In the Union Budget 2025-26, Indian Railways has seen its capital expenditure allocation maintained at Rs.2.52 lakh crore, marking the second consecutive year of this unchanged figure. Union Finance Minister Nirmala Sitharaman presented the budget on February 1, 2025, and while she highlighted continued focus on safety, electrification, and the expansion of infrastructure, there were no new significant reforms announced for the sector.
The government’s budgetary support for Indian Railways, amounting to Rs.2.52 lakh crore, will continue to fund essential infrastructure initiatives. These include the expansion of tracks, procurement of rolling stock (train coaches and engines), the electrification of tracks, enhancements in signaling technology, and the modernization of railway stations. Ensuring passenger safety remains a priority, with a substantial portion of this funding allocated toward safety initiatives and improvements.
Alongside the direct budgetary allocation, the Internal and Extra-Budgetary Resources (IEBR) for the Indian Railways have been set at Rs.13,000 crore for FY26, matching the previous year’s allocation. However, this is a steep reduction from the Rs.52,783 crore allocated in FY24. IEBR refers to funds raised through alternative financing channels such as the Indian Railway Finance Corporation (IRFC) and other financial instruments to support capital expenditure.
Despite the continued financial commitment to infrastructure development, there was a noticeable reaction in the stock market, where shares of Indian Railway-linked companies, including IRCON, IRCTC, and IRFC, saw a decline of over 6% following the budget announcement. Investors had hoped for major sectoral reforms, but the lack of new proposals or initiatives led to a negative market sentiment.
The unchanged capital expenditure allocation for Indian Railways signals continuity in the government’s approach, focusing on the ongoing development of the country’s railway network, but it also reflects the absence of new, bold reforms to attract private investment or significantly accelerate modernization.
As the Indian Railways works towards meeting ambitious goals such as network electrification, gauge conversions, and improved safety measures, the allocation remains a critical element in driving these long-term projects. However, without new investments or strategic reforms, challenges around sustainability and growth for the railway sector may persist.
In conclusion, while the Rs.2.52 lakh crore allocation ensures the continuation of crucial projects, Indian Railways will need innovative strategies and comprehensive reforms in the future to meet the demands of the modern transportation system and address market expectations.
