Private players to redevelop 400 rail stations

Some 400 train stations out of the 7,172 on India's railroad network will get a facelift by co-opting private players, the government said on Thursday.

The decision on redevelopment of stations at metros, pilgrimage centres and important tourist destinations was taken by the cabinet at a meeting presided over by Prime Minister Narendra Modi.

The decision assumes significance as it will allow private parties to take part in the redevelopment of stations.

"As the Indian Railway Station Development Corp is able to undertake redevelopment of only a few stations, it was proposed to redevelop stations through invitation of open bids from interested parties," an official statement said.

The railways alone cannot afford the redevelopment project as its finances are already constrained. Currently, the railways has a very high operating ratio of about 91.8 percent.

The high operating ratio leaves very little financial resources for other essential areas like safety and expansion.

It is expected that private players will bring in the much required funds, technical expertise and professionalism for station redevelopment.

The government has also been scouting for foreign players from France and Japan to take part in its station redevelopment scheme.

The stations open for redevelopment are classified 'A-1' and 'A'. These are located in metros, major cities, pilgrimage centres and important tourist destinations across the country.

Interested parties will have to present their design and business ideas, including commercial development of real estate, the statement informed.

While presenting his maiden budget Railway Minister Suresh Prabhu in February hinted at the possibility of allowing private players to modernise station infrastructure.

Another key aspect of the decision is to allow the private players to commercially leverage real estate assets around the station area.

The permission to leverage real estate assets is to lure the private sector which kept away from the redevelopment scheme of the previous government.

However, sector-based experts cautioned that the policy should be framed in such a manner that clearly defines the role of the private sector and the potential leverage they can extract out of the real estate assets.

"Earlier attempts had failed because there was no clear-cut policy on how much commercial exploitation of real estate is possible. Moreover there are various restrictions that the railways impose on upside leveraging of real estate," Vishwas Udgirkar, senior director for Deloitte in India, told IANS.

"Overall the policy is a good move and the railways should leverage the real estate around stations as these are centrally located in cities."

Jaideep Ghosh, national head for transport, logistics, leisure and sports sector

with KPMG in India told IANS, the decision is in line with the government's focus on enhancing passenger experience.

"In the railway budget the focus this time was on enhancing safety and customer experience. This decision is in line with that. The government is focused at recreating enhanced passenger experience that it has done by allowing private players in airports and ports," Ghosh told IANS.

India boasts of one of the oldest and largest railroad networks in the world, ferrying some 23 million people, or a population the size of Australia, as also 2.65 million tonnes of goods on its coaches each day.

It serves from 7,172 stations via 12,617 passenger and 7,421 freight trains on a track network spanning Baramulla in the Himalayan foothills of Kashmir to the southern tip of Kanyakumari in Tamil Nadu, and from Naharlagun in Arunachal Pradesh to the port town of Okha in Gujarat.