The railway ministry will soon approach the Union cabinet to obtain permission for building a multi-storied commercial complex in Mumbai. This will be a test case for the railway ministry's larger programme for lease and sale of air space.
The urban affairs ministry has been asked by the cabinet to draw up general guidelines for lease and sale of land and assets belonging to all government departments. The railways want permission for developing the proposed commercial complex before the guidelines are drafted.
The railways expect to raise a substantial amount of revenue through lease rentals or sale of air space on its existing properties in metropolitan cities. Under the plan, the railways will build additional floors on existing single storied buildings or specially develop commercial complexes on vacant land.
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To begin with, the ministry wants to develop 4,000 square metres of land at Bandra in Mumbai as a multi-storied commercial complex. "We will retain the ground floor and perhaps the first floor because we need some office space in that locality. The rest will be given out to others on commercial basis," a Rail Bhavan official said.
Sources said the cabinet was inclined to give permission to the railways to build the commercial complex at Bandra pending the release of general guidelines by the urban affairs ministry. The government wants the railways to raise additional funds and be less dependent on budgetary support. The railways have already mounted pressure on the government to substantially increase budgetary support.
The railway ministry has not yet decided on the modalities of the commercial deals it wants to carry out. It, however, wants to be flexible and offer air space on both lease rental and sale basis. In fact, initial market response will to some extent influence the modalities.
The ministry has not yet begun identifying other land and buildings for developing and leasing across the country. The process of identification will begin only after the urban affairs ministry comes out with its guidelines because the railways' programme will have to be tailored to them.
The urban affairs ministry is working out a general programme for lease and sale of government land and assets because it was felt that a uniform system should prevail in land and assets deals of all central government departments.
The railway ministry has taken the view that it will not dispose off any vacant land along tracks because it may need additional land for doubling and renewing tracks. It also owns large tracts of land in cities, including metropolitan cities, which it might not need for infrastructure development.
The railway ministry has sought permission from the government to raise additional revenue out of its property because the budgetary support is not adequate to meet its financial requirements, particularly capital works on new projects.