Govt likely to shift focus to railways from road transport in infra push

Govt has ramped up infrastructure spending, particularly on the road network, since the pandemic to drive economic growth, but execution challenges could see the focus shift to the railways

India will bump up spending on the modernisation of its railways in the upcoming federal budget while marginally increasing allocations to road building, two government sources said.

Prime Minister Narendra Modi's government has ramped up infrastructure spending, particularly on the road network, since the pandemic to drive economic growth, but execution challenges could see the focus shift to the railways, the sources said. 

 

Finance Minister Nirmala Sitharaman will present the 2025/26 budget on Feb. 1.

The sources requested anonymity as they are not authorised to speak to the media about the budget discussions.

India's finance, road transport, and railways ministries did not respond to emails seeking comment.

The railways ministry's budget allocations could rise to between 2.9 trillion rupees and 3 trillion rupees ($33.5 billion-$34.7 billion) for the 2025/26 fiscal year, up from 2.55 trillion rupees, a government source said.

The increase would help fund the expansion of state-run Indian Railways' more than 68,000 km of track and a goal of adding 400 high-speed Vande Bharat trains by March 2027, as well as an in rail freight, the source said.

The road transport ministry is expecting a 3 per cent to 4 per cent budget increase to about 2.9 trillion rupees ($34.7 billion), after its total spending rose six-fold in a decade, a government source familiar with budget discussions, said.

India has expanded its road network by nearly 60 per cent over the period to more than 146,000 km.

"Given spending limits and land acquisition challenges affecting new projects, the ministry would be content with a 2 per cent-3 per cent budget hike," the official said, adding the focus is also on raising funds through internal resources.

Policymakers have expressed concerns about a drop in spending by the road transport ministry, partly due to project delays caused by last year's national and state elections.

The road transport ministry spent only 54 per cent of its full-year budget in the first eight months of the fiscal year through November, government spending data shows, compared to 76 per cent at the railways ministry.

The road transport ministry plans to raise additional funds by selling toll collection rights to private firms and monetising road assets. It aims to raise up to 1 trillion rupees annually, to partly fund plans to build 50,000 km of high-speed road network in coming years, the first source said.