The history of YDM-2 begins in the early 1980s with the stated aim of the Indian Railways to remove steam locomotives from Indian rails after recommendation of Karnail Singh Fuel Committee.[1] Therefore, required building a large number of Meter gauge diesel locomotives. Thus Indian Railways began looking at various diesel-electric designs.
These locomotives were designed by CLW[2][3] for hauling both passenger and freight traffic. They used suri transmission similar to one used in the broad gauged WDM-3. 41 of these locomotives were built and they were initially homed at Moula Ali (MLY) diesel loco shed in Southern Central Railways division (SCR). After Moula Ali line was converted to Broad gauge, these locomotives were transferred to Golden rock(GOC) shed in the Southern Railway Zone. They hauled passenger and goods trains till the late 2000s when the meter gauge lines were converted to broad gauge. All units are now withdrawn from service and all units are believed to be scrapped.