Railways to earn Rs 5,000 cr by monetising land

The initiative, led by Rail Land Development Authority, involves 5 projects

Next financial year, Indian Railways plans to generate about Rs 5,000 crore by monetising its land reserves. The initiative, led by the Rail Land Development Authority (RLDA), involves five projects across the country.

So far 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.

For RLDA, a residential project in Sarai Rohilla here was one of the first big-ticket projects to take off this year. The project could fetch the railways as much as Rs 1,650 crore. Here, of the 15.27 hectares, Parsvnath Developers will build residential and shopping complexes, etc, on about 11 hectares. For the remaining land, the developer will build 750 quarters for the railways.

Key upcoming projects of the Rail
Land Development Authority

• Ashok Vihar, Delhi
• Nirala Nagar, Kanpur
• Aishbagh, Lucknow
• NH-5, Vishakhapatnam
• Halisahar, Calcutta

For the 11-acre project, Callison LLC of the US is the architect, while Red Fort Capital is the foreign investor.

Parsvnath will be leased the land 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.

“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,” said Y P Singh, vice-chairman, RLDA.

The structure of each project will be based on the location and feasibility. All of these will be public-private partnerships, with the railways leasing the land to earn revenue. “We can explore the option of revenue-sharing, but it depends on the kind of project it is,” said Singh.

Aniruddh Wahal, managing director, Occupier Services, 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 has various long-term impacts. Though 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. “From a monetary perspective, it’s a good deal but you lose effective ownership, which could be a challenge in the future,” says Wahal. Indian Railways has about 43,000 hectares of land that isn’t needed for operational purposes.