Budget 2025: Railways Allocation Likely to Hit Rs 3 Lakh Crore Mark

By siliconindia  |  Friday, 17 January 2025, 10:11:15 AM IST

Budget 2025: Railways Allocation Likely to Hit Rs 3 Lakh Crore Mark
The Union Budget 2025, scheduled for February 1, is anticipated to bring significant announcements for the railway sector, with analysts projecting a record allocation of Rs 3 lakh crore for capital expenditure. This represents a 15–20 percent increase over the Rs 2.62 lakh crore allocated in the previous budget for 2024-25, where around Rs 2 lakh crore was utilised as of early January 2025.
Experts expect the upcoming budget to focus on high-priority projects such as the Bullet Train, the enhancement of the KAVACH safety system, and the introduction of artificial intelligence for operations like ticketing. The other areas that will be important are the Amrit Bharat Station Redevelopment Scheme and Gati Shakti Multi-Modal Cargo Terminals (GCT) development, which are aimed at spurring private sector investment in cargo infrastructure.
However, effective execution remains critical for these ambitions. While capital outlay for railways has steadily increased over the past five years, delays in project execution have slowed progress. Equity research analysts highlight the need for better timeline management and stress the importance of government incentives like the Make in India initiative and Public-Private Partnership (PPP) models to encourage investments.
The planned initiatives are procuring 90 additional Vande Bharat trains and a dedicated high-speed rail testing track in Rajasthan valued at Rs 820 crore. There is also an expectation of a huge wagon order worth around Rs 20,000–25,000 crore to augment freight capacity and expand the share of railways in the cargo market at present, which stands at 27 percent. The 100 percent electrification of broad-gauge lines and better safety with improved signalling, level crossings, and bridges are likely to be accommodated as well.
Indian Railways currently runs 136 Vande Bharat trains across the country, and the upcoming budget may announce further expansion plans, including the launch of Vande Metro services, which are meant for suburban routes. Despite these positive news, the railway stock market has seen corrections. IRFC and RVNL have fallen by 48 percent and 45 percent, respectively, from their 52-week highs. Other prominent stocks, such as IRCTC, Container Corporation of India, IRCON International, and RailTel Corporation, also registered significant decline.
This sector has witnessed expensive valuations in the last few years, as stocks of RVNL, IRCON International, IRFC, and Titagarh Wagons gave annualized returns of 25 per cent to 50%. Analysts, however, are being cautious as they say the current valuations seem high and not sustainable without corresponding growth in the earnings. As optimism for this sector is quite high, more sensible prices are needed for fresh investments.
As Indian Railways undergoes a transformation phase with a focus on expansion of infrastructure and safety upgrades from the government side, the allocated amount is going to be well spent in its support for growth. The amount will be useful only if utilised effectively.

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