After the formation of Prime Minister Narendra Modi’s government at the Centre, the tradition of presenting a separate railway budget ended. When a separate budget was presented for the Railways, people were very much interested in the Railway Budget. The main reason for this was that the Railway Minister used to announce new superfast, express and passenger (short distance trains) trains in the Railway Budget. People wanted to know how many new trains were going to pass through their city. But, after the Railway Budget became a part of the Union Budget, this trend ended. Now people, especially investors, keep their eyes on how much capital expenditure has been announced by the government for the Railways. The effect of increasing government capital expenditure for railways is visible on railway stocks.
No major announcements were made on July 23, 2024
In the Union Budget presented on July 23, 2024, the Finance Minister did not make any major announcements for the Railways. Its effect was seen on railway stocks. There was a sharp decline in the shares of many companies related to railways. This time there is a big fall in railway stocks before the Union Budget. A big fall was seen in railway stocks on January 13. IRCON International shares fell 5.48 per cent on BSE. IRFC shares also fell by more than 5 percent. IRCTC stock crashed 4.41 percent. BEML stocks closed down 2.43 per cent.
The effect of increase in allocation is visible on stocks
The effect of increasing the government’s allocation for railways is visible on railway stocks. The reason for this is that if the government spends more on railways, then the companies related to railways get business from it. Capital allocation for railways has increased sixfold between 2018 and 2025. This has affected railway stocks. During this period, there has been a rise in the prices of many railway stocks. In FY18, the government had allocated Rs 43,230 crore for the Railways. The total allocation for Railways in FY25 reached Rs 2.65 lakh crore.
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Is it time to invest in railway stocks?
The question is whether the prices of railway stocks have reached attractive levels after the fall? Market experts say that there is no doubt that the focus of Prime Minister Narendra Modi government at the Center remains on Railways. In the initial years, Narendra Modi’s government focused on improving rail infrastructure. Now the government’s focus is on increasing passenger facilities. This will also increase the earnings of Railways. Therefore, on July 1, 2025, the Union may increase the allocation for Railways in the budget. Due to this, there may be a rise in the prices of railway stocks.