India has left politically sensitive rail fares on hold ahead of state elections later this year, and promised to improve safety.
More than 13 million people use the network every day
"I have no plans to increase the passenger fares as well as the freight rates in the fiscal year to March 2004," Railways Minister Nitish Kumar said as he presented the annual railway budget to parliament.
Four states - Himachal Pradesh, Meghalaya, Nagaland and Tripura - go to the polls on Wednesday and a further five will hold elections later in the year.
The 106bn rupees (£1.41bn; $2.2bn) budget also covers the creation of 20,000 jobs, 50 new express trains and higher safety standards for the network which carries 13 million people every day.
The railways budget came ahead of the government's full budget which is due to be presented on Friday.
"The thrust of the budget has been on improving safety standards and customer satisfaction," Mr Kumar told reporters.
I expect a rise in goods transported by railways and at prices competitive with transport by road
Nitish Kumar, Indian Railway Minister
The government has been criticised for a number of train accidents in last past six months in which more than 120 people have been killed.
And opposition parties attacked the government for announcing new trains without increasing the facilities and building new tracks.
"The budget has been announced with the elections in mind," said the Congress party leader Shivraj Patil.
"There is nothing in it to make the railways more efficient or convenient for people."
However, the Confederation of Indian Industries (CII) complimented the government's initiatives and described the proposals as "a rational and balanced budget".
The railway ministry also said a new locally-developed anti-collision device would be fitted to all express trains and proposed to recruit 3,500 more security guards.
Mr Kumar expects the amount of goods transported by rail to increase by 5% to 540 million tonnes in the year to March 2004.
"Looking at the growth of the economy I expect a rise in goods transported by railways and at prices competitive with transport by road," Mr Kumar said.
The budget included some concessions, including a 30% discount on rail fares for senior citizens, aged 60 or above.
Mr Kumar also said there would be a 50% discount on first and second class air-conditioned compartments for Thalessemia and cancer patients.