Explained | India's National Railways asset monetisation plan and how it will be executed

India's National Railways

The Indian railways, in line with the Narendra Modi-led government’s plans, is looking to monetize assets including through the Eastern and Western Dedicated Freight Corridors, station redevelopment,  railway land parcels, multi-functional complexes, railway colonies and stadiums.

So far the national carrier’s has already identified 87 land parcels, 84 railway colonies, 4 hill railways and 3 stadiums for asset monetisation so far, Minister of Railways Piyush Goyal said Replying to a question in Lok Sabha.

As part of this ambitious plan, the Ministry Ministry of Railways has been set a target to raise Rs 90,000 crore through asset monetisation in 2021-22 (Apr-Mar).

Indian Railways has also launched the Railway Station Redevelopment Program to redevelop 400 railway station across India at Rs 1 lakh crore or Rs 1 trillion through the Public Private Partnership mode.

The program is focused on improving passenger amenities by leveraging real estate available with railways to fund the development.

But how will the National Railway’s plans be executed?

Dedicated freight corridors

While currently, the National Railways has not assessed the monetary value of its land asset, it will monetise the Dedicated Freight Corridor assets for operations and maintenance.

The central government will take up the asset monetization of dedicated freight corridors in stages, by first listing the individual entities on the stocks exchanges and then gradually disinvesting after they become fully operational.

With the Western and Eastern dedicated freight corridors expected to be commissioned by June 2022, the government plans to raises funds by leasing them or handing them over to the private sector to utilize in the interim period.

A crucial requirement the successful monetization of the freight corridors will be the Dedicated Freight Corridor Corp of India Ltd making profits before the process begins.

The Indian Railways is also planning to come out with a new asset monetisation model for dedicated freight corridors, wherein train timings will be allotted to private parties through a bidding process.

At present, the initial asset monetisation plans also include leasing out the tracks to private players to operate trains and allowing telecom players to use the freight corridors’ 2,800-km optic fiber network.

Station Redevelopment

According to reports, the Ministry of Railways targets raising Rs 90,000 crore through asset monetisation in 2021-22 (Apr-Mar) with plans to award 150 passenger trains to private players during the year.

It also hopes to issue Requests for Proposals and Requests for Qualifications to redevelop 50 railway stations by March-end.

The government plans to redevelop stations through the public-private-partnership model. As part of the plan, the cost of re-development of stations will be met primarily by leveraging commercial development of spare railway land/airspace in and around the station.

This will put the vacant land of the Indian Railways to use and will also generate non-tariff revenue for Indian Railways.

The Indian railways will allot the land for a total concession period is 60 years including the construction period in case of commercial land and in the case of residential development, the lease period shall be 99 years.

The National Railways through the Rail Land Development Authority has already initiated action on many stations.

Tenders have been invited for the re-development of Safdarjung Railway Station in New Delhi and Ajni Junction at Nagpur also on Engineering, Procurement, and Construction model.

Requests for Qualifications for the Nellore, Tirupati, Dehradun & Pondicherry Railway stations have also been finalised.

Requests for Qualifications for New Delhi has also been invited.