Union Budget 2025: Railways Allocation Stagnates at ₹2.65 Lakh Crore; Customer Amenities, PSU Investments Slashed

The Union Budget 2025 has retained the Indian Railways’ allocation at ₹2.65 lakh crore, mirroring the previous year’s outlay, but triggered concerns over reduced funding for passenger amenities and investments in Public Sector Undertakings (PSUs). The decision reflects the government’s focus on fiscal consolidation amid economic pressures, even as critics argue it risks compromising modernization and passenger comfort in one of the world’s largest rail networks.

Key Highlights:

1. Flatlined Railways Budget:
   • Despite rising operational costs and pending projects, the Railways’ allocation remains unchanged. Officials emphasize that funds will prioritize safety upgrades, track electrification, and last-mile connectivity under the National Rail Plan.
   • However, no new major projects were announced, signaling a shift toward completing existing initiatives like Dedicated Freight Corridors and high-speed Vande Bharat trains.
2. Customer Amenities Take a Hit:
   • The budget for passenger amenities—including station modernization, cleanliness drives, and digital services—has been reduced by 18% compared to 2024.
   • Critics warn this could stall improvements in hygiene, crowd management, and accessibility, particularly at smaller stations.
3. PSU Investment Cuts:
   • Equity infusion into rail PSUs like IRCON, RITES, and RVNL has been slashed by 25%, raising questions about their capacity to execute infrastructure projects and adopt new technologies.
   • Analysts suggest this may delay critical upgrades, such as AI-driven signaling systems and green energy transitions.

Mixed Reactions:

• Government’s Stance: Finance Ministry officials defended the move, citing the need to curb fiscal deficits and redirect resources toward “high-impact sectors.” They highlighted increased private-sector partnerships under the National Monetisation Pipeline as a counterbalance.
• Industry Concerns: Railway unions and industry leaders criticized the cuts, arguing that underfunding amenities and PSUs could erode service quality and slow down India’s logistics competitiveness. Passenger advocacy groups also flagged risks to safety and convenience.
• Political Backlash: Opposition parties labeled the budget “anti-commoner,” accusing the government of neglecting public transport users while prioritizing capital-intensive projects.

Broader Context:

The stagnant Railways budget contrasts with rising allocations for roads and aviation, underscoring a strategic pivot toward multi-modal connectivity. Economists note that while fiscal prudence is necessary, underinvestment in Railways—which transports over 25 million passengers daily—could strain the system and inflate operational inefficiencies.

Looking Ahead:

With the Railways’ modal share in freight stagnating at ~27%, experts urge innovative financing models and faster project execution to meet 2030 capacity targets. The 2025 budget’s emphasis on public-private partnerships may determine whether the sector can bridge funding gaps while maintaining its social mandate.