Union railways minister Mamataa Banerjee today announced a nearly 40% hike in the financial allocation for Indian Railways as she unveiled a "common people's" budget that kept passenger and freight fares unchanged.
The railways budget is traditionally seen as a pointer to the national budget, due to be presented on Monday, which is expected to be strongly populist as the Congress-led government battles corruption scandals and high inflation.
Mamataa Banerjee raised the railways budget by 39% to a record 576.30 billion rupees ($12.7 billion) for the fiscal year to March 2012, from 414.26 billion rupees the previous year.
She told parliament she wanted to build "a responsible, efficient rapidly-growing railway", while showing "an acute sense of social responsibility towards the common people".
Banerjee kept passenger fares unchanged for a third straight year and said she planned to step up construction of new railway lines to 700 kilometres (434 miles) a year from an average of 180 kilometres.
She also announced plans for a series of new public-private partnerships to build wagon coaches and locomotives, which drew praise from the Federation of Indian Chambers of Commerce and Industry.
It said it welcomed "the budget's thrust on modernization".
Some 200 billion rupees of the railway budget is to come from the federal government while the rest is to come from market borrowing, including 100 billion rupees in tax-free bonds, freight revenues and other sources.
Banerjee announced that earnings from freight, the main revenue for the railways, were up 7% for the current fiscal year.
She forecast the railway would carry 993 million tonnes of freight next year and that passenger numbers would increase by 6.4%.
Experts say India's creaking railway system, the world's second largest under a single management, is desperately in need of new investment to help end transportation bottlenecks that threaten the country's fast economic growth.
The budget for the 155-year-old railway is also politically significant as it is seen as one of the key ways for the government to win support from India's poor masses who rely on the network for transportation.
The railway, the country's largest employer with some 1.4 million people on its payroll, runs 11,000 passenger and freight trains and carries 19 million people daily.