Budget 2025: Indian Railways may get funding boost, new trains, and infrastructure upgrades; check key stocks in focus

As central government prepares to present the Union Budget on February 1, 2025, investors are closely watching what will happen in the railways sector. Many are hoping for important announcements that could impact the future of railways.

Considering infrastructure has always been a focus area for this government, expectations are rife that the trend will continue this year, and budgetary allocation to the Indian Railways for the financial year 2025-26 may hit record-high levels.

Experts anticipate Finance Minister Nirmala Sitharaman increasing capital expenditure for the railway sector by 15-20% in the upcoming Union Budget 2025, potentially raising the total allocation to over ₹3 lakh crore.

If announced, this will be a significant increase compared to the total allocation to railways in the Union Budget 2024. The railway sector was allocated ₹2.65 lakh crore in the previous Budget, which was up 4% over the outlay for the preceding fiscal.

Notably, the Railway Ministry has already spent 76% of its Budget allocation for FY 2024-25 by January 2025, with the main thrust on capacity augmentation and infrastructure.

Union Budget 2025: Key expectations

One key focus area for the railway sector in the Union Budget 2025 could be decongestion of the Indian Railways network. Finance Minister Nirmala Sitharaman may announce the laying of new tracks, upgradation of existing tracks, and commissioning of upgraded railway stations.

New routes for Vande Bharat and Amrit Bharat Express trains are also expected. Various media reports suggest that 10 Vande Bharat sleeper and 100 Amrit Bharat Express trains will likely be announced in the Budget.

Also, the Mumbai-Ahmedabad High-Speed Rail Corridor, popularly known as the bullet train, may also receive higher funding this year to accelerate its completion.

Besides that, the government is likely to focus the most on modernising the railway infrastructure this year to prevent train collisions and derailments.

Currently, the Indian Railways is aggressively rolling out the Kavach safety system. The railway ministry has already spent ₹1,500 crore so far this fiscal as against the allocated budget of ₹1,100 crore for FY 2024-25.

Union Minister Ashwini Vaishnaw had earlier said that the ministry would use the ₹1.08 lakh crore of the Budget 2024 allocation to boost safety. According to the minister, ‘Kavach 4.0' safety system was to get a substantial part of the funds earmarked for safety-related measures.

Kavach is an automatic train protection (ATP) system to prevent train collisions and derailments. It uses technology like GPS and Radio Frequency Identification to monitor train movement.

Railway sector observers are also expecting that a portion of the budgetary allocation for Indian Railways will also go towards acquiring rolling stock like locomotives, wagons, and coaches. This would be critical to improving the Indian Railways' capacity and efficiency.

Key railway stocks in focus ahead of Union Budget 2025

Interestingly, railways stocks have seen a disappointing trend so far in January 2025 ahead of the Union Budget. Shares of companies related to the Indian Railways, from online ticket booking portal IRCTC to BEML, which manufactures coaches and wagons, all have witnessed correction in the range of 3-13% so far this month.

Most of this fall can be attributed to the recent broader market sell-off and subdued quarterly earnings of some of the companies. Despite the fall, investors are keeping a close eye on the railway stocks as the sector might see increased allocation in the Union Budget 2025.