Railways May See ₹3 Lakh Crore Allocation in Budget 2025

23 Jan 2025 , 11:15 AM

The central government is all set to present the Union Budget 2025 on February 1, and it will garner much attention from investors in general and, more specifically, the railway sector development.

Infrastructure development has been the emphasis of the government time and again, and it is very likely that the Indian Railways’ budgetary allocation for FY 2025-26 may touch a new high.

As per sources, Industry experts predict a 15-20% rise in capital expenditure for the railways, potentially increasing the allocation beyond ₹3 lakh crore. This would surpass the ₹2.65 lakh crore allocated in the Budget 2024, which marked a 4% increase over the previous fiscal year.

As of January 2025, the Railway Ministry had already utilized 76% of its FY 2024-25 budget, with efforts focused on capacity expansion and infrastructure upgrades.

Major points to look for in Union Budget 2025 are expected to be

• Easing of railway network congestions by increasing the number of tracks, improvement in existing railway networks, and development of new railway stations
• New route declaration for the Vande Bharat sleeper train for 10 routes; 100 Amrit Bharat Express train launches
  Funds to enhance speed of completion for the bullet train project or the Mumbai-Ahmedabad High-Speed Rail Corridor
• More on modernisation schemes to check the train-to-train collisions and derailment.
• The Kavach safety system is still a major focus area. In FY 2024-25, the Railway Ministry spent ₹1,500 crore on the system, which was more than its initial allocation of ₹1,100 crore. Kavach is an ATP system that uses GPS and RFID technology to monitor train operations and prevent accidents.

Union Minister Ashwini Vaishnaw had earlier said that ₹1.08 lakh crore of the previous budget was earmarked for safety-related works, and most of the money would be spent on Kavach 4.0.

Rolling stock, including locomotives, wagons, and coaches, is also expected to form a big chunk of the new railway budget as it will add to the operational capacity and efficiency.

Despite the expectation of higher railway budgetary allocations, railway-related stocks, such as IRCTC and BEML, have seen a 3-13% correction in January 2025. This is largely due to market-wide corrections and disappointing quarterly earnings reports.

However, investors are hopeful that the Union Budget 2025 will be a game-changer for the railway sector as higher allocations and infrastructure development plans will boost key stocks.