Railway Minister Suresh Prabhu made the announcement while presenting the budget 2016-17 in Parliament.
The Centre shall "partner" with Delhi government in this regard, he said.
"Delhi, our national capital, is under severe stress from rising pollution levels and can be provided relief by reviving the ring railway system comprising 21 stations. We will partner with the state government to develop this infrastructure," Prabhu said.
Experts have also said that infusing fresh energy into the line would yield benefits on the pollution front. Only around 3,700 passengers now take the line daily which was launched way back in 1975.