I think government really wishes to side step the main issue. They think fully air conditioning trains and forcing pax to travel in AC coaches will improve IR's image. Why would a passenger who daily lives his/her life in non AC surroundings be forced to shell so much for single journey of some hours just because IR artificially imposed limits on non AC rakes?
They think that making the system completely AC will reflect well on them. It doesn't work like that. When a country develops and the people actually start demanding...
more... facilities, does it work. You can't develop Shinkansen trains, start charging premium for them and say, install the system in an underdeveloped area.
Railways can't run trains on time, the average speeds of trains are falling, doubling and tripling of tracks is at a nadir, unprofitable branch lines have been abandoned[NG ones which weren't converted] and they don't have a solution for accidents.