GIPE-PUNE-OIIOI2 - DSpace@GIPE

mE RAIL VIA Y INDUSTRY AND COMMERCE OF INDIA
fctran for twenty-five years in each case. The
,lompa~ies were guaranteed to the extent of 4~-5 p.c. of'
their capital (some £52,000,000). Surplus profits were
to be shared between the Government and the companies.
~heright to purchase after the period of contract was
retained by the Government. The" guarantee" system
had a demoralizing effect on the companies leading· to
extravagance on their part and involved heavy losses and
1inanci~1 deficits, the Government resolved to embark upon
And naturally, the Government interfered in the affairs
of the companies in the most trivial details. The first
epoch of railway policy in India exhibits thus the features
of a peculiar type of "nationalization" which implies
state intervention in season and out of season combined
with "private" company finance, construction ~nd
management. (Total mileage open at 1870: 4,771).
.. In orde~ to be relieved of the inconveniences of this
dual system or dyarchy and especially in order to avoid
financial deficits the Government resolved to embark upon.
the direct construction of railways under its own auspices~.
The period frum 1870 to 1880 may be described as.
the epoch of 100 p.c.nationalization in railway policy.
The railways were not only financed and constructed.
i.e., owned but also. "managed" by the state. But the:
public finances of the. country were not plentiful and
proved to be inadequate for the exigencies of railway ex~
pansion . To add to the financial troubles the depreciation
of silver in the world market led to the fall of the Indian
currency. The Governme;;'t was, therefore, put to extra
losses on account of the PCiyments to be made to the rail~
way companies according to the terms of the guarantee
which had been fixed on a higher exchange basis.