Indian Railways has fast-tracked its project for vacant land monetisation, a move that could boost its investible resources. The Rail Land Development Authority (RLDA), which is empowered to identify portions of the transporter’s vacant land prone to commercial exploitation, has identified 17 plots for leasing out and aims to generate Rs 6,000 crore as rentals over the next 8-10 years, officials said. While eight of these plots are in Chennai, five are in Mumbai and two in Secunderabad. IR’s total vacant land is estimated at a massive 47,300 hectares, but only a portion of this area can practically be used for commercial purposes, as 90% of it is linear land on the sides of tracks.
The RLDA’s track record in monetisation of land is not satisfactory as it was hamstrung by land use restrictions imposed by state governments and other issues, including an earlier policy of earmarking land to it in a piecemeal fashion by the Railway Board.
The RLDA, which started operations in 2007, had generated just Rs 200 crore till FY16. A target of Rs 1,000 crore was set for FY17 but FE could not immediately ascertain how much of this was accomplished. The current plan is to earn revenues to the tune of Rs 19,000 crore over the next five years, which means more land parcels will be put to commercial use soon.
“These are vacant lands and will be given on leases for 99 years and the developer will be free to decide the kind of development — housing colony, hotel, mall or anything. It should be commercially viable,” said a ministry of railway official. Typically, the railways looks at a return of 6% of the land value per year from commercial development of its plots. The railways has assessed the commercial value of the 17 plots. The amounts to be paid by the developers will depend on the location, condition and accessibility of the plots. Though Indian Railways requires Cabinet approval for commercial use of its land, the RLDA now has the powers to commercially exploit railway land. As reported by FE earlier, the transporter is also working on a plan to allow private freight terminals (PFTs) on railway land adjacent to stations with a view to utilising vacant land parcels better, increasing public-private partnership investments and boosting freight revenue.
The official quoted above said the RLDA is working on PFTs and is in the process of finding investors. The railways through another of its arms, Indian Railway Stations Development Corporation, will also be giving out land for commercial development to developers who will redevelop railway stations. Under the RLDA scheme for commercial development of land, a developer will have the choice among various payment plans wherein one can make payment upfront or pay up to 10 years in instalments. “It will be a factor of the tender document. We will offer multiple payment plans and developer can choose any of them. They can even migrate from one plan to another after the initial choice by paying a fee,” added the official