The first railway engine that was put on the rails was designed by George Stephenson in England in 1814. Construction of steam driven railways in India was first proposed in 1834 in England.

It was given strong political support by England’s railway promoters, financiers, mercantile houses trading with India and textile manufacturers. It was decided that the Indian railways were to be constructed and operated by private companies, who were guaranteed a minimum return of 5 percent on their capital by the Government of India.

Nearly the entire amount of over Rs. 350 crores invested in the railways was provided by the British investors, Indian capital contributing only a negligible share to it.