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The legislative assembly in February 1923 recommended that the State shall take over the management of the East Indian and the Great Indian Peninsula Railways on expiry of their contracts. On the 1st January, 1925 the State took over the reins of the East Indian Railway.

The Acworth committee recommendations of 1924 laid the foundations of State management and State control of Indian Railways.

There is, also in addition….a positive feeling caused by an awakened national self-consciousness that Indians should have more control in the management of the railways in their own country….We therefore do not hesitate, though most of us have approached the question with a strong pre-possession in favour of private enterprise as a general proposition, to recommend that in India the state should manage directly the railways which it already owns......

Excerpts from the Acworth committee recommendations

On the 30th June, 1925 the Great Indian Peninsula Railway was also brought under State control. The separation of Railway Finances from General Budget in 1924 and the acceptance by the State in 1925 in principle marked a revolutionary change in policy for the responsibility of direct operation of its own railways.
This afforded Railways considerable financial and administrative autonomy to conduct their own affairs and to initiate and carry out future policies on “sound business principles”