Shares of many railway companies plunged up to 8% today after Finance Minister Nirmala Sitharaman's first Budget under the Modi 3.0 government didn't mention any big allocation for railways. Much to the disappointment of railway passengers, the FM's Budget 2024 speech document shows no major allocation has been made for the sector. Reacting to the Budget 2024 announcements, Prime Minister Narendra Modi said the Budget 2024 for "Viksit Bharat" ensures inclusive growth, benefiting every segment of society and paving the way for a developed India. However, the sector, which used to have a separate budget until 2016, didn't see any new allocation this time.
There were certain expectations about announcements to improve the safety standards of the railways, which have seen multiple mishaps in the past year. However, no major announcement was made on new trains and modernisation or upgradation of railways infrastructure. During the entire speech, the FM mentioned the word "railways" just once, with a reference to infrastructure projects in Andhra Pradesh. "Under the Act, for promoting industrial development, funds will be provided for essential infrastructure such as water, power, railways and roads in Kopparthy node on the Vishakhapatnam-Chennai Industrial Corridor and Orvakal node on Hyderabad-Bengaluru Industrial Corridor,” she says.
The development sent a majority of railway stocks plunging, with IRCON falling the maximum 7.52%. Shares of the railway tour, travel and related services company IRCTC dipped 3.07% to ₹975.10 on the BSE. The stock had opened in the green but fell post the budget announcement, taking its m-cap down to ₹78,008 crore. Shares of the Indian Railway Finance Corporation (IRFC) closed 4.79% down at ₹194.75. Civil construction major IRCON saw its shares closing 7.52% down at ₹295 on the BSE, taking its m-cap down to ₹27,745.21 crore. Similarly, RVNL shares fell 5.12% to ₹592 on the BSE, dragging its m-cap down to ₹1.2 lakh crore. Railway wagons company Jupiter Wagons Ltd shares dipped 3.12% on the BSE and its m-cap stood at ₹26,403.78 crore. RailTel Corporation of India shares also dipped 5.12% at ₹496 on the BSE. The fall in the railway shares, however, was in line with the BSE benchmark Sensex, which closed 0.09% down at 80,429.04 points, while Nifty closed 0.12% down at 24,479.05.
Notably, in the Interim Budget 2024-25 in February, the FM announced three major economic railway corridor programmes for railways, including energy, mineral and cement corridors; port connectivity corridors; and high traffic density corridors. The projects were identified under the PM Gati Shakti scheme for enabling multi-modal connectivity to improve logistics efficiency and reduce cost. The resultant decongestion of the high-traffic corridors due to these initiatives is expected to help improve the operations of passenger trains. Additionally, the FM had also announced 40,000 normal rail bogies to be converted to the Vande Bharat standards.
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