Union Budget 2026: Should Centre Amplify Efforts To Privatise India's Railway Sector?

Ahead of the Union Budget 2026, railway sector stakeholders and policymakers are mulling over if the central administration will amp up this strategic sector's capital expenditure of Rs 2.52 lakh crore, which was left unaltered in last fiscal year's budgetary allocation. 

Meanwhile, several investors and observers of India's burgeoning railway infrastructure spread are awaiting reforms that'll bolster the pace of privatisation in this sector.

Back in 2019, Indian Railways had floated a plan involving private entities running nearly 150 trains in over 100 major routes, however, it failed due to lack of participation with only two players remaining in play, including centre backed IRCTC. Since, this PSU would give higher revenue share to Indian Railways, the plan to privatise didn't take off.

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Despite this, the debate of privatising this strategic sector keeps resurfacing. The policy shifts in recent times voice encouragement for private sector participation but not privatisation.

Indian Railways functions as a state-owned enterprise organised as a departmental undertaking of the Ministry of Railway, which runs the national railway system in the south Asian nation.

Why Should Privatisation Be Encouraged In Railway Sector?

• Indian Railways began creating Focused Business Organisations (FBOs) nearly three decades ago to hive off non-core activities and inject commercial discipline. Yet, what was conceived as a transitional reform has ossified into a permanent structure of state- dominated commercial entities. This persistence stands in direct contradiction to the government's stated policy on strategic disinvestment.
• Container Corporation of India Ltd (CONCOR) remains a profitable enterprise, registering around 10 per cent volume growth, with a nationwide footprint of over 60 terminals. It has attracted interest from global port operators, logistics majors, sovereign investors, and private equity funds. However, this high-quality asset remains shackled by policy uncertainty is a self-inflicted constraint.
• One of the principal stumbling blocks—the issue of high land licensing fees (LLF)— exposes a fundamental conflict of interest. Post, the revision of the LLF guidelines in 2023, ambiguity persists, which several argue would not persist in a truly competitive market.
• A timeline on when the “on hold” status will be removed and strategic disinvestment of CONCOR will occur is awaited by industry stakeholders in 2026-27, inclusive of transferring management control.