Railways capex flattens amidst Budget’s consumption push; transporter eyes increased earnings in FY26

With the shift in strategy from a capex- led growth to boosting consumption, allocation for the Railways – one of the largest beneficiaries - have remained flattish in the present Budget. The Budget support for Indian Railways for FY26 has been set at ₹255,445 crore, with a focus on enhancing safety and electrification, a less than 1 per cent rise over FY25’s allocation of ₹255,393 crore.

In FY24, the Budgetary support to the Railways was ₹245,791 crore – amongst a record high; which was further increased to ₹255,393 crore a year later.

The FY26’s Budget documents state, capital expenditure has been pegged at ₹252,000 crore – same as last year; while revenue expenditure is at ₹3445 crore.

Market borrowings for the Railways continue to be on the lower side at ₹13,000 crore – through IEBR (internal and extra Budgetary resources) and also market borrowings – same as last year’s levels.

Investments in joint venture projects for FY26 have gone down and these include in the Dedicated Freight Corridor Corporation, National High Speed Rail Corporation Ltd and in Equity in State JV & Others. In case of the Kolkata Metro Rail Corp has remained same.

Earnings outlook

“The capex flow has been maintained and including the PPP projects, we have an outlay of ₹265,000 crore, same as last year’s levels. We are at a comfortable level of capex and hope to sustain this momentum in the coming days,” Ashwini Vaishnaw, Railways Minister, said.

According to him, Railways is already projecting a substantial increase in earnings, coming specifically from passenger earnings. Railways earnings for FY26 is pegged at nearly ₹302,000 crore, an 8 - 11 per cent rise y-o-y, amongst the highest in recent years, despite flattening of capital outlay. FY25 earnings estimates stood at 273,000 crore, and was revised upwards to ₹279,000 crore, respectively.

Passengers earnings are set to increase by over 15 per cent to ₹92,000 crore - with the national transporter expecting to ferry around 780-790 crore passengers; while freight earnings are expected to see a 5 – 8 per cent increase y-o-y to ₹188,000 crore.

“We are expecting recording earnings for FY26, driven by increased passenger and freight movement. There, however, has been no passenger fare hikes; and we expect to complete 100 per cent track electrification this fiscal (FY25),” Vaishnaw said.

With nearly 1.6 billion tonnes of cargo / freight movement, India Railways will be the second largest freighter globally after Chinese rail that carries around 3.6 billion tonnes of cargo.

For FY26, the Railways is aiming for an increase in expenditure by 6 – 7 per cent over last year’s BE and RE pegged at ₹155,898.46 crore and ₹158,913.79 crore.

“Our finances are in order, and we have been paying pension commitments from our own internal generation. Our operational ratio is in the 98 per cent-odd range which means we are generating surpluses,” Vaishnaw said.

New projects

According to him, new projects worth ₹462,000 crore have been cleared in the Budget and these have an approximate life-cycle of 4 – 5 years. Projects are spread across new line or track laying ones, line doubling and quadrupling, and so on.

Also cleared were 100 Amrit Bharat trains – non a/c rolling stock with push-pull tech, 50 Namo Bharats (semi high speed trains of 130 kmph that can run short distances), 200 Vande Bharats – both sleeper and chaircars, among others.

“Outlay on Railway safety has been pegged at ₹116,000 crore; as against ₹114,000 crore in FY25. And in the history of Railways, there have been no accidents for December and January months,” Vaishnaw said.

Installation of Kavach – the indigenous automatic train protection mechanism to prevent collision – is also underway as planned, that include on 10,000-odd locomotives, and 17,000-odd track kms.