2026 Budget Highlights: Income Tax Stagnates, Reforms Focused, Markets Decline

Bassyonni

Published: February 1, 2026 2:56 AM ET

Anticipation is building for the 2026 budget with expectations focused on the railway sector. Analysts predict a significant increase in allocations after several years of limited growth. Stocks of companies like IRFC, RVNL, IRCON, and IRCTC are gaining attention as forecasts suggest a growth in budgetary allocation of 5 to 10 percent for FY27.

2026 Budget Highlights: Income Tax Stagnates, Reforms Focused, Markets Decline

The railway sector is expected to receive heightened financial support, with estimates for gross budgetary allocation reaching Rs 2.65 lakh crore. Some projections suggest that this figure could go as high as Rs 2.8 lakh crore, signaling a positive development for the industry.

Key Initiatives and Focus Areas

The upcoming budget is set to prioritize several vital areas:

Capacity expansion and rolling stock additions
Safety upgrades and systems like Kavach
Station modernization and faster project execution
Decongestion through track doubling and bullet train corridor initiatives

As electrification nears completion, investments will likely shift towards creating new lines, converting gauges, and expanding Dedicated Freight Corridors. The overarching goal remains to lower logistics costs, which currently exceed benchmarks compared to advanced economies.

Beneficiaries of Increased Funding

Higher budget allocations are anticipated to benefit various sectors, improving the entire value chain, including consultancies and equipment suppliers. Significant beneficiaries of safety spending will include:

Kavach providers: HBL Engineering, Kernex Microsystems, Siemens, CG Power
Coach manufacturers: BEML, BHEL, Siemens, Titagarh Rail Systems

Currently, the railways ministry is advancing plans on an 18,000 km tender for Kavach 4.0. Analysts from Bajaj Broking and MOFSL echo the sentiment that expansion in capital expenditure is vital.

Market Reactions and Expectations

Brokerages anticipate the potential for a positive market response if allocations exceed expectations. Any rise in funding would underscore a strong commitment to infrastructure development in the railway sector.