100 years ago: Indian railways

1. At a Glance

• The Hindu's "100 years ago" column (21 October 2026 edition) reprints a report datelined Simla, October 20. In it, Mr. Beyers, leader of the South African Deputation, writes to Sir Clement Hindley, Chief Commissioner of Railways, that the Indian Railways are "second to none" [1].
• The letter shows how highly outsiders rated colonial-era railway administration in the mid-1920s. That period coincided with major reforms: the Acworth Committee (1920-21), the Separation Convention (1924) and the first electric train (1925) [2][6].
• UPSC value: the topic links GS-I (the colonial economy and railways) with GS-III (railway finance, electrification and infrastructure). The 1924 to 2017 budget story comes up often in Prelims [2][3].

2. Why in the News

• The Hindu ran the item on 21 October 2026, International Print Edition, Page 9 [1].
• Centenary of the first electric train. It ran on 3 February 1925, so the centenary fell in February 2025 [6].
• PIB published "Mission 100% Electrification: Powering the Future of Indian Railways" in January 2026 [9].
• PIB published "From Steam to Speed: The Ever-Evolving Journey of Railways" on 15 April 2026 [10].

3. Background & Evolution

• 1920-21: Acworth Committee. It recommended separating railway finances from general finances. The main aim was to give general revenues a steadier, assured contribution from the railways [2].
• 20 September 1924: Separation Convention. The House adopted it by resolution. From then on, the Railway Budget was presented to the Legislative Assembly before the General Budget and was debated on separate days [2].
• 3 February 1925: first electric train. It ran on 1,500 V DC from Bombay VT to Kurla on the Harbour Branch [6][7]. The EMU rakes were made by English Electric Co. [8].
• 20 October 1926: the South African Deputation praises Indian Railways in its letter to Sir Clement Hindley [1].
• Later DC phase: electrification was extended using a 3,000 V DC system [7].
• Pre-1947: only 388 route km had been electrified [9][11].
• After 1947: the separate Railway Budget continued by convention, not under any constitutional provision [2].
• 1957: Indian Railways adopted single-phase 25 kV AC for all future electrification schemes [6].
• September 2016: the Union Cabinet approved three changes together: merging the Rail Budget into the General Budget, advancing the budget date, and merging the Plan and Non-Plan classifications [3].
• 1 February 2017: FM Arun Jaitley presented railway finances as part of Union Budget 2017-18. It was the first merged budget since 1924 [3][4].

4. Core Static Facts

Item	Fact
Chief Commissioner of Railways (1926)	Sir Clement Hindley [1]
Leader of South African Deputation (1926)	Hon. Mr. Beyers [1]
Where the letter was datelined	Simla, the summer capital [1]
Committee behind separating railway finance	Acworth Committee, 1920-21 [2]
Separation Convention adopted	20 September 1924, by resolution of the House [2]
Legal basis of separate Rail Budget after 1947	Convention only; separate railway Appropriation Acts were possible because Parliament's rules let the budget be presented in parts [2]
Merger approved / first implemented	Cabinet, September 2016 / Budget 2017-18 [3]
Dividend after merger	Abolished: capital-at-charge written off; the Railways now receive Gross Budgetary Support [4]
Last dividend paid	₹8,723 crore, for 2015-16 [4]
Autonomy after merger	Railways keep their functional autonomy [3]
First electric train	3 February 1925; Bombay VT to Kurla (Harbour); 1,500 V DC [6][7]
Current traction standard	25 kV AC single-phase, adopted in 1957 [6]
Route km electrified before Independence	388 [9][11]
Ministry	Ministry of Railways / Railway Board [2]

5. Multi-Dimensional Analysis

Historical

• The 1926 praise came while administrative reform was under way: Acworth (1920-21), the 1924 Convention and the 1925 electric train [1][2][6].
• The letter came through official channels to Simla. This reflects how centralised the railway bureaucracy was under the Chief Commissioner [1].

Economic / Fiscal

• The 1924 separation was meant to give general finances an assured share of railway revenue [2].
• The 2017 merger ended the dividend liability; the last dividend was ₹8,723 crore for 2015-16. Railway capital spending now comes through Gross Budgetary Support [4].

Governance / Constitutional

• The separate Rail Budget ran for about 93 years (1924 to 2017) on convention alone. It is a good example of a constitutional convention shaping fiscal procedure [2][3].
• After the merger, the Railways kept functional autonomy while losing a separate budget of their own [3].

Technological

• Traction moved from 1,500 V DC (1925) to 3,000 V DC and then to 25 kV AC (1957) [6][7].
• Electrification has since become a mission-mode goal ("Mission 100% Electrification", 2026) [9].

Geopolitical (colonial-era diplomacy)

• A South African deputation toured India's railway systems and formally thanked the staff. This shows inter-dominion official exchanges in the 1920s [1].

6. Recent Developments (last 12-18 months)

• February 2025: centenary of India's first electric train, which ran on 3 February 1925 [6].
• January 2026: PIB published "Mission 100% Electrification: Powering the Future of Indian Railways" [9].
• 15 April 2026: PIB published "From Steam to Speed: The Ever-Evolving Journey of Railways" [10].
• 21 October 2026: The Hindu's "100 years ago" column carried the 1926 Beyers letter [1].

7. Prelims Hooks

• In 1926, the Chief Commissioner of Railways was Sir Clement Hindley [1].
• Mr. Beyers, leader of the South African Deputation, called Indian Railways "second to none" (Simla, 20 October 1926) [1].
• The Acworth Committee (1920-21) recommended separating railway finance from general finance [2].
• The Separation Convention was adopted by resolution on 20 September 1924 [2].
• After 1947, the separate Railway Budget continued by convention, not under any constitutional article [2].
• The Cabinet approved the Rail-General Budget merger in September 2016, together with advancing the budget date and merging the Plan and Non-Plan classifications [3].
• The first merged budget was Union Budget 2017-18, presented on 1 February 2017 by Arun Jaitley [3][4].
• After the merger, the Railways pay no dividend. The capital-at-charge was written off and they now receive Gross Budgetary Support [4].
• The last railway dividend was ₹8,723 crore, for 2015-16 [4].
• India's first electric train ran on 3 February 1925, Bombay VT to Kurla, on the Harbour Branch [6][7].
• The first electric traction used 1,500 V DC [6].
• The first EMU rakes were made by English Electric Co. [8].
• Indian Railways adopted 25 kV AC single-phase traction for all future schemes in 1957 [6].
• Only 388 route km had been electrified before Independence [9][11].

8. What the 1926 Praise Did Not Measure

• "Second to none" was a guest praising how the system was run, not whom it served
• The letter came from an official deputation. It was sent through official channels to the Chief Commissioner in Simla [1].
• A visiting delegation judges what it is shown: punctuality, workshops, staff. It does not judge whose needs the network was built for.

• So use the letter as evidence of how well the railways were administered. Do not use it as proof that colonial railways were good for India.

• The 1920s reforms were mainly about the government's money

• The Acworth Committee's main aim in separating railway finance was to give general revenues (the government's main budget) a steady, assured payment from the railways [2].

• Railway reform was linked to what the railways could pay the government. Better service for passengers was not the main concern.

• The modern network was mostly built after 1947, not in the decade of praise

• Electric traction began in 1925, but only 388 route km were electrified by Independence [9][11].
• The 1925 electric train was a showpiece in Bombay. Electrifying the rest of the network was left for independent India.

9. The 2017 Merger Ended the Dividend, Not the Money Problem

• The railways spend almost all of what they earn
• Operating ratio (how many rupees the railways spend to earn ₹100) was 107.39% in 2021-22 and 98.10% in 2022-23 [12].
• CAG found that some spending was understated (shown lower than it really was). Counting that spending, the 2022-23 ratio becomes 101.33%, so the railways spent more than they earned [12].

• The ratio was 98.43% in 2023-24 and 98.22% in 2024-25. That leaves less than ₹2 out of every ₹100 earned for new investment [13].

• New investment now depends on the Union Budget

• Gross Budgetary Support (GBS) is money the Centre gives the railways for capital works, such as new lines and electrification.
• GBS rose from ₹1,17,270.54 crore (2021-22) to ₹1,59,256.15 crore (2022-23) [12], and to ₹2,52,323.86 crore in 2024-25 [13].

• The 1924 system expected the railways to pay the government [2]. After the 2017 merger, money mostly flows the other way: the government funds the railways [4].

• Why this matters for the "gains and costs" question

• Gain: the railways no longer pay a dividend (the ₹8,723 crore they paid for 2015-16 was the last) [4].
• Cost: without a separate budget, it is harder to see that the railways cannot fund their own growth. The CAG's corrected ratio is a reminder of this [12].

10. Why Goods Trains Pay for Your Ticket

• Freight profits cover passenger losses
• This is called cross-subsidisation: one service (freight) pays for losses on another (passengers).
• In 2014-15, freight earned a profit of about ₹44,500 crore. Passenger services lost about ₹33,000 crore [5].

• In 2019-20, passenger and other coaching services lost ₹63,364 crore, while freight earned ₹28,746 crore. All of the freight profit went to cover the passenger loss [14].

• The losses come mostly from long-distance trains, not from concessions

• NITI Aayog estimated that about 77-80% of passenger losses come from non-suburban (long-distance) trains [5].
• Concessions, such as discounts for senior citizens, make up only about 4%. Most of the loss comes from fares being set below the cost of running trains [5].

• In 2023-24, the passenger subsidy was estimated at ₹60,466 crore. Passengers paid only about 55% of what their journey cost; the subsidy covered the other 45% [16].

• High freight rates push goods onto roads

• Freight charges are kept high to fund cheap passenger fares. So companies send goods by truck instead, and the railways keep losing their share of freight traffic [5].
• Freight is the business that keeps the railways running. Losing it weakens the money that pays for passenger fares.

11. The Reform Ideas That Are Still Unfinished

• The Ministry of Railways should make the Rail Development Authority actually work
• In May 2017, the Ministry notified a Rail Development Authority (RDA), with Cabinet approval. Its tasks include advising on fares, finding non-fare income and protecting consumers [5][15].
• PRS's note on the Railways (Amendment) Bill, 2024 says the Authority is yet to be set up [15].

• Without an independent body to set fares, fare decisions stay political. Fares stay below cost, and freight keeps paying the gap [5][14].

• Railway accounts should show the true cost

• The CAG showed that understated spending made the 2022-23 operating ratio look better than it was [12].

• The Standing Committee on Railways and the CAG should push the Ministry for honest, business-style accounts. Otherwise Parliament cannot tell if the GBS money is being used well.

• Earlier committees already pointed to this problem

• The Bibek Debroy Committee (2015) on restructuring the Railway Ministry and Railway Board is listed among past reform reviews. It made 44 recommendations [16].
• Use it in Mains with the Acworth Committee: one fixed railway finance in 1920-21, the other tried to restructure it about 95 years later [2][16].

12. Anchors for Answers

• Data: Operating ratio of 98.10% in 2022-23 (101.33% after CAG counted understated spending) [12]; 98.22% in 2024-25, with GBS of ₹2,52,323.86 crore [13]
• Data: In 2019-20, passenger services lost ₹63,364 crore and freight earned ₹28,746 crore; all freight profit went to cover the passenger loss [14]
• Data: Passenger subsidy of ₹60,466 crore in 2023-24; it covered about 45% of the cost of passenger travel [16]
• Report/Committee: Acworth Committee (1920-21); Bibek Debroy Committee (2015); CAG Report No. 9 of 2025 and No. 30 of 2026 on Railway Finances
• Law/Case: Separation Convention, 1924 (a House resolution, not a constitutional provision) [2]; Railways (Amendment) Bill, 2024 [15]
• Scheme: Mission 100% Electrification, which turns the 1925 start into network-wide electric traction [9]

13. Mains Relevance

• GS-I: Modern Indian history, especially the colonial economy and the development of infrastructure such as railways.
• GS-III: Infrastructure (railways); government budgeting; mobilisation of resources.
• GS-II: Parliament, its functioning and procedure, including budget conventions.
• Possible questions: 1. "Railways in colonial India served imperial rather than national interests." Critically examine, with reference to administrative reforms in the 1920s. 2. Trace the evolution of railway finance in India from the Acworth Committee to the merger of the Rail Budget in 2017. What were the gains and costs of the merger? 3. "Electrification of Indian Railways is both an energy-security and a climate imperative." Discuss, tracing the journey since 1925.

14. Related Topics to Study Next

• Acworth Committee and Indian Railways under state management. This is the origin of the 1924 separation.
• Constitutional conventions in India. The Rail Budget is a textbook case of a convention.
• Budget reforms of 2017, i.e. the earlier budget date and the end of the Plan/Non-Plan split. They were adopted together with the merger [3].
• Mission 100% Electrification and the Railways' net-zero goal. This is the modern side of the 1925 milestone.
• Indians in South Africa and the 1920s deputations. This is the context for the Beyers deputation.
• The colonial "drain" and railway guarantee system. This is the nationalist critique of railway economics.
• Dedicated Freight Corridors and Gross Budgetary Support. These relate to how railway capital spending is financed after the merger.

15. NCERT Concepts to Revise

• Indian Railways (Geography): The article is about Indian Railways' administration, finance and electrification, from the first line to the 1925 electric train.
• Union Budget (Polity): The separate Rail Budget (1924) and its 2017 merger into the Union Budget is the article's main fiscal storyline.
• Dividend (Economy): Railways paid an annual dividend to the government until it was abolished in the 2017 merger.
• Guaranteed interest system (History): Explains how colonial railways were financed and run for British interests, the background to 1920s reforms and Mains questions.
• Infrastructure (Economy): Railways were colonial infrastructure and are now a core infrastructure sector, linking GS-I and GS-III themes.
• Energy security (Economy): Electrification since 1925 is justified by energy security and climate goals, a likely Mains theme.

16. Common Errors / Trap Areas

• The separation was not a constitutional provision. It was a convention set by a House resolution in 1924 [2].
• Do not confuse the years: the Acworth Committee sat in 1920-21, but the separation came in 1924 [2].
• The merger was approved in 2016 but took effect in 2017-18. Questions may target either year [3].
• The first electric train ran to Kurla on the Harbour line, not on the main line to Thane. It used DC, not AC; 25 kV AC came only in 1957 [6][7].
• Railway Budget merger ≠ loss of autonomy. The Railways explicitly keep functional autonomy [3].
• Not verified here: standard facts such as the Railway Board's founding year and the first passenger train were not in the retrieved sources. Check them in NCERT before relying on them.