Many countries offer

subsidies A subsidy, subvention or government incentive is a type of government expenditure for individuals and households, as well as businesses with the aim of stabilizing the economy. It ensures that individuals and households are viable by having acce ...

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), Europe (€73 billion) and India ($35.8 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. These arrangements help to regenerate cities, increase revenue from local

taxes A tax is a mandatory financial charge or levy imposed on an individual or legal entity by a governmental organization to support government spending and public expenditures collectively or to regulate and reduce negative externalities. Tax co ...

, boost

housing Housing refers to a property containing one or more Shelter (building), shelter as a living space. Housing spaces are inhabited either by individuals or a collective group of people. Housing is also referred to as a human need and right to ...

values, and encourage mixed use development. By contrast, a policy of

highway A highway is any public or private road or other public way on land. It includes not just major roads, but also other public roads and rights of way. In the United States, it is also used as an equivalent term to controlled-access highway, or ...

expansion, which is more typical in the U.S., promotes the development of suburbs at the periphery, contributing to increased

vehicle miles traveled A vehicle () is a machine A machine is a physical system that uses power to apply forces and control movement to perform an action. The term is commonly applied to artificial devices, such as those employing engines or motors, but also ...

, carbon emissions, development of greenfield spaces, and depletion of natural reserves.

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

Europe

Total EU rail subsidies amounted to €73 billion in 2005. Note that several operators that do not receive subsidies also exist, including virtually all long-haul and high-speed services in France and Germany.

China

In 2015, total domestic rail spending by

China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...

was $128 billion and was 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.

India

The

India India, officially the Republic of India, is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area; the List of countries by population (United Nations), most populous country since ...

n railways are subsidised by around Rs 2.4trillion ($35.8 billion), of which around 60% goes to commuter rail and short-haul trips.

United States

Current subsidies for

Amtrak The National Railroad Passenger Corporation, Trade name, doing business as Amtrak (; ), is the national Passenger train, passenger railroad company of the United States. It operates intercity rail service in 46 of the 48 contiguous United Stat ...

(passenger rail) are around $1.4 billion. The rail freight industry does not receive direct subsidies.

Russia

In total, Russian Railways receives 112 billion rubles (around US$1.5 billion) annually from the government.

Japan

The privatized rail network in Japan requires few subsidies. The three biggest companies,

JR East The is a major passenger railway company in Japan and the largest of the seven Japan Railways Group companies. The company name is officially abbreviated as JR-EAST or JR East in English, and as in Japanese. The company's headquarters are in ...

, JR Central and JR-West (which account for 60% of the passenger market) receive no state subsidy.

References

External links

UK Rail Finance 2014-15
{{DEFAULTSORT:Rail subsidies Rail transport Subsidies