Railway ministry might miss FY23 asset monetisation target by 85%

U-turn on station development major cause behind botched FY23 monetisation

The ministry of railways, which is the second-biggest contributor to the Centre’s Rs 6-trillion national monetisation pipeline (NMP), is headed for another year of failure to meet it's target. The national transporter has only met 6 per cent of its Rs 30,000 crore 2022-23 monetisation target, and even in the best case scenario, is likely to miss it by almost 85 per cent, Business Standard has learnt. 

Railways, in the first seven months of the fiscal year, has monetised assets worth Rs 1,829 crore and has proposals close to Rs 3,200 crore likely to be transacted by the end of FY23, a source said. The ministry had an initial FY23 monetisation target of Rs 57,200 crore, which was revised to Rs 30,000 crore in view of its subpar performance in FY22.

Currently, key transactions for this fiscal year include monetisation of railway colonies and land parcels. The Union cabinet had earlier approved the proposal to lower the land licensing fee (LLF) for industrial use of railway land to make these parcels more attractive for freight operators and other industries.

Assets under consideration for monetisation include trains, track overhead equipment (OHE), goods sheds, hill rail, and stadiums. Meanwhile, the ministry has been asked to expedite transaction rollout for other assets.

The official noted that the ministry’s decision to redevelop stations in engineering procurement construction (EPC) mode instead of public-private-partnership (PPP) has been the biggest hit to the pipeline. Station redevelopment, which accounts for 50 per cent of the railways’ Rs 1.52 trillion monetisation target over four financial years, has not seen fruition yet. 

It had earlier floated tenders for the redevelopment of marquee stations such as New Delhi and Mumbai Chhatrapati Shivaji Terminus (CST). However, those proposals were shelved and it was decided to redevelop three key stations in EPC mode.  

Union minister Ashwini Vaishnaw, while presenting the Cabinet decision for the same had said that the railways is essentially a public good, so the ministry was inclined to develop these assets out of its own pocket.

The ministry is now looking at monetising stations with smaller asset value by redeveloping them in PPP. Bids for 16 stations including Anand Vihar, Vijayawada, and Bangalore City are in the works. According to another official, over 40 stations have been shortlisted by NITI Aayog to be monetised in the medium term.

The ministry is also considering the possibility of turning the fully redeveloped stations into monetised assets through instruments such as real estate investment trusts (REITs).

The monetisation exercise, which is being spearheaded by the Centre’s policy think-tank NITI Aayog, was last reviewed by Finance Minister Nirmala Sitharaman on November 15.