Railway budget 2025 for FY 2024–2025, the government set a record capital expenditure of Rs 2.62 lakh crore for railways.
The Union Budget 2025–2026, Finance Minister Nirmala Sitharaman reduced the railway budget by a small amount on Saturday, to Rs 2.55 lakh crore. In the interim budget for FY 2024–2025, the government set a record capital expenditure of Rs 2.62 lakh crore for railways. This time, railway stocks fell soon after the budget announcement due to the modest allocation and the lack of significant improvements for the industry.
Shares of key railway companies reacted sharply to the announcement. IRCON fell over 6% to Rs 207.50 per share, IRCTC dipped 3% to Rs 797, while IRFC declined by 5% to Rs 144. Investor sentiment had been buoyed by earlier reports suggesting a potential 15-18% increase in budgetary support for Indian Railways, which now appears to have been overly optimistic.
Railway budget 2025
The government’s decision to maintain railway capital expenditure (capex) at Rs 2.52 lakh crore for FY26 further disappointed the market. In order to support the expansion of infrastructure, update freight corridors, and improve passenger safety, analysts had anticipated a large increase in capital expenditures. Hopes were shattered by the flat allocation, which exacerbated the stock market’s negative response.
Indian Railways has developed its infrastructure significantly during the last ten years. It put 31,180 track kilometers into service between 2014 and 2024, with the rate of track laying rising from 4 km/day in FY15 to 14.54 km/day in FY24. Additionally, electrification advanced quickly; since 2014, 41,655 route kilometers (RKMs) have been electrified, which is about twice as much as was accomplished prior to that time.
Notwithstanding these successes, the industry still depends significantly on government support for capital-intensive initiatives. The main sources of income for railways are freight and passenger services, however they are unable to pay for significant capital projects and frequently rely on grants from the federal government and extra-budgetary resources.
More money had been set aside in the interim budget to support industrial development. According to the railway ministry, these funds will help build the necessary infrastructure to create industrial clusters at key locations, such as Gaya on the Amritsar-Kolkata Industrial Corridor in Bihar, Orvakal on the Hyderabad-Bengaluru Industrial Corridor in Andhra Pradesh, and Kopparthy on the Vishakhapatnam-Chennai Industrial Corridor.
