The Indian government is set to prioritise railway modernisation in the upcoming  Budget 2025-26, with plans for a significant increase in allocations. Sources close to the discussions revealed that the Ministry of Railways might see its budget rise to ₹2.9 trillion to ₹3 trillion ($33.5 billion–$34.7 billion), compared to ₹2.55 trillion allocated in the current fiscal year.

This boost will support key projects, including the expansion of Indian Railways' extensive 68,000 km track network and the introduction of 400 high-speed Vande Bharat trains by March 2027. Additionally, the increased funds will focus on enhancing rail freight infrastructure to meet growing demand.

Modest Increase in Road Sector Spending

While railway modernisation takes centre stage, spending on road infrastructure is expected to see a modest rise of 3-4 per cent, bringing the road transport ministry’s budget to approximately ₹2.9 trillion. Over the past decade, road infrastructure spending has surged sixfold, resulting in a nearly 60 per cent expansion of India’s road network to over 146,000 km.

Despite the progress, challenges such as land acquisition delays and project execution issues have tempered the ministry's ambitions. Officials indicate that a 2-3 per cent hike in the budget would suffice, given these constraints. The ministry is also exploring alternative funding options to complement government allocations.

Driving Growth Through Infrastructure Investment

Since the pandemic, Prime Minister Narendra Modi’s government has significantly increased infrastructure spending to fuel economic growth. While road development has been a primary focus in recent years, challenges such as delays caused by land acquisition issues have prompted a shift in emphasis towards railways.

Finance Minister Nirmala Sitharaman will unveil the Union Budget on February 1, 2025, outlining the government’s economic priorities for the coming fiscal year. As India seeks to strike a balance between ambitious growth targets and resource limitations, the budget is expected to reflect a strategic approach to modernising its transport infrastructure.

Key Highlights:

Railways Modernisation: A proposed budget of ₹2.9 trillion–₹3 trillion for the railways sector, focusing on track expansion, Vande Bharat trains, and freight improvements.

Road Sector Spending: A 3%-4% increase is anticipated, with a focus on addressing land acquisition challenges and raising funds internally.

Infrastructure Growth: Continued emphasis on transport infrastructure to drive economic growth post-pandemic.