This paper aims at examining the performance of Indian railways based on the criterion of total factor productivity. The paper makes an attempt to analyse the available data on output and factor inputs to estimate the rate at which the overall economic efficiency of Indian railways has changed during the period 1950-51 to 1977-78. An attempt is also made to analyse the sources of output growth in the railways by estimating the contribution made by factor inputs and total factor productivity of the observed growth rate of net product. The main conclusion that emerges from the study is that there has been a considerable increase in the overall economic efficiency of resource utilisation in Indian railways during the period under consideration. Moreover, there has been a significant acceleration in the rate of growth of total factor productivity in the railways during the period following 1970-71 as compared to the earlier period.