The Indian Railways has earned Rs 3,129 crore in FY25 from monetising its land bank for commercial purposes, which is 16% higher than the previous year, railways minister Ashwini Vaishnaw told Parliament on Wednesday. Over the past three years, the Railways recorded compounded annual growth rate (CAGR) of 21.5% from its land usage.
Land of Railways
The minister said that Railways owns about 490,000 hectare of land, out of which just about 1% (or 4,930 hectare) land is under utilisation for commercial purposes, including the land entrusted to its arm Rail Land Development Authority (RLDA) for commercial use.
Despite a steady growth in revenues from land use, the transporter is earning about 1.1% of its revenues from sundry sources such as land, advertisements, etc leaving room to significantly increasing the share of non-fare revenues. “There’s a vast potential to monetise the land which remains unrealised. If 5-10% of the land be leveraged, it could multiply revenues of the railways, and improve the operational performance. The ministry can look at successful global models such as MTR (Hong Kong), JR East (Japan) who are actively using real estate to fund rail operations,” said Lalit Chandra Trivedi, former general manager, East Central Railway.
Experts POV
Experts said that the nodal authority RLDA has not been slow in execution of projects which has resulted in sub-optimal realisation of revenues from land resources. RLDA was entrusted with the redevelopment of 90 railway stations, but just two stations have been completed so far. Similarly, the authority was given a task to develop 157 commercial sites, however, all the sites remain under different stages of development and planning.
However, RLDA is facing its own sets of problems which is causing delays in project execution. Before the approval of development plans, the authority has to coordinate with state government and local bodies which remains one of the biggest pain points. RLDA has also witnessed a series of awarded contracts being cancelled by the developers on account of payment default on the lease charges.
In 2023, the standing committee on railways recommended that the ministry should encourage private sector participation to accelerate the redevelopment process. It also recommended a phased approach to redevelopment, with priority based on passenger footfall, connectivity, and strategic importance.
“The urban-centric parcels offer high value for transit-oriented development (TOD). There’s a need to incentivise public-private partnerships for mix-use development. The ministry should also consider a separate railway land monetisation authority with multi-ministerial coordination,” said a railways consultant.
To be sure, out of the total land bank, just about 62,068 hectares of land is vacant. Even within the vacant land, 60%-70% consists of narrow strips along tracks, which are utilised for various operational needs.