenue till 2034-35.15
High salary and pension burden Infrastructure projects see significant
delays and cost escalation
Revenue expenditure of Railways include spending
on fuel, maintenance of assets, salaries and Infrastructure development projects by Railways
pension. A considerable portion of Railways’ often see delay in completion and cost escalation.
revenue is spent towards payment of salaries and This shows inefficiency in project execution, which
pension, which are difficult to rationalise in short has a negative impact on budgetary requirements as
term. In 2023-24, Railways is estimated to spend well as operations. As of December 2022, out of
Rs 1,05,235 crore on salaries and Rs 62,000 crore 173 ongoing projects worth Rs 150 crore or above,
on pension. These expenses are estimated to 76% have seen cost escalation.16 The cumulative
increase by 5% and 11% over the previous year, sanctioned costs of these 131 projects was Rs 1.94
respectively. Owing to revisions as per the 7 th Pay lakh crore, which escalated to Rs 4.52 lakh crore
Commission recommendations, spending towards (about 2.3 times).16 This also includes the two
salaries and pension saw a significant increase in dedicated freight corridor projects (eastern and
2016-17 (Figure 8). Since then, spending towards western), whose revised cost together is Rs 1.02
these items as a percentage of revenue receipts has lakh crore, an increase of 263% over the sanctioned
ranged between 63%-75%, except in 2020-21 cost (Rs 28,181 crore).16
(COVID year).

February 16, 2023 -5-

 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

Figure 9: Cost escalation in ongoing projects Table 5: Capital expenditure for 2023-24
worth Rs 150 crore or above (as of December (Rs crore)
2022) 2021-22 2022-23 2023-24
% Change
(22-23 RE to
> 3 times 17% Actuals Revised Budget
23-24 BE)
Gross
2-3 times 15% Budgetary 1,17,276 1,59,300 2,40,200 51%
Support
1.5-2 times 13%
Extra
1.25-1.5 times 11% Budgetary 71,066 81,700 17,000 -79%
Resources
up to 1.25 times 20% Internal
1,925 4,300 3,000 -30%
Resources
No Escalation 24%
Total 1,90,267 2,45,300 2,60,200 6%
0% 5% 10% 15% 20% 25% Sources: Expenditure Profile, Union Budget 2023-24; PRS.

Note: Data corresponds to 173 ongoing projects. Figure 11: Capital expenditure over the years
Sources: 445th Flash Report on Central Sector Projects, 3,00,000 60%

As % of Total Expenditure
Infrastructure and Project Monitoring Division; MoSPI; PRS.
2,50,000 50%

Amount in Rs crore
One of the key reasons for cost escalation is delay 2,00,000 40%
in completion. Out of 122 ongoing projects for
which timeline-related data is available, 96% 1,50,000 30%
projects are delayed.16 74% of these projects were 1,00,000 20%
delayed by more than 24 months.16 Average delay 50,000 10%
in these projects is about 64 months.16 0 0%
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22

2023-24 BE
2022-23 RE
Figure 10: Time overrun in ongoing projects
worth Rs 150 crore or above (as of December
2022) Capital Expenditure
>60 months 30% Capital Expenditure as % of Total Expenditure
Sources: CAG, Union Budget Documents of various years; PRS.
25-60 months 43%
Extra budgetary resources include: (i) borrowings
13-24 months 14% through Indian Railway Finance Corporation
(IRFC), and (ii) borrowings from banks,
1-12 months 8% institutional finance, and external investments.
Investments are in the form of public-private
On time 4% partnership, joint ventures, and purchase of equity
and bonds by private sector. Extra budgetary
0% 20% 40% 60% resources funded more than 50% of capital
expenditure between 2017-18 and 2020-21. This
Note: Data corresponds to 122 ongoing projects. reliance has increased debt servicing obligation of
Sources: 445th Flash Report on Central Sector Projects,
Infrastructure and Project Monitoring Division; MoSPI; PRS. Railways (discussed in the next section in detail).

Budget support and extra budgetary Figure 12: Financing of capital expenditure
100%
resources help sustain investments
80%
Railways’ capital expenditure includes investments
for constructing new lines, procuring wagons, 60%
doubling of lines, and renewing tracks. In 2023-24,
40%
Railways’ capital expenditure is targeted at Rs 2.6
lakh crore, an increase of 6% over the previous 20%
year (Table 5). The share of capital expenditure in
total expenditure of Railways has consistently 0%
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22

2023-24 BE
2022-23 RE

increased in recent years, despite low revenue

surplus (Figure 11). This increase has been funded
through budgetary support from the central Extra Budgetary Resources
government and extra budgetary resources.
Budgetary Support from Central Government
Internal Resources
Sources: CAG, Union Budget Documents of various years; PRS.

February 16, 2023 -6-

 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

From 2021-22 onwards, the budgetary support has Table 6: Payment of lease charges (Rs crore)
been increased significantly. This has been made % Change
2021-22 2022-23 2023-24
possible with the central government incurring a (22-23 RE to
Actuals Revised Budget
much higher fiscal deficit than the usual (above 6% 23-24 BE)
of GDP).17 In 2023-24, 92% of capital expenditure Capital
14,581 18,898 22,229 18%
Component
will be financed through budgetary support (Rs
Interest
2,40,200 crore), up from 65% in 2022-23 (Rs 13,896 19,855 23,782 20%
Component
1,59,300 crore). Correspondingly, extra budgetary
Total 28,477 38,753 46,011 19%
resources have been scaled back. Funds from extra
Sources: Expenditure Profile, Union Budget 2023-24; PRS.
budgetary resources are estimated at Rs 17,000
crore in 2023-24, a decrease of 79% from the Shortage of funds for essential provisions
previous year.
Railways operates various funds to earmark surplus
Rise in liability for lease charges resources for certain purposes. For instance,
Extra budgetary resources include funds raised Depreciation Reserve Fund is for replacement and
through IRFC. IRFC borrows from market and renewal of assets and Capital Fund is to finance
follows a leasing model to finance the rolling stock capital works and repayment of principal
component of lease charges. Diminishing revenue
assets. Since 2015-16, IRFC has also been utilised
for project financing.9 Lease charges have both surplus has meant that these funds do not get
interest and principal components. Increasing lease adequate provisions (Table 11 in annexure). These
charges payment obligation is crowding out the purposes are then met either from general revenue
space for productive expenditure. of the central government or extra budgetary
resources. This has also led to postponement of
Between 2015-16 and 2023-24, the interest critical works.
payment obligation is expected to increase at an
annualised rate of 15% and principal repayment Huge backlog in replacement of old assets
obligation at 17%. During the same period, At the end of 2020-21, value of old assets pending
revenue receipts are expected to grow at a much to be replaced from Depreciation Reserve Fund is
lower rate, i.e., 6%. In 2023-24, Railways is Rs 94,873 crore.9 This includes: (i) Rs 58,459
estimated to spend Rs 23,782 crore towards the crore on track renewals and (ii) Rs 26,493 crore on
interest component, and Rs 22,229 crore towards rolling stock.9 CAG (2022) observed that given the
the principal component. Together, these payments backlog and depleting surplus, the replacement and
are estimated to be 17% of revenue receipts, a renewal of assets could become a burden for the
sharp rise from 9% of revenue receipts in 2015-16. central government.9
Figure 13: Payment of lease charges as % of Servicing of lease charges from general revenue
revenue receipts
Due to inadequate funds in the capital fund, the
10% principal component of lease charges is being paid
9%
from budgetary support. CAG (2022) observed
8% 8%
that ideally, this expenditure should be met from
Railways’ internal resources.9 CAG (2019) had
6% observed that if obligations towards IRFC have to
5% be met from budgetary support, the government
4% might as well borrow directly from the market, as
4% the cost of borrowings would be lower.18 In 2023-
2% 24, no extra budgetary resources have been
estimated to be raised through IRFC.
0% Inability in meeting committed funds for safety-
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22

2023-24 BE
2022-23 RE

related works
Rashtriya Rail Sanraksha Kosh was set up for five
years from 2017-18 for financing critical safety
related works.8 The fund was to have a corpus of
Lease Charges-Interest Component
one lakh crore rupees.8 Railways was to apportion
Lease Charges-Capital Component Rs 5,000 crore in each of these five years, however,
it did not meet this obligation in any year.
Sources: Union Budget Documents of various years; PRS.

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 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

ANNEXURE
Table 7: Freight traffic details (traffic volume in million NTKM; earnings in Rs crore)
% change
2022-23 2023-24 % share in
2021-22 (2022-23 RE
Commodity Revised Budget 2023-24 BE
to 2023-24 BE)
Earning Volume Earning Volume Earning Volume Earning Volume Earning Volume
Coal 65,856 3,27,754 82,752 3,88,536 89,875 4,08,474 9% 5% 50% 43%
Other Goods 10,018 78,877 11,996 88,565 13,227 94,530 10% 7% 7% 10%
Cement 10,605 81,476 12,397 80,080 14,073 88,000 14% 10% 8% 9%
Containers service 6,275 66,622 7,263 63,520 8,514 71,918 17% 13% 5% 8%
Food grains 10,661 97,076 10,592 79,850 8,479 61,880 -20% -23% 5% 7%
Iron ore 13,093 66,123 11,923 53,851 14,101 61,717 18% 15% 8% 7%
Pig iron and Finished steel 9,125 60,238 9,911 52,756 11,865 61,140 20% 16% 7% 6%
Fertilizers 5,428 44,530 6,447 44,787 6,755 45,430 5% 1% 4% 5%
Petroleum, Oil, and Lubricant 5,822 31,359 6,337 31,131 6,739 32,050 6% 3% 4% 3%
Raw materials for steel plants 2,406 17,761 2,632 15,431 2,902 16,470 10% 7% 2% 2%
Miscelleneous revenue 1,809 - 2,750 - 2,967 - 8% - 2% -
Total 1,41,096 8,71,816 1,65,000 8,98,507 1,79,500 9,41,609 9% 5% 100% 100%
Note: NTKM – Net Tonne Kilometre (One NTKM is when one tonne of goods is carried for a kilometre).
RE: Revised Estimates; BE: Budget Estimates.
Sources: Expenditure Profile; Union Budget 2023-24; PRS.

Table 8: Passenger traffic details (traffic volume in million PKM; earnings in Rs crore)
% change
2022-23 2023-24 % share in
2021-22 (2022-23 RE
Revised Budget 2023-24 BE
to 2023-24 BE)
Earning Volume Earning Volume Earning Volume Earning Volume Earning Volume
Suburban 1,370 69,798 2,265 1,13,425 2,619 1,31,893 16% 16% 4% 12%
Non-Suburban 37,844 5,20,418 61,735 8,89,083 67,381 9,80,440 9% 10% 96% 88%
Second Class (M E) 7,170 1,58,819 17,174 3,80,434 19,027 4,24,847 11% 12% 27% 38%
Sleeper Class (M E) 12,849 2,25,637 15,753 2,76,630 17,028 3,01,415 8% 9% 24% 27%
AC 3 Tier 12,225 90,488 19,310 1,42,725 21,156 1,57,619 10% 10% 30% 14%
Second Class (Ordinary) 400 18,355 983 45,129 1,058 48,970 8% 9% 2% 4%
AC 2 Tier 3,385 18,536 5,446 29,779 5,855 32,272 8% 8% 8% 3%
AC Chair Car 1,163 6,602 1,912 10,834 1,999 11,421 5% 5% 3% 1%
AC First Class 496 1,537 880 2,726 962 3,006 9% 10% 1% 0%
Executive Class 140 368 241 634 257 680 6% 7% 0% 0%
Sleeper Class (Ordinary) 3 39 6 90 6 97 7% 8% 0% 0%
First Class (Ordinary) 4 27 11 84 12 95 12% 13% 0% 0%
First Class (M E) 11 10 20 18 19 18 -1% 0% 0% 0%
Total 39,214 5,90,216 64,000 10,02,508 70,000 11,12,333 9% 11% 100% 100%
Note: PKM – Passenger Kilometre (One PKM is when a passenger is carried for a kilometre).
RE: Revised Estimates; BE: Budget Estimates.
Sources: Expenditure Profile; Union Budget 2023-24; PRS.

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 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

Table 9: Details of capital expenditure (Rs crore)

% change from
2021-22 2022-23 2022-23 2023-24
Head 22-23 RE to 23-
Actuals BE RE BE
24 BE
New Lines (Construction) 21,245 26,324 26,000 31,850 22%
Gauge Conversion 2,837 3,475 3,829 4,600 20%
Doubling 32,219 37,150 42,492 30,749 -28%
Traffic Facilities-Yard Remodeling and Others 2,675 3,045 4,739 6,715 42%
Rolling Stock 41,406 38,887 59,994 47,510 -21%
Leased Assets-Payment of Capital Component 14,581 22,188 18,898 22,229 18%
Road Safety Works-Road Over/Under Bridges 4,222 6,500 5,999 7,400 23%
Track Renewals 14,082 12,077 13,620 17,297 27%
Electrification Projects 6,961 7,695 8,022 8,070 1%
Other Electrical Works incl. TRD 627 650 676 1,650 144%
Workshops Including Production Units 2,668 2,045 2,671 4,601 72%
Staff Welfare 473 495 463 629 36%
Customer Amenities 1,995 2,700 3,824 13,355 249%
Investment in Govt. Commercial Undertaking -
25,751 38,687 28,981 34,354 19%
Public Undertaking/JVs/SPVs
Metropolitan Transport Projects 2,515 1,998 3,533 5,000 42%
Others 5,621 6,884 6,858 7,192 5%
EBR- Partnership 10,388 35,000 14,700 17,000 16%
Total 1,90,267 2,45,800 2,45,300 2,60,200 6%
RE: Revised Estimates; BE: Budget Estimates.
Sources: Expenditure Profile; Union Budget 2023-24; PRS.

Table 10: Physical target and achievement for capital expenditure

2021-22 2022-23 2023-24 % change
from 22-
Head
Revised Achieve Budget Revised % Budget 23 RE to
In % 23-24 BE
Target ment Target Target change Target
Construction of New Lines
300 289 96% 300 200 -33% 600 200%
(Route Kms)
Gauge conversion (Route
500 636 127% 500 100 -80% 150 50%
Kms)
Doubling of Lines (Route
1,600 1,984 124% 1,700 2,200 29% 2,800 27%
Kms)
Rolling Stock
(i) Diesel Locomotives 0 100 - 100 100 0% 100 0%
(ii) Electric Locomotives 1,091 1,110 102% 1,290 1,290 0% 1,290 0%
Coaches 8,115 7,151 88% 7,551 7,520 0% 6,978 -7%
Wagons (vehicle units) 9,600 8,386 87% 13,000 21,000 62% 26,000 24%
Track renewals (Track Kms) 3,600 4,275 119% 3,700 4,200 14% 4,800 14%
Electrification Projects (Route
6,000 6,366 106% 6,500 6,500 0% 6,500 0%
Kms)
Sources: Expenditure Profile; Union Budget 2023-24; PRS.

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 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

Table 11: Apportionment to various funds (Rs crore)

Debt Service Depreciation Development Rashtriya Rail
Capital Fund
Year Fund Reserve Fund Fund Sanraksha Kosh
2013-14 500 165 7,900 3,075 -
2014-15 6,233 57 7,775 1,375 -
2015-16 5,798 3,488 5,600 1,220 -
2016-17 2,398 0 5,200 2,515 -
2017-18 0 0 1,540 1,506 0
2018-19 0 0 300 750 3,024
2019-20 0 0 400 1,389 201
2020-21 0 0 200 1,547 1,000
2021-22 0 0 0 0 0
2022-23 RE 1,300 0 1,000 1,093 0
2023-24 BE 0 0 1,000 1,210 1,000
RE: Revised Estimates; BE: Budget Estimates.
Sources: Expenditure Profile; Union Budget 2023-24; PRS.

Table 12: Zone-wise operating ratio (in %)

Zone 2016-17 2017-18 2018-19 2019-20 2020-21
Central 105 111 105 105 126
East Central 102 98 98 102 89
East Coast 54 52 52 51 47
Eastern 165 181 186 170 175
Metro Rail/Kolkata 260 278 248 216 678
North Central 71 67 68 74 79
North Eastern 197 202 205 188 203
North Western 95 108 106 113 107
Northeast Frontier 130 169 161 152 139
Northern 119 117 132 155 154
South Central 86 83 80 88 101
South East Central 56 56 56 54 46
South Eastern 73 76 73 65 57
South Western 120 129 133 124 138
Southern 148 161 153 146 219
West Central 74 75 68 71 68
Western 103 108 102 115 128
Overall 96.5 98.4 97.3 98.4 97.5
Note: Figures have been rounded off.
Sources: CAG; PRS.

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February 16, 2023 - 10 -

 Demand for Grants 2023-24: Ministry of Railways PRS Legislative Research

9
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February 16, 2023 - 11 -