Last Update: May 2023 (Railways)


This article deals with ‘Railways – UPSC.’ This is part of our series on ‘Economics’ which is an important pillar of the GS-3 syllabus. For more articles, you can click here.

General Information


1853 First Train started in India (from  Mumbai to Thane (34kms))
1924-25 Rail budget was separated from general budget (based on the Acworth Committee Report of 1921)
2015 Bibek Debroy Committee on railway restructuring gave recommendations.
2016 India’s first Railway University opened in Vadodara, Gujarat
2017 Railway Budget was merged with General Budget.

Share of Railways in the transportation of goods

In the US, 44% of goods are transported through railways, but in India share has been decreasing each passing year  (65% in 1970, 30% in 2007 & 25% in 2020)


Benefit of Railways wrt other modes of transport

  • Cheaper: The transportation cost of goods using railways is low (₹2/ton/km).
  • Low Carbon Footprint: Railways are a greener mode of transportation as they consume 20% less energy.
  • Integrate India with world markets: Railways can help to expand & integrate markets as they did in Europe and the USA. 
  • Spur economic activity: According to Economic Survey, 1 rupee invested in the railways increases GDP output by 5 rupees.

Railway gauge size

Gauge Size
Broad 1,676 mm
British used it to send raw material from Indian hinterland to port cities
Meter 1,000 mm 
Narrow 762 mm
Lift  610mm
  • Ranking track length in India: broad > meter > narrow
  • Under the Project uni-gauge, Railways has converted selected routes into broad gauge.

Railway Undertakings

Indian Railway has 14 undertakings. Important ones are 

  • IRCTC (provides catering services)
  • CONCOR (Container Corporation of India)
  • Railtel

Statistics about Indian Railways

Statistics about Indian Railways
Operational Ratio of Indian Railways

UNESCO World Heritage: Indian railways

  1. Darjeeling Himalayan Railways
  2. Nilgiri Mountain Railways
  3. Kalka Simla Railway
  4. Chhatrapati Shivaji Terminus (Victoria Terminus) (It was designed by British architect FW Stevens in  Gothic Style)

National Rail Plan for India, 2030

Under this plan, the government of India wants to achieve the following

  1. Increase Indian railway’s share in freight transportation to 45% and average speed of freight transportation to 50% by 2030.
  2. Achieve 100% electrification of all train routes.
  3. Increase the speed of Delhi-Howrah and Delhi-Mumbai routes to 160 km/hr.
  4. Identify and develop new Dedicated Freight Corridors and High-Speed Rail Corridors.
  5. Improve the safety of railway tracks in India.

Railway Budget merged with General Budget

Railway Budget vs General Budget

  • 1924-25: British separated rail budget based on the recommendations of Acworth Committee (1921).
  • Indian constitution didn’t provide for a separate railway budget or budget in parts. But Parliamentary rules of procedure permitted it.
  • 2017: Railway Budget was merged with General Budget.

Arguments for merging Railway Budget with General Budget

  1. Economic Reasons:
    • Saving funds of financially starved Railways: Indian Railways need not pay the annual dividend of ₹10,000 crores to the Government. 
    • Railways will be better equipped to raise funds on the strength of the sovereign instead of being restricted to the Indian Railway Finance Corporation.
  2. The situation is different from 1924:  In 1924, the railway’s expenditure was more than the expenditure of all other administrative expenses. It has presently reduced to just 6% of total government spending.
  3. Any other country does not follow this system. 
  4. Politicization of Railways: This provision was used by politicians for populist reasons.   
  5. Bibek Debroy Committee too has suggested separating the railway budget from the general budget.

Why should there be a separate budget for the Railways?

  1. Indian Railways is different from other central ministries due to its size and scope. Whereas other ministries just spend, Railways is an operational ministry as it earns and spends. 
  2. Bibek Debroy Committee has recommended separating the railway budget from the general budget. But it wasn’t a standalone measure.

Metros / Mass Rapid Transit System (MRTS)

  • Rapid transit, also known as the metro or subway, is high-capacity public transport. Unlike buses & trams, they are electric & operate on an exclusive right-of-way. 
  • First Metros was started in Kolkata in 1984 from Dum Dum to Tollygunge. 


  1. Reduced traffic density on the roads
  2. Reduced vehicular emission leading to decreased air pollution
  3. Reduced fatalities due to road accidents
  4. Reliable & safer journey
  5. Decreased fuel consumption
  6. Decreased vehicular operating cost

Metro Rail Policy, 2017

Metro Rail Policy, 2017

Indian Government has announced its Metro Rail Policy with PPP as the centre of the scheme

  • PPP is the centre of the scheme. The PPP component has been made mandatory for availing assistance from the central government.
  • The new policy mandates Transit Oriented Development (TOD).
  • Power to set up Fare Fixation Authorities has been vested with states. 
  • States can raise low-cost debt capital through the issuance of corporate bonds. 
  • Empowers state to charge a “betterment levy” in areas that will benefit from the metro rail projects. 

Problem with the Policy

  • The main problem is with the PPP model. PPP model has failed in Delhi Metro’s airport line — and is faltering in the Mumbai and Hyderabad metro rail projects. Due to various positive externalities of Metro, these projects must be subsidized by the government. In  Delhi Metro, the Centre and state government have footed much of the bills. Even E Sreedharan has opined that the PPP model is not suitable for Metros as private players expect more than 12% return from metro projects while no metro project can yield more than 3 per cent.

MetroLite or MetroNeo

  • MetroLite or MetroNeo is the model for Metros in smaller cities such as Nashville in the USA and Indian cities of Jammu, Coimbatore, Srinagar etc.
  • It was announced in the budget of 2021. 
  • These are a lighter version of conventional metro rail and can be set up at a lesser cost (2/3rd to 1/3rd cost of the normal metro).

Issues that Indian Railways is facing

1. Cross Subsidisation

  • Railways keep passenger tickets low –> Indian Railways suffer the loss of 23 paisa/passenger/km.
  • To compensate for the loss, Indian Railways keep freight prices higher.

2. Operating ratio of Indian Railways

  • The Operating Ratio of Indian Railways is just 98.4%, i.e. Indian Railways spend 98.4 rupees out of 100 rupees earned. Hence, only 1.6 rupees are left in surplus. 
  • It is a problem because Indian Railways left with no capital for expansion. 

3. Rail Safety / Large accidents

  • A large number of rail accidents such as derailments and collisions take place in India.

4. Congestion of Tracks

  • Indian railways has an overstretched  infrastructure  with 60 per cent plus routes being more than 100 per cent utilized,  leading to a reduction in the average speed of passenger and freight trains

5. Organisational Structure

  • Due to complex and outdated organizational structure, project approval and completion take extraordinarily long.

Steps already taken to improve railways

  • Tariff rationalization of fares has already been completed.
  • Indian Railways is focussing on Non-Tariff Earnings such as advertisement revenue.
  • Rail Budget has been merged with General Budget. 
  • The government has constituted the Rail Development Authority (RDA).
  • New delivery models like Roll-on Roll-off (Ro-Ro)services have been started.
  • Indian Railways have changed the accounting system  to Accrual Based Accounting from Cash Based Accounting 
  • Indian Railway Finance Corporation has issued Masala Bonds to gather funds.
  • Kayakalap Council under the Chairmanship of Ratan Tata has been constituted

Side Topic: Accrual Based Accounting

Accrual Based Revenues are reported on Income Statement when they are earned
Cash Based Revenues are reported on Income Statement when they are received

Non-Tariff Earning

  • Indian Railways has decided to increase its focus on non-tariff earning
  • All the budgets since 2016 have emphasized on non-tariff earnings, and Indian Railways unveiled its first non-fare revenue policy in 2017.
  • Indian railways earn a minuscule amount from non-tariff revenue compared to their counterparts in other countries. E.g., Indian railways earn 5% of all its earnings from non-tariff revenue compared with 25-30% in Japan. 


  • Selling spaces on railway stations and railway containers for advertising hoardings and billboards.  
  • Leasing out spaces at platforms to ATMs. 
  • Selling branding rights of trains and stations. 
  • Leasing the land around tracks for horticulture purposes

Bibek Debroy Committee  on Railway Restructuring

Bibek Debroy is a noted economist & member of NITI AYOG. The committee was formed under Bibek Debroy to suggest measures to restructure railways. 

Suggestions of Committee

Bibek Debroy Committee  on Railway Restructuring

The committee does not recommend the privatization of Indian Railways. However, it does endorse private entry with the provision of an independent regulator.

1. Reform in Human Resource Management

  • There are 8 services in Railways with different cadres, thus reducing the administrative efficacy. 
  • Recommendations: Unify the Cadre System for optimal utilization of human resources.  

2. Outsourcing

  • Outsource non-core areas, i.e. Police force, schools, hospitals, water bottling, museums etc. 

3. Regulator

  • The Committee has recommended that the Independent RAILWAY Regulator. 
  • Railway Board should continue only as an entity for the management of Indian Railways (PSU).
  • 2018 Update: Rail Development Authority has been constituted with the following functions
    1. Recommend tariff “commensurate with costs.” 
    2. Benchmark service standards
    3. Frame guidelines for track access charges on dedicated freight corridors.

4. Towards entry of private players

  • It recommended separating railway track construction, train operations, and rolling-stock production units under different entities to enable open access to private operators. 

5. Other Recommendations

  • Merge rail budget with General Budget.

Sanjeev Sanyal Committee Report (2021)

The main recommendations of the Committee include

  1. Wind up organizations such as Central Organisation for Railway Electrification (CORE), Centre for Railway Information System (CRIS) etc.
  2. Merge Rail Vikas Nigam into IRCON, Railtel into IRCTC and takeover of Braithwaite and Co. Limited by RITES as their functions overlap.
  3. Outsource the non-core functions. 

Private Train Operators

On selected routes, Private train operators will Design, Build, Finance and Operate (DBFO Model) their own private trains on government tracks  & charge market-linked fares. . Government (Indian Railways) will provide track and signalling infrastructure to them in return for which Private train operator will share a percentage of its revenue with Government.

Timeline of Rail Privatization

Attract private 
investment in building 
railway infrastructure. 
Allow entry of private 
railway operators in goods 
and freight services 
Allowed Private Operators 
to run trains on theme 
based circuits

Benefits of Rail Privatization

  • It will lead to improved efficiency as private players will bring superior management, technology and amenities.
  • It will lead to a lack of political interference in the railway operations, and decisions will be taken on sound economic principles.
  • Increased competition: The entry of private players will ensure improved quality of service with competitive fares. 
  • Prevent Government’s loss: The revenue generated by the Indian Railways is low and keeps the system always at losses. 
  • Reducing the supply-demand deficit: Since waitlisted passengers comprise ~15% of the reserved passengers. 
  • Private investment: According to estimates, railway infrastructure needs an investment of ₹50 trillion between 2018 and 2030. Given the FRBM restrictions, involvement of private capital is required.  
  • Economic Growth: Private investment in the railways will also lead to economic growth due to its positive spillover effects.

Challenges with Rail Privatization

  • Private monopoly: Privatization in railways might create a private monopoly that might seek to set higher prices and exploit consumers.  
  • Coverage Limited to Lucrative Sectors: With privatization, less popular routes could be eliminated, thus hurting connectivity and rendering some parts of the country virtually inaccessible.  
  • Apprehension among railway employees about job-loss, if Government reduces the number of Government trains.
  • Fragmentation in the railways: Rail privatization broke unified railway operations into infrastructure management and train operating companies in the UK. It led to the absence of clear demarcation of responsibility.

Bharat Gaurav Trains and Bharat Gaurav Policy

  • Bharat Gaurav Trains are private trains that will operate on theme-based circuits (e.g., Ramayana Express connecting places associated with Lord Ram).
  • The operator can lease the train and coaches from the Indian railways and change the interiors provided they comply with the safety norms.
  • The tenure of arrangement can vary from a minimum of two years to the life of the coach. 
  • The operator can also decide the halts, sell advertisement rights etc.

Railway Safety

Main categories of Railway Accidents

  • Derailment of Trains is the primary cause of railway accidents, constituting 50% of railway accidents.
  • Accident on unmanned level crossing gates (36%)
  • Train collisions
  • Rail Fire 
  • Persons standing on railway tracks (e.g., In 2018, 61 people were crushed to death in Amritsar).
  • Natural Causes such as floods, landslides etc. 

Between 2012-2018, a total of 600 rail accidents happened.

Reasons for Railway Accidents

  1. Lack of anti-collision technologies that automatically halts the train if it overshoots a red signal.  
  2. Inappropriate maintenance of tracks: Khanna Committee on Railways Safety commented that nearly 25% of the total railway track in India is overaged.  
  3. Poor Rolling stock: Most trains’ locomotives are not equipped with the Linke Hoffman Busch (LHB) coaches. LHB coaches are more secure than ICF due to the lower centre of mass, preventing it from toppling, turtling, and telescoping.
  4. Rail Fractures: Railway Tracks are made up of strong and durable steel, which can withstand extreme weight and fluctuations in temperature. But Railway fractures do occur due to many reasons like defects during manufacturing, defects during installation and lack of maintenance. These Rail fractures are also among the frequent reasons for derailments.
  5. Government Negligence: Government has formed committees such as Sam Pitroda Committee, Khanna Committee and Bibek Debroy Committee. But all these reports kept on lying dormant and recommendations un-implemented.  

Steps taken by Government

  • Rashtriya Rail Sanraksha Kosh was created with a corpus of 1 lakh crores to promote railway safety.   
  • TCAS (Train Collision Avoidance System): TCAS is based on a combination of railway signalling data, global position, radio frequency identification devices (RFID), software and logic. 
  • Tri-Netra System: Tri-Netra or Three Eyes system is made up of (1) Optical video camera, (2) Infrared video camera and (3) Radar-based terrain mapping system. It will help in avoiding collisions even during the fog.
Tri-Netra System
  • Changing to LHB: Indian Railways is replacing the ICF (Integral Coach Factory) coaches with German-made Linke Hofmann Busch (LHB) coaches. 
  • Setu Bharatam Project: Under the Setu-Bharatam project, unmanned railway crossings are eliminated. 

Way Forward: An independent body like Railway Safety Authority should be constituted to set the standards for Rail Safety and find the reasons and persons responsible for it in case of an accident.

Dedicated Freight Corridors 

Freight operations on the Indian Railways are set to witness a paradigm shift with the completion of its two dedicated freight corridors.

Eastern & Western DFC

Eastern & Western Dedicated  Freight corridor
  Eastern corridor Western corridor
Start Ludhiana in Punjab Dadri in Uttar Pradesh
Funded by World Bank JICA
End Dankuni in West Bengal Jawaharlal Nehru Port Trust near Mumbai
Length 1760 Km 1468 Km

Why DFCs?

  1. It will segregate freight infrastructure passenger transport. It will remedy the issue faced by freight trains, i.e. unpredictable and low speeds of around 25 km per hour. These trains can run at the average speed of 50-60 kph on the Dedicated Freight Corridors, thus leading to faster transport of raw material & finished material from factories to ports and vice versa. 
  2. DFCs will reduce the congestion on existing routes as existing routes are already saturated. 
  3. Allow Passenger Trains to run at faster speed:  Indian railways run fast passenger trains, slow trains, goods trains all on the same track. Hence trains like Rajdhani, which can achieve speeds up to 130kmph, run at an average of 70kmph.  
  4.  Reduce Logistic cost: At present, the logistic cost is about 14% GDP which is 30-40% higher than global benchmarked logistics cost.
  5. DFCs will help India in containing the railway’s falling share of goods traffic, which is 44% in the US and 47% in China compared to just 25% in India.
  6. DFCs will facilitate fresh industrial activity along the corridors.
  7. Carbon emission reduction may help India to claim carbon credits.

Issues / Constraints

  • Issue of Land Acquisition: Due to route alignment, the railways have to acquire large swathes of private land that are already developed, making the construction of the corridor difficult.
  • Double stack vs single stack: The project has adopted different technical standards for WDFC and EDFC. WDFC would have moving dimensions made for double-stacked containers, and moving dimensions for EDFC are being made for single stack container operations. This makes the seamless movement of double-stack trains from WDFC to EDFC impossible.  
  • Not enough bidders: Given the conditions set by the Japanese government (which is giving soft loans) and which stipulates the involvement of a Japanese partner, the total number of bidders has been low for the Western corridor.

High-Speed Rails (HSR)

High-Speed Rail Corridor Plan (Diamond Quadrilateral)

  • Under the High-Speed Railway Corridors (HSR) plan, the Railways intend to run trains at the average speed of 200- 300 Kmph.
  • Ministry of Railways has selected the following six corridors
    1. Delhi-Chandigarh-Amritsar
    2. Pune-Mumbai-Ahmedabad
    3. Hyderabad-Dornakal-Vijaywada-Chennai
    4. Chennai-Bangalore-Coimbatore-Ernakulam
    5. Howrah-Haldia
    6. Delhi-Agra-Lucknow – Patna

Ahmedabad-Mumbai HSR

  • Work on the Ahmedabad-Mumbai line has already been started.
  • It’s details are as follows
Length 509 km
Time to travel 2 km (compared to 7 hours taken by fastest train now)
Top Speed 350 km / hr
Cost of project ₹ 1lakh 8 thousand CRORE
Technology Used Japanese Shinkansen (Bullet Train) Technology
Ahmedabad-Mumbai HSR

Why should India go towards HSR ?

  • Globally, India’s railway network is the fourth largest. Hence, India should build High-Speed Railways to move forward on the learning curve.
  • It has a multiplier effect. 
    1. Improved specialization in construction technologies (as done by China)
    2. The emergence of large MNCs like Alston of France and Hitachi of Japan
  • The development of HSR will have benefits on real estate & facilitate balanced urbanization. For example, the Beijing-Tianjin HSR line helped the growth of Tianjin’s real estate & commercial industry.  
  • Although High-speed railways directly compete with economy class tickets of an airline but have the following benefits vis-a-vis road and airlines
    1. These rail systems have 30% less land requirement in comparison to expressways. 
    2. Energy consumption is 1/3 less than private cars & 5 times less than aeroplanes.
  • HSR system is highly safe. No accident has been reported in the entire history of the Japanese High-Speed Rail.

New Trains

1. Vande Bharat

  • It was formerly known as Train -18.
  • It was made and designed by Integral Coach Factory (ICF) based in Chennai under the Make in India Initiative 
  • These are semi high-speed trains that run at a speed of 160 Kmph (fastest in India).
  • It is an Engineless train running on Electrical Multiple Unit (EMU) Technology.
  • The train has state of the art facilities like onboard WiFi, CCTVs, Rotating Chairs, disabled friendly, intelligent braking system etc. 
  • Budget 2022: 75 new Vande Bharat trains will be added in Indian Railways till 15th August 2023 and 400 new trains in 3 years.

2. Bharat Gaurav Trains

  • Bharat Gaurav Trains are theme-based trains launched in 2021.
  • E.g., Buddhist Circuit Tourist Train (to explore Buddhist places), North East Circuit Train (to explore North Eastern States) etc.

3. Gatiman Express

  • Gatiman Express is a semi-high speed train.
  • It runs on electricity.

4. Antyodaya Express

  • Antyodaya Express is a fully unreserved superfast train that runs on dense routes. 

5. Tejas Express

  • Tejas runs at 130 Kmph and provides advanced amenities such as WiFi services.

6. Uday Express

  • Uday is a double-decker train running on busy routes. 

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