Indian Railways FY 2025-26 Budget Allocation at ₹2.65 Lakh Crore: Key Highlights

The Budget allocation for Indian Railways for FY 2025-26 stands at ₹2.65 lakh crore. File
| Photo Credit: The Hindu

The Indian Railways has been allocated ₹2.65 lakh crore for the Financial Year (FY) 2025-26, staying consistent with the previous fiscal year’s budget. This budget allocation, however, reveals some notable changes in how resources are being distributed, particularly in customer amenities and public sector investments.

Capex Stands at ₹2.52 Lakh Crore

Union Railways Minister Ashwini Vaishnaw announced that the Capex for Indian Railways amounts to ₹2.52 lakh crore, covering all approved Public-Private Partnership (PPP) investments under the ₹2.65 lakh crore allocation. At a press briefing following the Union Budget 2025-26 on February 1, 2025, Minister Vaishnaw provided an insight into the budget allocation, highlighting the continuation of significant Capital Expenditure.

According to internal sources, as of January 23, 2024, Indian Railways had utilised ₹2.09 lakh crore (79.33%) of the ₹2.65 lakh crore allocated for FY 2024-25. Meanwhile, the total expenditure for FY 2023-24 reached ₹2.45 lakh crore based on Budget documents.

Minister Vaishnaw addressed the unchanged allocation as indicative of the sustained commitment to increasing Capex. He revealed that several new projects totalling ₹4.6 lakh crore have been considered in the upcoming budget. These projects encompass a wide range of initiatives, from constructing new railway lines, line doubling, expansions of stations, and advanced infrastructure development.

Declining Investment in Customer Amenities and PSU/JVs

A closer examination of the budget allocation reveals a reduction in funds dedicated to enhancing customer amenities. The budget estimate for customer amenities for FY 2024-25 was ₹15,510 crore, which had been revised to ₹12,993.97 crore. The further reduced allocation for FY 2025-26 stands at ₹12,118.39 crore. Customer amenities include critical aspects such as station improvements, modernising toilets, enhancing lighting, improving signalling systems, and overall cleanliness.

Additionally, the budget for Public Sector Units (PSUs) and Joint Ventures (JVs) has seen a decrease from ₹27,570.77 crore in FY 2024-25 to ₹22,444.33 crore in FY 2025-26. This reduction indicates a shift in strategic focus towards other critical areas within the railway sector.

Frieght Corridor and Cargo Capacity

Railway officials anticipate reaching a significant milestone by March 2025, when the Indian Railways will achieve a cargo carrying capacity of 1.6 billion tonnes. This would establish the Indian Railways as the second-largest cargo carrier globally, just behind China, which has a capacity of 3.7 billion tonnes.

Interestingly, the budget allocation for the Dedicated Freight Corridor Corporation of India, a PSU of the Indian Railways, has been slashed from ₹5,499 crore in FY 2024-25 to ₹500 crore in FY 2025-26. This reduction reflects a strategic reassessment of priorities within the railway network.

Electrification and Revenue Targets

Minister Ashwini Vaishnaw announced an ambitious goal of achieving 100% electrification of the Indian railway network by March 2025. He also highlighted a targeted milestone of ₹3 lakh crore in passenger revenue for FY 2025-26, marking a groundbreaking achievement for the railways.

The Indigenous Bullet Train Project

The Indian Railways is making strides in developing an indigenous high-speed train, known as the ‘Bullet Train’, in collaboration with BEML, a Defence PSU, and NHSRCL, a Rail PSU. The target velocity for these trains is 280 kmph. The Japanese government has committed to supporting this project, further boosting its feasibility.

FY 2023-24 saw ₹18,295 crore being utilised for this project. The initial fiscal allocation for FY 2024-25 was ₹21,000 crore, but it has been reduced to ₹19,000 crore for FY 2025-26. This reflects a cautious approach to managing resources while advancing technological innovations.

Manufacturing New Trains

The upcoming financial year will also see the introduction of 100 non-AC Amrit Bharat trains, 50 NAMO Bharat trains capable of running at 130 kmph for shorter routes, and 200 Vande Bharat trains. These trains will bring improved comfort and service toRailway passengers.

The budget includes provisions for manufacturing 17,500 general coaches, with 1,200 already produced. The production capacity is set to increase annually, ensuring the needs of a growing number of travellers are met.