Indian Railways’ pension expenditure trends from 2017 to 2025

The pension expenditure of Indian Railways shows a consistent upward trajectory over the last eight-year period, reflecting the railways’ growing commitment to its retired employees. Starting from ₹45,275 crores in FY 2017-18, the pension expenditure is projected to reach ₹65,000 crores in FY 2024-25 (BE), representing a substantial increase of approximately 43.6% over this period. To put this in perspective, this growth means the Indian railways are spending nearly ₹20,000 crores more annually on pensions by the end of this period compared to the beginning. The year-over-year growth rates tell an interesting story of how this increase has evolved. The highest growth rates of 11.9% and 12% (projected) were observed in FY 2017-18 and FY 2024-25 (BE). These significant jumps reflect major policy decisions or structural changes in pension obligations, such as pay commission recommendations or increased retirement rates among railway employees.

The intervening years show more moderate growth rates, typically ranging between 3% and 7%, suggesting a more stable progression in pension obligations. However, there was one notable exception – FY 2020-21, which saw a negative growth of -1.5%. This unusual decrease coincided with the COVID-19 pandemic. It might be attributed to several factors, such as delayed retirement processing, temporary payment adjustments, or, sadly, the loss of some pensioners during the pandemic period. The recovery from this dip was swift and substantial, with growth bouncing back to 7.2% in FY 2021-22, followed by steady growth rates of 5.97% and 5.5% in the subsequent years. This pattern demonstrates the resilient nature of pension obligations and their priority in railway finances, even during challenging times.

Looking at the projected increase for FY 2024-25 (BE), the 12% growth rate – the highest in recent years – suggests anticipation of significant additional pension obligations. This could be due to various factors such as an expected wave of retirements, pension revisions, or adjustments for inflation and cost of living increases. When we consider this data alongside the railways’ overall financial picture, it becomes clear that pension expenditure represents a substantial and growing commitment. To illustrate this, we can see that the Indian railway is projected to spend about ₹178 crores per day in FY 2024-25 on pensions alone (₹65,000 crores ÷ 365 days). This significant financial obligation underscores the importance of long-term financial planning and the need to balance employee welfare with operational sustainability.