New Delhi: In a move to raise money from existing assets to subsidize rail travel, the minister for railways, Lalu Prasad, announced plans in the Rail Budget on Tuesday to generate more than Rs4,000 crore through the lease of land to private parties, and has set up the Railway Land Development Authority for this purpose. The Indian Railways has 43,000ha of “vacant” land on its books.
A member of the railways’ governing board said the railways had received initial bids from developers for 10 land parcels. The ministry is in the process of shortlisting companies that are eligible to bid for the project.
The 10 land parcels that have received initial bids are in Visakhapatnam, New Delhi, Kanpur, Gwalior and Kolkata. The railways expects to call for request for qualifications, or initial bids, for a further 31 land parcels by May 2008, while site inspections and feasibility surveys are on for another 15.
“We have been trying to work with the railways for the last 10 years,” said Sanjay Dutt, joint managing director of real estate consulting firm Cushman & Wakefield. “The awareness about the value of land was there even 10 years ago, but what has changed is the political will. The demand for railway land, which is strategically located, is very huge. The impact on the market will be very positive as the increased supply would ease the pressure on rent values.”
While Mint could not immediately ascertain the market value of the parcels on offer, bidders said the land was at prime locations and valued very highly.
“Indian Railways owns surplus land across the country in very good locations. The Rail Land Development Authority has already floated an expression of interest. We have tied up with Indiabulls Real Estate to bid for 10 prime location plots being offered by the Indian Railways for commercial development across various cities,” said Pradeep Jain, chairman, Parsvnath Developers Ltd. “In Delhi, the railways has 100 acres of land in north-west Delhi, in Mumbai, it has land in Churchgate and Bandra. The value of this land is very, very high,” he added.
A scarcity of land in the heart of cities in the country has created suburbs such as Old Mahabalipuram Road in Chennai to Gurgaon in Delhi. Government arms such as the railways own prime land across several cities in India—they were alloted the land at the time of their inception. However, this has now left these organizations with valuable assets.
By involving the private sector, the railways is marrying the boom in private business with its own ambitions to grow and keep itself affordable and relevant. Other government departments, such as the postal services, have also said they plan to use their land assets better, after land values tripled in about two years in India’s top cities.