Railways Likely to Get Bigger Push Than Highways in Union Budget 2026–27

New Delhi: The Union Budget for the next financial year is expected to continue its strong emphasis on infrastructure spending, with indications that Indian Railways may receive a higher allocation than the highways sector. The move is aimed at stimulating economic growth, boosting employment and strengthening domestic demand.

According to a report by India Ratings and Research (Ind-Ra), the Railways could be allocated around ₹2.7 lakh crore in Budget 2026–27, up from ₹2.5 lakh crore in the current financial year. The likely increase is attributed to a growing pipeline of railway projects, including new lines, capacity expansion and modernisation works.

In contrast, the highways sector may see only a marginal rise in budgetary support, as significant investments have already been made in recent years and approvals for new projects have slowed.

Infrastructure to Remain the Budget Focus

The government believes that sustained investment in infrastructure will act as a multiplier for the economy—creating jobs, increasing incomes and encouraging private sector investment. Even as private capital expenditure remains somewhat subdued, both central ministries and state governments have largely aligned with the Centre’s push to step up public spending.

In the current financial year, Finance Minister Nirmala Sitharaman raised capital expenditure by 10% to ₹11.2 lakh crore, reinforcing infrastructure as the cornerstone of economic policy.

Capex Trends So Far

Between April and October, government capital expenditure rose by 13% to ₹6.7 lakh crore, compared to just under ₹6 lakh crore during the same period last year. As of this week, the Railways has spent close to ₹2 lakh crore, or about 77% of its annual allocation, while the Ministry of Road Transport and Highways has spent over ₹1.8 lakh crore, accounting for nearly 68% of its budgeted outlay.

Why Railways May Get Priority

Railway officials expect higher allocations due to the acceleration in new railway line construction and the approval of several additional projects. Typically, expenditure increases significantly in the second and third years of project execution.

Railway spending is largely directed toward:

• Laying new railway lines
• Converting existing routes into multi-track corridors
• Completing electrification of the broad-gauge network
• Procuring rolling stock such as new trains, wagons and locomotives

Beyond transport efficiency, Railways is viewed as the most affordable and accessible mode for moving people and goods across the country. Expanded rail connectivity and electrification are expected to boost train speeds, improve cargo movement and enhance trade efficiency.

Highways Sector Faces Slower Momentum

The highways sector, meanwhile, has seen a slowdown in project approvals. Against a target of 10,000 km by 2026, only around 2,000 km of projects have been approved so far. In 2024–25, approvals stood at 7,537 km, well short of the annual target.

Officials suggest that the declining pace of approvals will limit spending requirements, making it likely that the highways budget for the next financial year will remain close to current levels.

Wider Investment Push

Apart from transport, the government is also considering higher investment in sectors such as agriculture, with proposals to strengthen irrigation networks and canal systems in select states to improve farm productivity.

Overall, the upcoming Budget is expected to reinforce the government’s belief that infrastructure-led growth can set off a virtuous cycle—higher employment, increased consumption, stronger corporate earnings and renewed private investment—laying the foundation for sustained economic expansion.