NMP 2.0: Railways targets ₹2.5 trillion asset monetisation in five years

Plan to bring in new freight trains through private funding

In its largest private-investment drive, the Ministry of Railways will monetise assets worth ₹2.5 trillion over five years as part of the second phase of the national monetisation pipeline (NMP 2.0), Business Standard has learnt. 

The ₹10 trillion pipeline, which will be the bedrock of central monetisation strategy till 2029-30, announced by Union Finance Minister Nirmala Sitharaman in her Budget speech in February, is in preparatory stages with individual ministries having made initial asset pipelines, and is expected to be unveiled soon. 

The railways will look to meet this target through public-private partnership (PPP) models and a multi-asset approach, a ministry spokesperson said. 

In monetisation, the government leverages revenue-generating operational assets by bringing in private participation through PPP, generally on a revenue-sharing basis. 

“Using this multi-asset approach, the ministry plans to monetise Gati Shakti Cargo Terminals and bring in new freight trains through private funding. Proceeds are expected to be realised through station redevelopment and commercial development around stations in PPP mode, as currently under progress for Vijayawada station,” the spokesperson added. 

In a meeting of top bureaucrats earlier this year, the railways, which has been shying away from handing over operations to private entities during the first monetisation pipeline, was asked to step up monetisation. 

According to officials in the know, the transporter initially had been given a target of ₹1.7 trillion till FY30, but the railways confirmed that it had been raised to ₹2.5 trillion now. This makes the new target nearly 50 per cent higher. 

The ministry will also monetise high-value land parcels for commercial and residential projects, as currently in progress in Salt Golah (Kolkata), Sewa Nagar-Lodhi Colony (Delhi), etc. 

“The railways ministry is working on multiple fronts to achieve the monetisation target,” the spokesperson said. 

The target for the ministry, according to the first NMP released in 2021, was ₹1.52 trillion by FY25. According to officials, this had been revised over the years to ₹1 trillion. 

In 2021, the NITI Aayog, the central think tank, had expected half the ministry’s proceeds to come from monetising railway stations, with redevelopment projects said to be in PPP mode. 

The railways had also received a significant market interest in PPP redevelopment projects, with major players such as Adani Railways, GMR Highways, Godrej Properties, and Oberoi Realty in the running for big-ticket projects like Mumbai's Chhatrapati Shivaji Maharaj Terminus and New Delhi Railway Station. 

However, the tenders were scrapped due to the shutdown of a railway special purpose vehicle. The Union Cabinet in September 2022 had approved a ₹10,000 crore plan to redevelop three mega stations from the Centre’s own coffers, and work is ongoing on these projects. 

According to at least two officials who spoke to Business Standard, initial discussion has also begun on a proposal to monetise the ₹1.24 trillion eastern and western dedicated freight corridors (DFCs). 

However, the ministry said in an official response that as of now, there was no such proposal under consideration. 

However, responding to a query on the freight corridor proposal, Niti Aayog said, “The details pertaining to the same will be made public once the Asset Monetisation Plan 2.0 is finalised through the extant inter-ministerial consultation process.” 

Experts say several factors determine a project’s monetisation potential but two carry a higher weight -- the level of private-sector interest in taking up the project and the government’s expectation of the monetisation value. 

“While initial assessments indicate that there is a private-sector interest in operating the corridors, it is important to identify an appropriate risk-allocation framework and finalise the monetisation framework to achieve results,” said Kushal Kumar Singh, partner, Deloitte India. 

Big investment push

• Initially, the railways had been given a target of monetisation of ₹1.7 trn till FY30
• High-value land parcels for commercial and residential projects to be monetised
• Monetisation target to be achieved through a mix of PPP models and a multi-asset approach
• Sources say discussions are underway to monetise freight corridors, but the Railways said the proposal is not under consideration as of now