India to Prioritise Railway Modernisation in 2025/26 Budget

21 Jan 2025 CW Team

The Indian government is set to significantly increase funding for railway modernisation in the upcoming federal budget while making a modest rise in road infrastructure allocations, according to two government sources.

Prime Minister Narendra Modi’s administration, which has prioritised infrastructure spending to boost economic growth post-pandemic, is now shifting focus to railways due to challenges in road project execution. Finance Minister Nirmala Sitharaman will unveil the 2025/26 budget on February 1.

The railways ministry is expected to receive a budget allocation of Rs 2.9 trillion to Rs 3 trillion, up from Rs 2.55 trillion in the current fiscal year. This increase will support the expansion of Indian Railways' 68,000 km network, the production of 400 high-speed Vande Bharat trains by March 2027, and improvements in rail freight infrastructure.

Meanwhile, the road transport ministry anticipates a 3-4% budget increase, reaching approximately Rs 2.9 trillion. Despite a six-fold rise in road infrastructure spending over the past decade and a 60% expansion of the national road network to 146,000 km, the ministry faces constraints due to land acquisition challenges and spending limits.

Policymakers have raised concerns over the road transport ministry's slower spending pace, with only 54% of its full-year budget utilised by November 2024, compared to 76% by the railways ministry. Delays caused by national and state elections have also impacted road project execution. The ministry is now focusing on raising funds through internal resources to address these challenges.

(ET)

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