The comments from Vladimir Yakunin, president of Russian Railways, mark the highest profile public defence so far of moves to fold troubled private firms into state corporations.

Business leaders and market analysts have voiced concerns that the government is using the crisis to effectively nationalise industries. Late last year, for instance, the state folded about a dozen bankrupt airlines into a new state aviation giant, Russian Airlines, which promised to guarantee flights and save jobs.

Yakunin said the trend was good if it forced companies to pay their workers enough.

"Our work force is undervalued, underpaid ... and that is what has caused the social tensions we are seeing today," he said.

"We see in the anti-crisis measures of other countries that they are not little girls. If they need to save private banks, they nationalise them. If they have to support some industrial sector, they don't just throw money at it, they nationalise it."

Wage arrears and soaring unemployment in many Russian towns have prompted protesters to block major highways, forcing the government to step in and force business owners to pay late wages and resume operations, even if loss-making.

Yakunin, whose monopoly employs around 1.2 million people, had been named among potential candidates to replace Vladimir Putin in the 2008 presidential elections before Putin, now prime minister, named Dmitry Medvedev as his preferred candidate.

Yakunin said only oil and coal cargoes have shown signs of recovery, and forecast a 19 percent decline in rail transport for 2009 because global demand for other goods and commodities remains weak. In the first half, rail shipments fell 22.7 percent, he said.

The government limits the annual price increases for railway services, and the industry has been allowed the smallest hikes in the past years compared with other state regulated sectors such as gas and power.

Economy Minister Elvira Nabiullina told the same conference that the liberalisation of the gas and electricity sectors will need to be reined in next year.

Under a plan approved in 2007, gas and power prices were to gradually rise to free market levels by 2011. The Kremlin's chief economic aide clarified later on Tuesday that gas prices would rise 10 percent in 2010 and power prices 5 percent, far less than initially planned.

Since the financial crisis hit Russia last year, utility prices have roused fierce debate, with many officials insisting that the state must keep them low to protect the public.