Rail land leases at a standstill

FinMin order on prior permission wasn’t noted till well after rail Budget and nothing much has moved since.

The already strained railway finances may be dented by another Rs 600 crore this financial year, owing to a lack of communication within the government.

The Rail Land Development Authority (RLDA) is supposed to earn Rs 600 crore, according to the rail budget for 2011-12; it had brought in Rs 350 crore last year. Only, its hands have been tied from earning a single paisa. For, in March, the Union ministry of finance had declared that its approval was mandatory for any government department to lease any land.

“At the time of setting the budgetary target, we were not aware of the finance ministry move,” said a senior official in the railways ministry. And, so, RLDA has not issued any tender or started any bidding process for rail land since the finance ministry notification. The last tender-related notice was issued on April 21, but then withdrawn; it had called for offers to commercially develop railway land at Bandra in Mumbai. When asked, RLDA officials declined to comment . The last commercial dealing they did was to auction land at Sarai Rohilla in Delhi for around Rs 1,500 crore.
 

KEY POINTS

* Around Rs 600-crore dent on the budgeted railway earnings for 2011-12

* Finance ministry notification of March puts status quo on the lease/sale of any government-held land without the ministry’s approval

* RLDA lying as a defunct organisation after the finance ministry’s notification in March 2011

* Inclusion of RLDA land in the ambit of government-held land puts question mark on the creation of RLDA

The finance ministry had said its approval must be sought out for sale/grant/assignment/allocation/disposal of any government assets or assets created from government funds. Such approval would not be required if the transaction is to be made as part of a scheme approved by the competent authority or is in the normal course of approved activities of autonomous bodies. The notification came on the heels of the Adarsh land scam in Mumbai.

Even if RLDA gets finance ministry approval at this point for a transaction, it would take four to six months for bidding to get over, so the railways are unlikely to make any money on this count in 2011-12.

“The inclusion of railway land in the ambit of the finance ministry notification defeats the very purpose of the establishment of RLDA,” said a railway official. “RLDA goes for open bidding for leasing any land; it is not awarded on favours.”

RLDA was created as a statutory authority, under the ministry of railways, through an amendment to the Railways Act, 1989, for development of vacant land for commercial use. The railways have 43,000 hectares of vacant land.

Under the process being followed earlier, land not required for operational purposes in the foreseeable future is identified by each zonal railway and the details given to the Railway Board.

RLDA gives land on lease either for commercial purposes or for the creation of a multi-functional complex (MFC). For commercial purposes, it gives leases for 40-45 years. These complexes are to be located around railway stations to provide multiple facilities to rail users such as shopping, food stalls/restaurants, book stalls, PCO Booths, ATMs, medicines and variety stores, budget hotels, parking spaces and other similar amenities.

The sites are being offered on a lease of 30-45 years on upfront premium or a revenue-sharing basis under a memorandum of understanding between the railways if to government-owned companies and through an open bidding process to the private sector.

According to the RLDA website, the ministry of railways sanctioned 67 and 93 complexes in 2009-10 and 2010-11, respectively, for these purposes. Of 167 sites allocated, 67 site bids were to be invited. Agencies have been fixed for 45 and the remaining sites are under inspection and study.