Prime Minister Narendra Modi greets people on the streets of Varanasi. (Photo: Press Trust of India)

In his constituency of Varanasi on Thursday, the Prime Minister said there is no question about the railways being privatised. "Those who are spreading lies that railways is being privatised...this is not our thought or intention," he said.The PM said the railways have been an essential part of his life. In his campaign for the national election, he had underscored that as a child, he sold tea at train stations to help support his family.Today, he was speaking at a factory in Varanasi that produces diesel-electric locomotives and its spare parts."We don't see railways only as a means to travel. We see it as the backbone of India's development," said the PM.In July, the government in its railway budget promised to seek foreign and private funding for the railways but gave no details .India's state-owned railways are the fourth-largest in the world. They have suffered from years of low investment and populist policies that have kept fares low. But that has turned a once-mighty system into a slow, badly-congested network that crimps economic growth.The railways cost the government around 300 billion rupees (Rs 30,000 crore) a year in subsidies and spend 94 per cent of revenues on operating costs, leaving next to nothing for investment."The bulk of our future projects will be... by the PPP model," then Railway Minister Sadananda Gowda had said in July, referring to public-private partnerships.

Reform of India's railways has long proven politically sensitive. Successive governments have backed away from modernisation, preferring instead to use the system to provide cheap transport for voters, and jobs for 1.3 million people.Mr Modi's government pushed through a fare rise in June, but partially rolled it back later, under political pressure.