Railways to monetize land and earn Rs 5,000 Crore
Indian Railways has come up with a new plan to generate revenues. Next financial year, the agency employing the largest number of people in Asia, plans to generate about Rs 5,000 crore by monetizing its land reserves. This Rail Land Development Authority (RLDA) led initiative involves five projects across the country.
So far, in this financial year, RLDA has generated Rs 937 crore by way of public-private partnerships. It expects to garner Rs 1,000 crore by the end of 2013-14.
The residential project in Sarai Rohilla in Delhi was one of the first big-ticket projects to take off this year for RLDA. The project has the potential to fetch the railways as much as Rs 1,650 crore. Of the 15.27 hectares of area here, Parsvnath Developers will build residential and shopping complexes, etc, on about 11 hectares which will be designed by US based Callison LLC, while Red Fort Capital will be the foreign investor. On the remaining land, 750 quarters for the railways will be built by the developer. The land will be leased to Parsvnath for 99 years.
Other residential and commercial projects also are expected to come up in Ashok Vihar (Delhi), Bandra East, Kurla and Mahalaxmi (Mumbai), Nirala Nagar (Kanpur), Aishbagh (Lucknow), etc.
Vice-chairman of RLDA, Mr. Y P Singh, says, “Even if we manage to award two or three projects this year, we will get about Rs 5,000-6,000 crore. These are big projects and the tenders for the project in Ashok Vihar, Delhi, and Bandra East, Mumbai, will be floated by next month. All of the projects will be public-private partnerships, with the railways leasing the land to earn revenue and the structure of each project will be based on the location and feasibility. Singh further added, “We can explore the option of revenue-sharing, but it depends on the kind of project it is.”
The Managing Director of Occupier Services, Mr. Aniruddh Wahal says, “Railways should have considered engaging as a joint developer, but given the structure of the government, it doesn’t have the sophistication to engage as an active partner. This is like the slum model in many cities such as Mumbai, where the slum dwellers are rehabilitated in vertical complexes and the private party uses the rest of the land.”
The model being undertaken has various long-term impacts: Though, the Indian Railways leases land for 99 years, once the land is sold to many people, as is the case in residential complexes, it becomes difficult to get it back. Wahal further says, “From a monetary perspective, it’s a good deal but you lose effective ownership, which could be a challenge in the future.” Indian Railways has about 43,000 hectares of land that isn’t needed for operational purposes.
Source: Business Standard
Aniruddh Wahal, Ashok Vihar, Bandra, Callison LLC, Delhi, IndiaN railways, Mumbai, Occupier Services, Parsvnath Developers, Rail Land Development Authority, Red Fort Capital, RLDA, Sarai Rohilla
