Victor Mallet in New Delhi

Passenger squeeze: rail ministry says that as part of the announced investment, capacity will rise to 30m people a day
The Indian government will modernise and expand the country’s huge but ageing rail network with investments of $137bn over the next five years, the railways minister, Suresh Prabhu, told parliament on Thursday.
Presenting the rail budget ahead of the national budget on Saturday, Mr Prabhu said the network had not changed much for decades and was suffering from severe under-investment.

Once that cycle of low investment and underperformance was reversed, “the gains to the economy will be immense”, he said. “Over the next five years the railway has to go through a transformation.”

Mr Prabhu is a key member of the cabinet of Prime Minister Narendra Modi, and is charged with reviving a highly congested network that is essential for hundreds of millions of Indian passengers and for the transport of freight.
With 1.3m staff, the state-owned Indian Railways is one of the world’s largest employers. It carries more than 21m passengers every day and 1bn tonnes of freight a year, but rolling stock is antiquated, many passenger services are always fully booked and freight delays are common.

In October last year the pressure of passengers travelling ahead of the festival season and the need to transport imported coal to power stations meant that 40,000-50,000 containers of imports destined for north India were stranded at west coast ports, while thousands more containers of exports were stuck inland.

Mr Prabhu said that in five years the railways would increase passenger capacity to 30m a day, increase track length by a fifth to 138,000km and raise freight capacity by half to 1.5bn tonnes a year.
In the 2015-16 fiscal year alone, India would spend $15.5bn on rail capacity expansion, and the overall annual budget represented a 52 per cent increase in rupee terms over the 2014-15 year, Mr Prabhu said. Freight rates, but not passenger fares, would be increased.

Maximum train speeds on nine key railway corridors would be increased from 110-130kph to 160-200kph, allowing journeys between Mumbai and Delhi or Delhi and Kolkata to be completed overnight. A feasibility study for a high-speed link between Mumbai and Ahmedabad — the first stage of a bullet train route connecting Mumbai to Delhi — was at an “advanced stage”.
Indian Railways will continue to be financed largely out of its own operations and by the state, although Mr Prabhu said profitable projects could be funded through market borrowings and long-term loans from insurers, pension funds and international donors.

“Railways will create new vehicles to crowd in investment from long-term institutional investors and other partners,” the Ministry of Railways said.
The rail budget is a prelude to the main budget to be announced by Arun Jaitley, finance minister, at the weekend. Foreign and Indian investors are hoping that the Modi government will accelerate a programme of business-friendly reforms, in spite of stiff opposition in parliament from Mr Modi’s opponents.