Railways plans Rs.1.3 Trillion Capital Expenditure in FY 2017-18

Indian Railways is seeking more money despite being able to spend only 54% of its planned capital expenditure during the current fiscal

New Delhi: In its highest-ever capital expenditure, the Railway Ministry is planning a capital outlay of about Rs 1.3 lakh crore and expecting a gross budgetary support of Rs 55,000 crore (GBS) for the fiscal year 2017-18. Railways CAPEX plan of around Rs.1.3 Trillion for the FY 2017-18 – the highest-ever capital outlay with a gross budgetary support (GBS) of around Rs.55,000 crore from the finance ministry is something could be seen as seeking more fund despite being able to spend only 54% of its planned CAPEX during the current fiscal.

“The railway ministry has sought a GBS of Rs.60,000 crore from the Union budget and we are hopeful to get around Rs.55,000 crore which is an increase of approximately 20%,” a senior railway board official said on condition of anonymity.

The gross budgetary support for railways was around Rs.45,000 crore for the current fiscal year.

The railways has pegged a capital expenditure of Rs.1.3 trillion and discussions are on with the finance ministry, the official added.

Indian Railways is seeking more money despite being to able to spend only 54% of its planned capital expenditure during the current fiscal.

“There are three months to go and it would be too early to comment on expenditure,” said another railway board official who did not wish to be named, adding that railways will try its best to catch up.

With the merger of railway budget and the Union budget, the railway ministry and industry is hopeful that finance ministry would increase budgetary support to boost growth in the infrastructure sector.

According to a 7 October PhillipCapital report, Indian Railways will need about $53 billion to execute pending projects and network decongestion orders over FY17-FY20. “If the railways gets the desired gross budgetary support and is able to raise the required external funds to incur Rs.1.35 lakh crore outlay, there would be significant growth opportunities for companies catering to the railways segment,” said Alok Deora, an analyst with IIFL Wealth Management Ltd.

Edelweiss Capital in a report had said in the next 10 years, investments in railways will far outstrip those in national highways.

“We believe rail revolution will usher monumental changes in India. For EPC (engineering, construction, procurement) companies, it will open up an entire new segment for orders.

For companies in capital goods, power, ports, cement, logistics and metals/mining space, this will spell better volumes and cost reduction,” Edelweiss analyst Parvez Akhtar Qazi wrote in a 11 January report.

The increased orders from railways is likely to benefit several engineering and construction companies.

Foreign firms such as Larsen and Toubro Ltd, Bharat Heavy Electricals Ltd, KEC International Ltd, Crompton Greaves Ltd, Siemens India, Timken India, Kalpataru Power Transmission Ltd, Titagarh Wagons Ltd, Texmaco Rail and Engineering Ltd and others stand to benefit.

Several global companies like Hyperloop Technologies Inc., Spain’s Talgo SA, Germany’s Siemens AG and Knorr Bremse AG, are already trying to woo Indian policymakers with their transport technologies.