Railways to partly develop stations, let them out to private players for 99 years

The redevelopment of 600 stations was mentioned by Finance Minister Arun Jaitley in his Budget speech this month. While the redevelopment project is estimated to cost over Rs 1 lakh crore for 600 stations, IRSDC will tap into market sources for funds.

Written by Avishek G Dastidar | New Delhi | Updated: February 20, 2018 8:09:15 am
Railways to partly develop stations, let them out to private players for 99 years Besides commercial use, the ministry also plans to allow residential use of its land around the stations. (Express Photo)

The railways has come up with a new plan to involve private players in its ambitious scheme to redevelop 600 stations across India. According to the plan, the Railways will carry out 25-50 per cent of the construction work, and then give the station on a 99-year lease to the highest bidder for completion, development and subsequent operation.

Besides commercial use, the ministry also plans to allow residential use of its land around the stations.

The proposal has been sent for Cabinet approval and is likely to be discussed at the next meeting, said sources. If approved, it is expected to kick-off simultaneous construction work at stations across the country.

The redevelopment of 600 stations was mentioned by Finance Minister Arun Jaitley in his Budget speech this month.

In the first phase, Railways arms like the Indian Railway Station Development Corporation (IRSDC) and zonal units will take up about 130 stations. The IRSDC will develop about 10 types of designs, which will be followed at all the stations.

According to the plan, the IRSDC and Divisional Railway Managers will redevelop the main station facilities. After that, the station, along with its land parcels, will be put up for bidding. The government has sanctioned Rs 3,300 crore in the Budget for kicking off the initial process.

While the redevelopment project is estimated to cost over Rs 1 lakh crore for 600 stations, IRSDC will tap into market sources for funds.

Sources said work is expected to begin in the next few months.

“In the scenario that a station does not find a bidder even after we have completed half the construction, IRSDC has the mandate to complete the project and take over the operation of the station and earn through it,” said a senior Railways official.

The new model was devised by the ministry following deliberations with infrastructure and real estate majors like Shapoorji Pallonji Group, DLF, Reliance Infra, Hiranandani Developers and GMR Group since October last year, after Railways Minister Piyush Goyal mandated a new strategy to make the station redevelopment scheme a success. Recently, Goyal and ministry officials also discussed the issue with architect Hafeez Contractor.

This is in addition to the existing model of bidding out stations to private developers on “as is where is” basis. This model, however, has not been able to galvanise the tepid real estate sector. The last, and the only station so far, that was successfully bid out to a private player was Habibganj in Bhopal, where the local developer, Bansal Group, will develop and operate the station for eight years and get the lease for development of four adjacent land parcels for 45 years. The department had also invited bids for the Jammu and Kozhikode stations.

Last year, Railways changed its classification scheme of 7,000 stations across the country to make footfalls, and not commercial earnings, the guiding benchmark. About 50 stations were classified as “high-value”, including the 21 busiest stations.

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