Rlys plan modernisation for 5 stations

Electronic ticket swiping, eateries & shops to come up in 5 years; rlys banking on real estate around stations

In five years, boarding a train from the Anand Vihar railway station here will be a different experience — there will be a separate waiting hall at the concourse, along with restaurants and shopping outlets. And, there would be check-in counters where you could swipe tickets before boarding trains.

Under the station modernisation drive, Indian Railways has identified five stations — Anand Vihar and Brijvasan in Delhi; Chandigarh; Habibganj in Bhopal; and the Shivaji Nagar station in Pune. While Brijvasan is a greenfield station, the rest are brownfield.

Modernising each of these stations would involve an expenditure of about Rs 500 crore. The railways expects real estate development around the station to account for these funds. Experts say the prime location of these stations may prove to be an excellent opportunity for the railways to generate money.

It is expected 100 acres around the stations would also be developed. The railways may have to acquire some land around these stations from local authorities.

The project was announced in Railway Budget 2012-13; then railway minister Dinesh Trivedi had hoped to modernise about 100 stations in five years.

Business model
So far, infrastructure projects that have bet big on real estate development for operational costs have primarily seen failure. Experts say for the modernisation of the five stations, Indian Railways expects to raise not operational costs, but the cost of construction, which may prove to be a difficult task.

To provide a boost to this project, Station Development Corporation Ltd, a joint venture between the Rail Land Development Authority (RLDA) and the Indian Railways Construction Company (IRCON), was set up in 2012-13, with equity of Rs 100 crore.

“The idea is to build world-class stations like the one in Beijing, which has a concourse above the station and different gates for arrival and departure. The station will also have a waiting area with eateries and shopping outlets,” said a senior railway official associated with the project.

On the financial model, officials close to the development said it would be a challenge, as it was a new experience for the railways. “We are working on various financial models; we are deciding whether real estate development should happen along with station construction or we should divide it into phases,” said another official close to the development.

Experts claim exploiting real estate potential in and around the station terminals may be a good idea because most of these stations are located in prime city areas. “In India, many of our stations are located in the midst of cities and, therefore, have good potential to be exploited to improve the quality of passenger services. One can also use this model while developing new stations. However, I do not think it is good idea to first build real estate and then stations,” said Vishwas Udgirkar, senior director, Deloitte India.

Experts also say the real estate potential would dependent on passenger traffic; so, real estate development preceding station development isn’t logical.

“The model (banking on real estate) has been used in many places across the world. For example, Honk Kong Metro developed residential areas around it and raised money,” says Mudassir Zaidi, national director, Knight Frank India, which is involved in the business plan for the project.

Challenges
Former railway officials and experts say bureaucratic delays may dampen the project’s prospects. “If you look at past projects, there is too much resistance to new initiatives. Considering the Lok Sabha elections are close, I don’t think anything will happen anytime soon,” says Akhileshwar Sahay, an expert on the railways.

Indian Railways’ engagement with the private sector for station modernisation has been marred by bad planning and bureaucratic delays. In the 2008-09 Railway Budget, then railway minister Lalu Yadav had announced the modernisation of the New Delhi, Chhatrapati Shivaji Terminus (CST), Patna and Secunderabad railway stations, estimating an investment of Rs 15,000 crore. However, the initiative hasn’t materialised so far.

The CST station in Mumbai is stuck for want of a clearance from the United Nations Educational, Scientific and Cultural Organization, as the monument has been declared a world heritage site. The plan for the New Delhi station never took off. “The local authorities wanted us to only develop 50 per cent of the land we have identified; we had to change the entire plan,” said an official close to the development. While the Patna station faced land acquisition issues, plans for the station in Secunderabad never progressed beyond the planning stage.

Officials say the project can take off only after clearances from local authorities. Though no deadline has been set so far, government officials say they expect the project to be completed in five years.

Indian Railways has about 8,000 stations across the country. Every year, it spends about Rs 1,000 crore on upgrading stations.