Indian Railways is out to woo developers to ensure that its plan to develop railway stations is a success.
After the Railway Board gave an in-principle approval for leasing railway land for 99 years and allowing construction of residential complexes, Indian Railways is considering handing over revenue and operations of platform tickets and parcel business of the stations to the developers who undertake station re-development.
The Railway Board, in a meeting on 5 October, discussed the two provisions along with giving approval for the land lease and land development.
A senior railway official on condition of anonymity said, “Railway minister Piyush Goyal has been informed about the proposals and he is in support of the move. Provisions are being considered as developers have asked for more sops to make it a lucrative offer.” He added that revenue from parcels account for just around 2% of railways’ earnings. No information was immediately available on earnings from platform tickets, which are currently priced at Rs10.
Under the current station redevelopment plan, the Indian Railways already allocates operation and maintenance of stations to the developers, including the maintenance and operations of toilets on the platform, vendors and food stalls, parking, waiting rooms, etc. If approved, the two provisions would bring additional business for the developers, apart from land sops.
Interestingly, Indian Railways seems to be giving in to the demands of developers now which were being opposed during the reign of former railway minister Suresh Prabhu. Prabhu had been advocating land leases of up to only 45 years citing the examples of Japan and UK. Prabhu often stated that if a developer cannot mint out their investment in 30-45 years, they won’t be able to do it with more time.
Another railway official who didn’t want to be identified said, “This is railways’ big privatization plan. It will start with stations and slowly cover other areas. Ticket and parcel handling are the only sources of revenue from stations which were with the railways under station development, and if they are gone, we give up our hold on stations.” He added that under the new station development plan, railways have asked a corporate entity to help them to set terms and conditions for termination of contracts, which entails penalties on early termination of contacts by railways.
“We have been given a clear mandate—our business is just to run trains on time,” he said adding that there seem to be no voices of dissent.
However, former railway board chairman Vivek Sahai warned, “Railways job is to transport men and material. Residential complex and such sops should come if you have no hope of any growth in transportation.” Read more