Railway Budget 2026 Live: Govt allocates Rs 2.77 lakh crore for the sector; rail stocks surge

The Union Budget has proposed seven high-speed rail corridors, new dedicated freight corridors and the operationalisation of 20 national waterways over the next five years.

The Budget placed strong emphasis on environmentally sustainable passenger transport, with the proposed high-speed rail corridors positioned as growth enablers linking major urban and economic centres. The government said the corridors would help cut travel time, lower carbon emissions and spur regional development by connecting India’s financial hubs, technology centres, manufacturing clusters and emerging cities through faster and cleaner mobility.

“In order to promote environmentally sustainable passenger systems, we will develop seven high-speed rail corridors between cities as growth connectors, namely Mumbai to Pune, Pune to Hyderabad, Hyderabad to Bengaluru, Hyderabad to Chennai and Chennai to Bengaluru. Delhi to Varanasi, Varanasi to Siliguri,” Sitharaman said during presentation.

Sitharaman unveiled plans to make 22 new national waterways operational over the next five years. The move is aimed at strengthening freight transport and expanding multimodal logistics across the country.

Nirmala Sitharaman signalled a fresh infrastructure push by announcing plans for seven new high-speed rail corridors across the country, alongside a sharp increase in public capital expenditure. Presenting the Union Budget, Sitharaman underscored the government’s intent to sustain the investment-led growth momentum, proposing higher capex for 2026-27 and a set of measures aimed at crowding in private investment, de-risking large projects and accelerating asset monetisation.

Sitharaman has announced 7 high-speed rail corridors between cities as “growth connectors”. These corridors will be Mumbai-Pune, Pune-Hyderabad, Hyderabad-Bengaluru, Hyderabad-Chennai, Chennai-Bengaluru, Delhi-Varanasi and Varanasi-Siliguri.

Presenting her ninth Budget, Finance Minister Sitharaman said the economy has remained on a stable footing since the Modi government took office, marked by fiscal discipline, sustained growth and moderate inflation. She said the government’s consistent focus on Atmanirbharta as a guiding principle has helped deliver a high growth rate of around 7%.

Sitharaman also pointed to the challenging global backdrop, noting that disruptions to trade, resources and supply chains have made multilateralism increasingly important. “India must remain deeply integrated with the global markets, exporting more and attracting stable long-term investments,” she said.

Defence is expected to emerge as one of the dominant themes in this Budget. Stock market analysts have forecast an 8-20% increase in allocations to the sector. This has kept defence-linked stocks in focus, including Bharat Electronics Ltd (BEL), Bharat Dynamics (BDL), Hindustan Aeronautics (HAL), Data Patterns (India) Ltd, Astra Microwave Products Ltd, Mazagon Dock Shipbuilding Ltd and Paras Defence and Space Technologies Ltd.

Motilal Oswal Financial Services said defence capital outlay is likely to stay on a strong upward path, noting that the sector has been a key driver of recent growth in overall capital expenditure. According to the brokerage, this momentum underpins the government’s continued push for indigenisation of major defence platforms and electronics, while also widening the scope for private-sector participation in the defence ecosystem.

Sustained public investment has sharply accelerated the expansion of India’s rail network, with track commissioning rates more than doubling in the decade after 2014 compared to the previous ten years, the Economic Survey for 2025–26 said. The Survey was tabled in Parliament of India on Thursday.

According to the Survey, Indian Railways commissioned an average of 1,499 km of railway tracks annually between 2004 and 2014. This pace rose sharply to 3,118 km per year between 2014 and 2024, reflecting a sustained push towards capacity creation and network expansion.

“Indian Railways continue to play a pivotal role in India’s infrastructure landscape by expanding network capacity, modernising assets and strengthening multimodal connectivity,” the Survey said. It noted that record capital expenditure in recent years has been a defining feature of the sector’s transformation.

The Survey highlighted that spending has been directed towards new line construction, doubling and multi-tracking of existing routes, rolling stock augmentation, signalling upgrades and safety-related works. Based on Budget Estimates for FY26, capital expenditure levels have been maintained at historically high levels to accelerate capacity creation within defined timelines.

As of March 2025, India’s rail network stood at 69,439 route kilometres. During FY26, the Railways aim to add another 3,500 km to the network. Electrification has also advanced rapidly, reaching 99.1 per cent of the rail network by October 2025, the Survey said, underlining the sector’s growing operational efficiency and sustainability focus.

For nearly a century, India’s railways occupied a distinct place in the country’s fiscal calendar. The Railway Budget was presented separately in recognition of the sector’s central role in transportation, trade and economic mobility. That long-standing tradition ended in 2017, when the government decided to merge railway finances with the annual Union Budget.

The idea of a standalone Railway Budget dates back to 1924, when a committee under British rule recommended separate financial planning for railways because of their strategic and commercial importance. After Independence in 1947, the practice continued uninterrupted for 92 years. The Railway Minister kept presenting the budget a few days ahead of the Union Budget each year.

In 2016, the government announced the decision to discontinue the separate exercise for Indian Railways. The move was guided by recommendations from a committee headed by Bibek Debroy of NITI Aayog, as well as a paper by Debroy and economist Kishore Desai titled 'Dispensing with the Railway Budget'. The change aimed to streamline budgeting and improve overall fiscal efficiency.

Capacity augmentation has emerged as one of the major focus areas. Of the Rs 1,09,238 crore allocated for expanding network capacity, Indian Railways has spent Rs 76,048 crore so far i.e. 69% utilisation done by December 2025.

This spending covers the construction of new lines, gauge conversion, track doubling and the creation of additional traffic facilities aimed at easing congestion on busy corridors. Over the past decade, such investments have helped improve average speeds and reduce travel time on several key routes.

As investors track signals from the Union Budget and the government’s sustained push on rail infrastructure, select railway-linked stocks are back on market watchlists. Despite recent volatility, some public sector rail plays continue to offer a mix of dividend income, long-term growth visibility and exposure to capital expenditure.

RITES

RITES has a market capitalisation of ₹10,474.28 crore and operates as a key engineering and consultancy arm for rail and infrastructure projects. The stock has traded between a 52-week high of ₹316 and a low of ₹192.40.

Valuations remain moderate, with a price-to-earnings ratio of 27.22 and a price-to-book ratio of 3.81. Its dividend yield of 3.46% makes it attractive for income-focused investors, while return on equity stands at 14.07%. Although the stock is down 14.4% over the past year, longer-term performance remains steady, with three-year and five-year returns of 29.8% and 71.67%.

RailTel Corporation of India

RailTel, with a market capitalisation of ₹10,616.64 crore, has seen sharper price swings, touching a 52-week high of ₹478.95 and a low of ₹265.50. It trades at a higher valuation, with a P/E of 35.41 and P/B of 5.31. While its dividend yield is modest at 0.86%, return on equity is a healthy 15.67%. The stock has declined 9.12% over one year, but its longer-term returns remain robust, clocking nearly 175% over both three and five years.

Ircon International

Ircon International, valued at ₹14,569.53 crore, trades at a relatively lower P/E of 20.03 and P/B of 2.29. Its dividend yield stands at 1.71%, with return on equity at 11.86%. While the stock has fallen 20.99% over the past year, it has delivered strong wealth creation over time, with three-year and five-year returns of 173.93% and 266.65%.