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Rail Budget 2021: Re-Defining Priorities & Accelerating Modernisation

2020 has been a globally challenging year bringing the economy to a grinding halt. The transportation sector was amongst the worst affected sectors with people across the globe avoiding travel. Indian Railways, the nation’s lifeline has been running on a limited scale with the excessively low-occupancy rate with the passenger earnings suffering a loss of 86,000 crores. Much of the revenue generated has been possible through the freight traffic which has dominated the Indian tracks since the nation entered the lockdown phase helping provide essentials. The year saw the start of Kisan Trains providing a much-needed boost to the agricultural sector with the railways helping promote point-to-point connectivity. The limited scale operations proved to be both a boon and bane with the railways using the opportunity to strengthen critical infrastructure and improve train speeds. For a major portion of the year, the railways have been working on the zero-timetable to help decongest traffic and reduce travel time on important routes of the Indian Railway network. The limited scale of development due to the raging pandemic can have an impact on the upcoming budget. Yet, every cloud has a silver lining. The upcoming budget is no exception and despite challenges posed by the pandemic has the potential to turnaround by re-defining priorities and therefore accelerating modernisation. In this article, we aim to discuss the possible outcomes that the railways may expect in the upcoming budget.

The Changing Nature of Budget

Over the years preceding the NDA government, the railway budget since its colonial days post the convention of 1924 has been separately presented to help place greater focus the growing requirements of the railway network as the competition amongst the global railway networks pace up with the passing time through induction of high-speed routes and shift in technologies to help improve haulage and train speeds providing greater carrying capacity to modern-day passenger and freight trains. From a common man’s language, a budget is an instrument of accountability employed by the government to help provide for the expenditures and revenues for the particular year. The budget in previous years though partially sounded as envisioned by the common man failed to fully deliver expectations with populism dominating the budget overlooking realistic expectations and the actual requirements. Promises which though lucrative were unviable on a large scale were often the major attractions helping secure the votes of the public rather than securing the development agenda of the railways.

To overcome the populist challenges posed due to the nature of the budget presentation, the current government proposed a merger of the budget with the union budget to help promote a goal-oriented development of the railway sector keeping in mind the interests of the stakeholders and cherry-picking projects which served the national and political interests of the ruling government and make railways globally competitive which had been lacking for a long time. The years’ post-merger saw the budget bringing infrastructure and related projects to the centrestage promoting a qualitative rather than a quantitative development and expanding the travel choices of the common public by introducing semi high-speed services on both long and short-distance routes competing against the rapidly expanding aviation sector and pushing for greater Public-Private Partnership projects to promote a competitive environment in the railway sector and supplement the government’s efforts in improving the railways.

The advantage behind the merger is far from just eradicating populism from the budget. The railways are also exempted from payment of dividend to the Ministry of Finance helping it pool funds for meeting its development obligations. Every idea, however, has its drawbacks and the merger is one amongst the many. The merger has resulted in a reduced focus on railways. In most cases minuscule allocations and limited projects being highlighted complemented with a disproportionate balance of focus between the core and the non-core sector. The envisioned goals remaining far from fulfilled.

Rail Budget in the Post-COVID period: Resetting the Flaws?

As discussed earlier, with null developments and scope for capital intensive investments being a grim situation, the post-COVID budget, however, brings its opportunities which if accurately interpreted can open up the gateway for completing missed targets and re-defining the necessities and luxuries and rationalising investments. Let us understand this with an example. As we see in the pre-covid periods, the growing inclination to high-speed rail corridor nearly blurred the government’s focus on the projects on the existing network in need of attention resulting in a spate of accidents with the 2016 Pukhrayan accident being the worst-ever accident bringing back the attention of the policymakers and the government to the need for striking a balance between a highly futuristic project and projects which have been crawling over the past decade such as the Dedicated Freight Corridor which was recently inaugurated in both the Eastern and the Western sections of the network and decongesting the network of redundant train services through the zero-timetable method.

The railways have begun to realise the growing threat from the aviation and road sector in both the road and aviation sector. 2021 is therefore expected to bring about focus to not only boosting investments in the saturated corridors but also exploring the potential of the existing network in starting with the semi high-speed network achievable with the help of existing infrastructure. Further, the budget should expand into institutional reforms and not just technology development. A strong institutional setup complemented with infrastructure development is the key to an ideal modernisation programme and promotion of a competitive environment. It is a lingering fear of the private train operations dominating the budget session other than the much-required reforms such as the constitution of a railway safety board and independence of railway tariff authority to help set fare structures in line with the trends of the competitors helping bring back passengers to the railways and redefining the catering setup as the railways move forward with the discontinuation of pantry cars in its long-distance trains.

A Budget of Uncertainty

As the session approaches, perhaps the upcoming budget is been more uncertain compared to other budgets with multiple points being affected due to the pandemic. The question therefore comes – Will the government look at institutional reform or infrastructure modernisation or using the increment principle will the government revisit its old commitments and attempt to fulfil its past commitments to pave way for a competitive future for the railways against its rivals? Or will it be a competition within the railways itself? Too much on the platter and too little space to fulfil is the dilemma that one needs to watch out for in the upcoming ‘extraordinary’ budget. Hopefully, in the coming days, the budget sessions shall also take into account the need for allocating funds for the development of institutions physically and technically.

Article by-

Renuka Bhatt (


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