Budget 2026: The much-awaited Union Budget for the financial year 2026-27 will be presented by Union Finance Minister Nirmala Sirtharaman on Sunday, February 1. The upcoming mega policy event is expected to underline the government’s push to boost economic growth while keeping fiscal discipline intact.
Against this backdrop, the railways are expected to remain a priority in this year’s budget, though the increase in spending may be more measured compared to the sharp jumps seen in earlier years, according to experts.
In the previous Budget, the allocation for Indian Railways in FY 2025–26 was stood at ₹2.65 lakh crore, unchanged from the year before. However, spending allocation for passenger amenities, as well as investments in public sector units and joint ventures, was reduced.
Budget allocation to railways likely to rise by 5%
According to Vivek Lohia, Managing Director, Jupiter Wagons Limited, the rail outlay is expected to see a calibrated increase of around 5%, including extra-budgetary resources.
“ With electrification nearing completion, capital deployment is likely to be redirected toward easing congestion through new lines, gauge conversion, track doubling, and the expansion of Dedicated Freight Corridors and economic corridors linked to ports and mineral clusters,” Lohia said.
Ravi Singh, Chief Research Officer at Master Capital Services Ltd, explained that an increase in railway capital expenditure usually plays out over time and budget announcements set the direction, but actual orders flow in gradually as tenders are issued and projects move to execution.
“ This means the real impact is often seen over the next one to two years rather than immediately after the Budget. Companies that are closely involved in project execution and have strong government linkages are likely to benefit the most. Firms already sitting on healthy order books may see further additions, improving revenue visibility. Wagon manufacturers and equipment suppliers linked to freight and logistics upgrades could also gain. Overall, higher capex strengthens confidence in future order inflows and supports earnings stability for well-placed railway companies,” said Singh.
Key focus areas
The government is likely to continue focusing on areas such as track expansion, electrification, signalling upgrades, station redevelopment and freight efficiency.
Experts further believe that rather than announcing something entirely new, the emphasis may be on execution and completion of ongoing projects.
“ In terms of beneficiaries, rail infrastructure and EPC segments are likely to gain the most. These projects involve long pipelines and steady work orders. Rolling stock manufacturers should also see demand, but growth there may be more gradual. Overall, the Budget is expected to support steady, long-term growth for the rail sector rather than trigger an immediate spike in activity,” Singh added.
Key Takeaways
- The railways will remain a priority in the upcoming budget with a focus on ongoing projects.
- A gradual increase in capital expenditure is expected, emphasizing execution over new announcements.
- Companies involved in project execution and with government ties are likely to see benefits in the coming years.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
