₹79,398-Crore Loan: Railways Wanted Grant, Gets Partial Relief

Jan 30, 2025

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Indian Railways sought ₹79,398 crore as a grant but received partial relief instead. What does this mean for its finances and future projects?

₹79,398-Crore Loan: Railways Wanted Grant, Gets Partial Relief

New Delhi: The Indian Railways, which had sought a ₹79,398-crore grant from the government instead of a loan, has received partial relief, easing some financial pressure on the national transporter. However, a significant portion of the amount remains a liability, impacting the Railways’ financial planning and future expansion projects.

Railways’ Request for Grant

Indian Railways had initially urged the government to convert the entire ₹79,398-crore loan—taken from the Gross Budgetary Support (GBS)—into a grant. The demand was based on concerns over the increasing interest burden and the impact on railway finances. The loan, taken for infrastructure and modernization projects, was seen as a long-term financial strain on the already stretched budget of the Railways.

A senior official stated, “The Railways plays a crucial role in national development. Given the nature of investments, we had requested that this amount be considered a grant rather than a loan.”

Partial Relief Granted

While the government has not fully converted the loan into a grant, it has provided some relief by adjusting repayment terms and possibly waiving a part of the interest component. This decision is expected to help Railways manage its financial obligations better without severely impacting its expansion plans.

However, a substantial part of the loan will still need to be repaid, adding pressure on revenue generation. The Railways has been working on enhancing freight earnings, increasing passenger fares on premium trains, and monetizing assets to boost its financial health.

Future Implications

  • Debt Management: The Railways will still need to repay a significant portion of the loan, requiring careful financial planning.
  • Project Execution: The burden of repayment might slow down some infrastructure projects if funds are diverted toward debt servicing.
  • Fare & Freight Strategy: To cover costs, the Railways may explore fare hikes or freight tariff adjustments.
  • Government Support: While partial relief is granted, the Railways may continue pushing for further financial assistance to ease long-term burdens.

As the Railways balances its financial challenges, this partial relief provides some breathing room, but concerns over debt sustainability and future funding remain.

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