Many countries offer subsidies to their railways because of the social and economic benefits that it brings. The economic benefits can greatly assist in funding the rail network. Those countries usually also fund or subsidize road construction, and therefore effectively also subsidize road transport. Rail subsidies vary in both size and how they are distributed, with some countries funding the infrastructure and others funding trains and their operators, while others have a mixture of both. Subsidies can be used for either investment in upgrades and new lines, or to keep lines running that create economic growth.
Rail subsidies are largest in China ($130 billion) and Europe (€73 billion), while the United States has relatively small subsidies for passenger rail with freight not subsidized.
Social and economic benefits of rail
Railways channel growth toward dense city agglomerations and along their arteries, as opposed to highway expansion, indicative of the U.S. transportation policy, which incents development of suburbs at the periphery, contributing to increased vehicle miles traveled, carbon emissions, development of greenfield spaces, and depletion of natural reserves. These arrangements revalue city spaces, local taxes, housing values, and promotion of mixed use development.
Modern rail as economic development indicator
European development economists have argued that the existence of modern rail infrastructure is a significant indicator of a country's economic advancement: this perspective is illustrated notably through the Basic Rail Transportation Infrastructure Index (known as BRTI Index).
Subsidies by country
|Country||Subsidy in billions of Euros||Year||Billion passenger-km travelled in 2014|
Note that several operators that do not receive subsidies also exist, including virtually all long haul and high speed services in France and Germany.
In 2015, total domestic rail spending by China was $128 billion and is likely to remain at a similar rate for the rest of the country's next Five Year Period (2016-2020). A planned 8,000 kilometres (about 5,000 miles) of track will be added domestically, with a goal of better connecting existing domestic track with other foreign railway systems.
The Indian railways are subsidised by around Rs 400 billion ($5.8 billion), of which around 60% of which goes to commuter rail and short-haul trips.
Current subsidies for Amtrak (passenger rail) are around $1.4 billion. The rail freight industry does not receive direct subsidies.
In total, Russian Railways receives 112 billion rubles (around US$1.5 billion) annually from the government.
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Includes both "Railway subsidies" and "Public Service Obligations".
- "EU Technical Report 2007".
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- "German Railway Financing" (PDF). p. 2. Archived from the original (PDF) on 2016-03-10.
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6.3 billion Swiss francs
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£3.2 billion, using average of £1=1.366 euros for 2015-16
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- "Govt defends fare hike, says rail subsidy burden was too heavy".
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- "Level playing field: EU efforts to break into Japan's rail industry".