Indian Railways (IR) plays a crucial role as the key transporter of goods and passengers. IR has ambitious plans to reinvent itself as a 21st century organisation, integrating modern technology and adopting an environmentally and economically sustainable business model. These efforts aim to offer quick freight movement services, as well as enhanced safety and comfort to passengers.
IR is redeveloping stations, increasing network capacity and connectivity, inducting new types of trains, switching to renewables for energy requirements and exploring new possibilities such as hydrogen-powered trains and the induction of nuclear power. It is deploying new safety technologies such as Kavach and digitising processes across operational systems and customer-facing interfaces.
In addition to significant government investment, the transformation of the railways sector requires private capex and involvement. Thus far, private sector involvement has been inconsistent, with successes in certain areas and lack of progress in others. The Amrit Bharat Station Scheme, which aims for the redevelopment of 1,337 stations, will create new business opportunities worth Rs 300 billion for the private sector in the next two years.
Better private sector participation will require a review of the current high-risk, low-reward revenue-sharing pattern. The private sector must also reduce reliance on imported technology and components, presenting a significant opportunity.
The transformation of IR also requires policy tweaks to enable the Railway Board and increase efficiency. Relevant policy changes have been initiated, with IR reorganising divisions to ensure higher degrees of local control while the new Railways (Amendment) Bill, 2024, seeks to streamline IR’s operations by decentralising and granting more autonomy and flexibility to the Railway Board, enabling faster decision-making. The act will simplify the legal framework. The accounting model has also been updated with the implementation of accrual-based accounting.
Capex outlay has almost doubled, rising from Rs 1,480 billion in 2019-20 to Rs 2,652 billion in 2025-26 (the same allocation as 2024-25). IR recorded an 8 per cent increase in originating passenger traffic and a 5.2 per cent rise in freight revenue during April-December 2024-25 over the corresponding period of the previous fiscal year. It remains to be seen how the special circumstances of the Kumbh Mela impact January-March 2025. The surge in passenger traffic may also affect freight movements.
Rolling stock has received an allocation of Rs 455 billion in Union Budget 2025-26. There is also the manufacturing of Vande Bharat coaches and ongoing test runs of the experimental hydrogen locomotive. IR is also looking to test-launch indigenous bullet trains in 2027 and run double-decker cargo liners.
Operational zones are being restructured with new divisions, such as the Jammu railway division. There are plans to merge Konkan Railway Corporation Limited with IR to streamline services on the west coast.
Safety remains a paramount concern with several high-profile accidents in the recent past. A key upgrade is the deployment of electronic interlocking systems across stations, along with the integration of the indigenously developed Kavach. As of November 2024, IR had deployed 5,133 km of optical fibre cable for Kavach. There are plans to implement integrated track monitoring system across all railway zones at an investment of Rs 1.8 billion.
Challenges remain, including slow network expansion, issues with first-mile and last-mile connectivity and land acquisition. IR has lost market share to road transport. Achieving the target of 3,000 million tonnes of freight by 2030 presents a significant challenge, as it demands a CAGR of 11 per cent between 2024-25 and 2029-30. This is nearly double the 5.4 per cent CAGR that was achieved in recent years, from 2017-18 to 2023-24. Nevertheless, the organisation seems to be moving on the right track.