Railways likely to receive Rs 3 trillion Budget boost on February 1

The government is likely to continue with a zero or minimal borrowing plan for the national transporter

With a sustained capital expenditure push expected by the central government, the Ministry of Railways might get a double-digit percentage hike to Rs 2.9 trillion-3 trillion in budgetary allocation on February 1, multiple sources aware of the development said.  In the full budget in June last year, the ministry was allocated Rs 2.65 trillion, of which Rs 2.52 trillion was directly from central government coffers.  The government is likely to continue with a zero or minimal borrowing plan for the railways, which typically borrows money from the market via its dedicated project financing arm – Indian Railways Finance Corporation.  A railway board spokesperson did not comment on the budgetary allocations, but said that the ministry will continue its push in capital expenditure in the coming financial year as well, especially in passenger services such as station modernisation and Amrit Bharat trains.  The fully non-AC trains have been a focus for the central government since the 2024 Lok Sabha election, when one of the key criticisms of the government was its focus on premium services like Vande Bharat and lack of priority for underprivileged travellers in general and sleeper coaches. 

    A second official aware of the developments said that the ministry has started putting the wheels in motion to ensure that allocated capital expenditure is front-loaded starting April itself.  As of January 5, the ministry has spent 76 per cent of its allocated capital expenditure of Rs 2.52 trillion in 2024-25. Rs 81,713 crore has been spent on capacity augmentation, which is 68 per cent of its allocated budget for new lines, doubling, and expansion works.  With track congestion being the prime cause of legacy problems, it expects continued capital support from the finance ministry, especially in the wake of mega corridor announcements worth Rs 11 trillion in the interim budget in 2024.  Expenditure on safety-related works such as level crossings, over and under bridges, track renewals, bridges, and signalling has already reached 82 per cent of the allocated budget of Rs 34,414 crore.  Rs 40,354 crore has been spent on rolling stock by December, which is 79 per cent of the budget allotted for equipment modernisation. The ministry is also hopeful of an increased allocation on account of expectations that the highways ministry may not see an aggressive hike as it has been struggling to award projects at a sustained pace over the past couple of years.  “Expanding PLI schemes to include components such as rail wheels, axles, advanced bogies, and high-speed passenger coach components, alongside export incentives, will drive innovation and boost the railways' global footprint. Additionally, the government should encourage public-private partnerships and provide financing for capacity expansion, fostering long-term growth,” said Vivek Lohia, managing director at Jupiter Wagons, a leading rolling stock manufacturer.