Budget 2025 Expectations: Centre likely to prioritise railways over highways?

The Union Budget for 2025-26, set to be announced on February 1 (Saturday), is expected to prioritise railways over highways, according to a report by brokerage Nuvama. Railways are likely to receive increased allocations, aligning with the government’s push for greener, cost-effective logistics and reduced reliance on road transport.

In FY24, highways were allocated Rs 2.70 lakh crore, but projections for FY25 indicate that railways could receive a larger share of the infrastructure budget. This aligns with the government’s emphasis on sustainable development and reducing the environmental impact of freight transportation.

Union Budget 2025: Railways in focus

Add Zee Business as a Preferred Source

In the Union Budget 2024-25, presented on July 23, the Indian Railway ministry was allocated a record capital expenditure of slightly over Rs 2.62 lakh crore. By January 5, nearly Rs 2 lakh crore of this allocation had already been utilised. Analysts anticipate a 15–20 per cent increase in the upcoming budget, which could see the allocation rise to Rs 3 lakh crore.

In FY24, Rs 11.1 lakh crore (3.4 per cent of GDP) was allocated for infrastructure. States received Rs 1.5 lakh crore in interest-free loans, while Phase IV of PMGSY aimed to connect 25,000 rural areas. Key projects, including the Rs 11,500 crore Kosi-Mechi link, were also part of the plan.

Budget 2025: Railways vs roads

India’s railway network, the fourth-largest globally, has doubled its track length from 51,000 km in 1950-51 to over 102,000 km in 2022. Despite this expansion, the share of freight transported by rail has declined drastically, falling from 85 per cent in 1951 to 60 per cent in 1991, and further to just 27-28 per cent in 2022.

Currently, 70 per cent of freight movement depends on roads, with trucks consuming over half of the country’s petrol and diesel. The rapid expansion of the road network, including the doubling of national highways over the past decade to 150,000 km, has further tilted the balance towards road-based freight transport. Challenges such as the lack of dedicated freight corridors and limited rail connectivity to non-major ports have also exacerbated this dependency.

The government is now addressing these challenges by enhancing rail infrastructure. Efforts are focused on developing dedicated freight corridors, improving rail connectivity in underserved regions, and fostering a sustainable logistics ecosystem.