Railways’ Station Redevelopment Plan Hits Another Hurdle

Railways' ambitious station redevelopment plan with 99-year lease, awaiting Cabinet clearance, seems to hit a hurdle again, as the Urban Affairs Ministry is now asking for a lump sum payment as compensation. It has refused to take token payment for leasing out its land for the project.

According to the ministry, the proposal to extend lease from 45 years to 99 years to attract leading real estate players is as good as freehold or sell-out. The Ministry is seeking commercial rate and not the token payment, as suggested by the Railways for using its land.

Earlier, Finance Ministry had objected to extending the lease period from 45 years to 99 years, and had suggested that the "lease period should be limited to 60 years".

However, the Railways managed to get the Finance Ministry to agree for the 99-year lease for redeveloping about 600 stations, and accordingly cabinet note was moved.

Railways had proposed in the Cabinet note that the central government land – including land already given on lease hold basis on a token payment as conversion charges – should be transferred on freehold basis.

While the Railways aims to earn about Rs 50,000 crore over the next 10 years from commercialisation of land near stations, the ambitious project is expected to involve expenditure of over Rs 1.1 lakh crore – Rs 80,000 crore in commercial exploitation and Rs 35,000 crore in station redevelopment.

If the Railways is forced to pay the commercial rate for redeveloping stations on adjoining land to land-owning agencies, then the project becomes financially unviable, according to a senior Railway Ministry official.

Railways has already been allotted land by Delhi Development Authority (DDA), the land-owning agency, under Urban Affairs Ministry, at Anand Vihar and Brijwasan stations on government rates without any profit, and in future, more stations like New Delhi and Nizamuddin can also be selected for redevelopment.

"Therefore, the land cannot be transferred to Railways on token payment, as there is no provision for such transfer on freehold basis," said the Urban Affairs Ministry, in a letter to Railways.

The letter further stated that the DDA "needs to have income streams to sustain and provide for future development of Delhi". The Union Cabinet has to decide on the payment issue for the DDA in the 99-year lease period for station redevelopment proposal, a pet project of Railway Minister Piyush Goyal.

DDA model, once finalised by the Cabinet, is crucial for the station redevelopment project, as the same would be applicable in other Union Territories across the country. The Cabinet had, in 2015, approved the proposal to redevelop 400 railway stations using a contract method called the "Swiss Challenge", with a 45-year lease period. However, the proposal did not get a good response, prompting Goyal to propose changes.

According to the Railways, changes it sought were "essential to attract the major real estate players into such transit-oriented development (TOD) programmes in the urban sector".

TOD is a type of urban development programme, which maximises the amount of residential, business and leisure space within walking distance of public transport. The Railways' note has details about the TOD which aims to increase public transport ridership, reduce automobile travel, and promote sustainable urban growth.

Railways is hopeful that it would get the Cabinet nod for the 99-year lease plan as the redeveloped stations would act as catalysts of economic activity in the surrounding areas.