So you mean that tickets should be distributed exactly like the train reservations? Then what is the difference between reserved seats and unreserved seats. IMO its a lot easier to track reserved seats than tracking all seats.
Not everything is fair in business, but IMHO what the railways is doing cannot be termed as unfair business practice.
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"Gentle man ! I mean-
1- Tickets should be sold according to the capacity of general compartments so that the poor may travel comfortably.
2- Government concern should not being run on profit base.
3- Railway department should increase time limit for returning the ticket and least deduction of money is done at the time when someone wish to return his/her tickets.
If railway is not capable/wish to do so then "You are quite intelligent to define railway's activity"