The railways would have put up a speed restriction if there was a formal request from the organizers about the event and the possibility of people encroaching the tracks. When no such initiative has been taken by the organizers, there is no reason for the railways to take any speed restrictions.
This incident happened at a fair distance from the main station. The motorman had enough time to bring the train up to a good speed (may be 60-80kmph) .
Also this was after dark. Now, as powerful a train's headlamps are,...
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it still has to be quite close to make out people on the tracks. Even when the driver reached a point where he could see some crowd, he would first see the few stragglers at one end of the crowd. All he would see is a major crowd on both sides of the tracks with a few stragglers on the tracks (the crowd will not be uniformly distributed- people tend to throng in the center with a less dense crowd on the fringes). So naturally he would just sound the horn and expect the crowd to clear away in the last second as it always happens across every railway track in the entire country.
As far as the driver is concerned, the LC was closed and a green signal was showing up ahead. He had no reason whatsoever to slow down or observe any caution.
There is absolutely no fault of the motorman (who would be in a very severe trauma now because of what happened) or the railways. This accident should be taken as an example to teach the general public some common sense that they should not loiter on railway tracks. By shifting the blame on to an innocent man who was just doing his job, we are making sure that the real problem is not being tacked here.
A more straightforward way to avoid the misery would have been to just not have people standing on the tracks.

As seen from the news reports and the video of the incident circulating online, most of the people were standing away from the tracks. It was only when the effigy started burning that many of them backed away on to the tracks and were hit by the oncoming train.
Even then, it was only isolated patches of people that moved on to the tracks, not a dense mob.
The line man would not have had any time to warn the oncoming driver about the people on the tracks, as they moved rather...
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suddenly after the effigy started burning. Similarly, the driver would not have been too concerned as he would only see small batches of people on the tracks, and not a large stationary mob.