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Budget 2025 Likely To Prioritise Railways Over Highways, Says Nuvama

The report said, "For the previous FY24, an allocation of R 2.70 lakh crore was made for the highways sector. In the forthcoming budget, the number is expected to tilt more in favour of railways"

Budget 2025: The upcoming Union Budget for 2025-26 is expected to prioritise the railways sector over highways, according to a report by Nuvama. This shift reflects a change in infrastructure priorities, with the railways likely to see a boost in budgetary allocations.

In the previous financial year (FY24), the highways sector was allocated Rs 2.70 lakh crore. However, the report notes that the upcoming budget is expected to favour railways more, with the sector gradually receiving allocations on par with highways, according to an ANI report.

The report said, "For the previous FY24, an allocation of Rs 2.70 lakh crore was made for the highways sector. In the forthcoming budget, the number is expected to tilt more in favour of railways.”

In the previous budget for FY25, the railways received a record-high allocation of Rs 2.5 lakh crore, up from Rs 2.4 lakh crore in FY24, marking a ninefold increase compared to the allocation in 2013-14. Meanwhile, the highways sector was allocated Rs 2.78 lakh crore for FY25.

The report highlighted the environmental and logistical advantages of railways over roads, noting that a single freight train can replace hundreds of trucks. Studies show that transporting freight by rail can reduce greenhouse gas emissions by up to 75 per cent.

Despite being the fourth-largest railway network in the world, India’s rail share in freight transportation has been steadily declining over the years, states the report.

Between 1950-51 and 2021-22, Indian Railways expanded its track length from 51,000 km to over 102,000 km. However, rail’s share in freight transportation dropped from 85 per cent in 1951 to 60 per cent in 1991, and further to just 27 per cent-28 per cent in 2022. Currently, approximately 70 per cent of freight movement is handled by roads, with trucks consuming more than half of the country’s petrol and diesel, as per the report.

The growth of the road network, which doubled in the past decade to 150,000 km of national highways, has further tilted the balance. The absence of dedicated freight corridors and insufficient rail connectivity to non-major ports has contributed to the increased reliance on trucks.

However, the government is working to address these challenges by improving rail infrastructure to reduce logistics costs and enhance the efficiency of freight transportation.

This shift in focus is expected to strengthen the role of railways in freight transport, fostering a more sustainable and cost-effective logistics ecosystem.

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