India is set to significantly boost its railway budget in the upcoming 2025/26 federal budget, while allocating a marginal increase for road infrastructure, two government sources revealed. Prime Minister Narendra Modi's government, which has prioritized infrastructure development to foster economic growth, will shift some focus toward modernizing the railway sector in response to ongoing challenges in executing road projects.

Finance Minister Nirmala Sitharaman will present the budget on February 1, 2025, with the sources confirming that the railway ministry's budget allocation could rise to between 2.9 trillion rupees and 3 trillion rupees (approximately $33.5 billion to $34.7 billion). This increase, up from 2.55 trillion rupees in the current fiscal year, will support the expansion of Indian Railways' vast network of over 68,000 km of track, as well as plans to introduce 400 high-speed Vande Bharat trains by March 2027. The budget will also help boost rail freight services.

Meanwhile, the road transport ministry is expecting a 3% to 4% increase in its budget, taking the allocation to approximately 2.9 trillion rupees ($34.7 billion). Despite the ministry's spending rising six-fold over the past decade, the official cited land acquisition and project delays, especially in the aftermath of last year's national and state elections, as factors limiting a larger budget increase.

As part of efforts to maintain the momentum in road development, which has seen the network grow by nearly 60% over the past decade, the road transport ministry plans to raise funds through internal resources and private partnerships. One such initiative involves selling toll collection rights and monetizing road assets to generate up to 1 trillion rupees annually.

These adjustments come as policymakers focus on maintaining infrastructure growth amid fiscal constraints and a need for greater execution efficiency across sectors.