The railway sector in India is poised to receive a major boost in the upcoming Budget 2025-26, with reports suggesting a 20% increase in capital expenditure (capex) allocation. This hike will push the total allocation to over Rs 3 lakh crore, compared to Rs 2.65 lakh crore in the current fiscal year. The increase in capex is expected to fund key infrastructure upgrades, such as the laying of new tracks, modernization of existing infrastructure, and the purchase of new locomotives, wagons, and coaches.
Indian Railways has already utilized 80% of the current year's allocation and is set to fully exhaust it by the end of the fiscal year. A significant portion of the increased capex will also be directed towards launching Vande Bharat sleeper trains, aimed at enhancing passenger comfort during long-distance journeys. Additionally, the National High-Speed Rail Corporation, which received Rs 21,000 crore in FY25, is likely to get an increased budget allocation to speed up the development of critical high-speed rail corridors.
The anticipated budget boost has already driven a surge in the stocks of railway-related companies. Shares of companies such as Rail Vikas Nigam Limited (RVNL), IRCON International, and RITES saw an increase of up to 11% during Thursday’s intra-day trading, fueled by heavy trading volumes and positive investor sentiment regarding the future of Indian Railways.
The government is also expected to encourage increased private sector involvement in railway development through public-private partnerships (PPP). For FY25, Indian Railways set a capex target of Rs 10,000 crore through PPPs and achieved nearly 90% of it by mid-January. With the growing focus on PPPs, the railway sector is set to see further investments in the years to come.
