Railway stocks have been buzzing for the last one month on expectation of significant budget allocation

• Stocks related to rail sector like Titagarh wagons, Texmac, Rail Vikas Nigam have been rallying in the last one month on expectation of significant hike in budget for railways.
• In the last year’s budget, finance minister Nirmala Sitharaman had announced ₹1.10 lakh crore for railways.
• As of November 2021, 61% of the budgeted amount had been spent.

The government’s efforts towards infrastructure development is expected to continue aggressively in this Union Budget as well. Railway is among the core infrastructure assets for the country and all eyes are on the budget allocation towards it.

In the last year’s budget, India’s Finance Minister Nirmala Sitharaman had announced ₹1.10 lakh crore for railways for FY 2021-22. As of November 2021, 61% of the budgeted amount had been spent.

Further, it is expected that the government would allocate ₹1.3 lakh crore for railways under the national infrastructure pipeline from expected capital expenditure of ₹7 lakh crore for FY23.

Reportedly, the government is planning to raise the fund allocation to ₹2.5 lakh crore for railways. Since the government has reportedly suffered a loss of ₹26,338 crore last year due to COVID-19, thus it may increase train fares as well.

The expectations of strong funds coming into the railway sector have led to huge buying in shares of some railway companies.
Railway sector includes the government’s ambitious projects like high-speed rail including bullet trains and analysts expect special allocation to these segments in the upcoming budget. “The government should provide some dedicated allocations towards these projects (bullet trains, sagar mala, smart cities, inland waterways developments) in the budget,” said analysts at KR Choksey.

Analysts believe Indian railways require an estimated ₹50 trillion between 2018-2030 to strengthen its infrastructure, electrification and signaling process. “We expect capital expenditure allocation for railways to be increased substantially,” said analysts at KR Choksey.

In the FY22 budget, the government had increased the railway budget by 52%.

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