Rail Budget may see up to 20% hike, focus on station upgrades & modern trains

New Delhi: Indian Railways could get a 15-20% bump in capital expenditure allocation for FY26 in the upcoming budget as it looks to exhaust the current year’s funds in time. This could raise the total capital expenditure allocation for the national transporter to more than ₹3 lakh crore from the ₹2.65 lakh crore provided in the current fiscal year.The focus next year will be on commissioning upgraded railway stations, launching modern trains, and decongesting the track network, people aware of the deliberations told ET.

Finance minister Nirmala Sitharaman will present the budget for FY26 on February 1.

“Railway capex is expected to rise by up to 20% in budget 2025-26,” an official said.

According to railways estimates, nearly 80% of the ₹2.65 lakh crore capex for fiscal FY25 has been spent till now. “The Railway Board has spent more than ₹2 lakh crore in the current fiscal. Capex target will be met well before the fiscal ends,” a senior railway official told ET.

Expediting Projects
The higher allocation is expected to go toward laying new tracks and upgrading existing ones. It will also be incurred on buying rolling stock – locomotives, wagons and coaches.The Mumbai-Ahmedabad High Speed Rail Corridor (MAHSR) – the bullet train project – is set to get enhanced budgetary support as well to speed up the project. Besides, India Inc has asked the government to continue its high capital spending plan to crowd in private investment and support the slowing economy.

India’s economic growth is projected to slow to a four-year low of 6.4% in the current fiscal year from 8.2% in FY24. The Centre had provided Rs 11.1 lakh crore for capital expenditure in the current fiscal year, up from Rs 10 lakh crore budgeted in FY24.

A higher target for investments under the public private partnership (PPP) route is also expected in FY26. Indian Railways had planned capital expenditure of Rs 10,000 crore through PPPs in the current fiscal year, of which nearly 90% had been achieved by mid-January.

Capex of Rs 50,903 crore for rolling stock was planned for the current fiscal year. Allocation for capacity augmentation work, including new lines, gauge conversion, track doubling, traffic facilities, railway electrification, investment in public sector undertakings, and metropolitan transport stood at Rs 1.2 lakh crore. Another Rs 34,412 crore was allocated for safety related work this year.

In FY25, Indian Railways had planned an investment of Rs 21,000 crore on the National High Speed Rail Corp. Ltd (NHSRCL), the entity executing the bullet train project. A significantly enhanced allocation is expected for faster infrastructure development on this crucial corridor.

The railways will also start operations of Vande Sleeper trains that will have improved comfort for passengers over long journeys next fiscal year.