Making BCG strategic adviser in station redevelopment is a move that should expedite the long-pending makeover of 400 stations besides enhancing the Railways’ revenue from commercial utilization of its assets.
Mamata Banerjee, when she was the union railway minister, talked about developing 50 world class stations through innovative financing and in the Public Private Partnership (PPP) mode in her budget speech of 2009-10 and one of the stations in that list was Habibganj in Bhopal, Madhya Pradesh.
But, the work on redeveloping Habibganj has just started with the NDA government handing over the work to a consortium. This in itself speaks of the problems in redeveloping the railway stations despite successive governments announcing plans to do this.
Current rail minister Suresh Prabhu, who has been fairly successful in improving the passengers’ perception about the railways through better trains and facilities along with grievance redressal through social media platforms like Twitter, spelt out his plans for redeveloping 400 stations in this year’s railway budget.
“Besides improvement in service, a redeveloped railway station would also provide opportunities for generating significant non-tariff revenues,” Prabhu said, adding that the government was open to utilise different models for different stations.
Along with the PPP mode, the idea is to explore multilateral financial investments for the development of some stations and also some with the states as partners. If all this is left to the usual government and Railways’ handling, the fate of even this plan would not be different from the earlier ones considering the complexities like local clearances and financial viability involved in it.
It is, therefore, a good move on the part of the government to make the global management consulting firm Boston Consulting Group (BCG), the strategic advisor of the government to suggest how best these 400 stations can be redeveloped.
Prime minister Narendra Modi’s keen interest in the project is obviously pushing the ministry of railways to expedite the work. The Indian Express has reported that Indian Railways has awarded the contract to BCG at an estimated Rs 8 crore with a timeline of six months. The main job of BCG will be to tell the government, which station is worth how much and how best each one of them could be redeveloped.
It is a fact that a professional agency will do a better job than the railways in assessing the real estate market and the commercial prospects and though a delayed move, this could be another smart move of the railways under Prabhu, who has been adopting several innovative strategies to improve railways’ functioning and financial performance, including long-term freight contracts.
The change under the NDA’s stations redevelopment project is already evident from the MoU signed with the Gujarat government and municipal authorities to give the commercial developer of the Surat station a 90-year lease period as opposed to 45 years for Habibganj. The entry of BCG would certainly help in developing this kind of effective individual plans for each station.