The cash-strapped India Railways is looking at land monetisation with renewed vigour.
The cash-strapped India Railways is looking at land monetisation with renewed vigour. It has set ambitious targets for the under-performing Railway Land Development Authority (RLDA) after suitably empowering it to identify the transporter’s vacant land prone to commercial exploitation. While since its start in 2007 RLDA has generated just over R200 crore by putting rail land into commercial use, it will target R1,000 crore revenue in FY17 and over R19,000 crore over the next five years, according to official sources.
Ending the practice of the Railway Board “allocating” land to RLDA, the transporter’s entire vacant land — estimated at a massive 47,336 hectares — will now be available for the authority to select and commercially exploit. RLDA officials said the authority’s focus will now be overwhelmingly on the transporter’s prime land in metro cities like Delhi, Mumbai, Chennai, Hyderabad and Pune. Each parcel of prime land identified is worth R50-5,000 crore at current market rates.
RLDA now has just 500 hectares at its disposal; while the Railway Board has been niggardly in allocating land to the authority, the latter has failed to expeditiously monetise even the land assigned to it for unclear land titles, refusal of states to change land use norms and lack of encumbrance-free status for large parcels of the land. Last year, RLDA gave back some 400 hectares to the railways after it found it impractical to monetise them; sources said only 30% of its current possession of 500 hectares have all legal entitlements and an encumbrance-free status.
RLDA is set to float tenders for long-term lease (45 years for commercial use and 90 years for residential purpose) of prime land in eight locations in the current year. This includes 4.3 hectares in Bandra East in Mumbai which it plans to leverage for cluster development (a mix of corporate offices, commercial shops and residential housing) near the railway station.
The potential revenue from the Bandra project is seen at around R3,000 crore, part of which will come in as upfront payment by the developers and the balance in instalments over a few years.
“There has been a major shift in approach. We are now identifying prime railway (vacant) land, prepare the plan (for their commercial use) and then approach the rail ministry for approval. In fact, we have already selected eight parcels of land across the country and these will be up for grabs this fiscal year itself. We have found multifunctional complexes (MFC) (including office space and commercial outfits) successful and will have at least 163 such complexes up and running in two to three years,” Rakesh Goyal, vice-chairman at RLDA, told FE.
Goyal added that thanks to the new policy, RLDA has already identified more than Rs 50,000 crore worth of prime railway land in metro cities. “We will identify land worth Rs 1 lakh core by the end of this year,” he said. However, he added that the target for revenue generation for this fiscal year (Rs 1,000 crore) looked “daunting”. “We may struggle to achieve it…but I can assure you RLDA will witness a quantum jump in revenue generation in FY18.”
RLDA, sources said, has tied up with rail PSUs IRCON, RITES and RVNL to develop 40 MFCs; 23 projects have already been awarded. The draft and the model concession agreement for the redevelopment of 400 railway station under the Swiss challenge route has also been prepared by RLDA and sources said the ministry is looking at releasing issuing the model concession agreement by next month. The land monetisation arm is also undertaking development of 10 railway colonies in metro cities.
RLDA is engaged in a legal battle to recover lease rentals of Rs 1,166 crore for a project in Sarai Rohilla in Delhi after the project developer turned defaulter. Re-tendering of the project is under consideration.