Union cabinet has cleared the plan for modernizing railway stations. Indian Railway Stations Development Corporation (IRSDC) has been appointed as the nodal agency for modernization and the resources for this would be arranged by leasing out vacant land and air space around stations. “IRSDC will be the nodal agency for station redevelopment now. It will take up a project based on its suitability,” said Union Minister for Electronics and IT Ravi Shankar Prasad. Railways have already lined up 600 railway stations for modernization which would need an investment of 1 trillion rupees and the aforementioned sum of money required for this would not come from budgetary expenditure. Therefore, the concept of leasing was thought of by the railways to meet the expenses of modernization. “This programme will help provide state-of-the-art amenities to passengers, generate additional revenues and be overall at least cost-neutral to Ministry of Railways (MoR) over a basket of stations. Furthermore, redevelopment of railway stations across the country will have a multiplier effect on the economy, with increased job creation and improved economic growth,” a government statement said.
Railway ministry had already floated the idea of leasing back in 2015 but it could not get the support of bidders. The bidders were asking to extend the leasing period from 45 years to 90 years. Keeping these demands in mind, the ministry has extended the time period to 90 years in the new plan. IRSDC, the appointed agency for leasing, will have financial freedom including an option to raise money directly from the market. Agencies have decided to go ahead with a liberal approach on leasing and redevelopment, the approval for developing residential complexes will be decided on a case to case basis. The stations with a higher footfall will get more money from bidders and therefore could be modernized at a better and bigger scale.
The residential complexes will be developed not only for the railway employees but for general buyers too. The ratio for commercial and residential complexes has been fixed at 80:20 to better utilize the vacant spaces. IRSDC will probably use Engineering, Procurement and Construction (EPC) model for development of railway stations. In the EPC model, the government bears almost all the costs of the project and is responsible for operations and implementation. To speed up fundraising, Indian Railways is likely to enter into annuity model deal with IRSDC. Under the annuity model, the government pays almost half of the project costs to the developer through annual payments (annuity). The remaining payment will be made on the basis of the assets created and the performance of the developer. With annuity model, IRSDC will be able to raise money from the market based on a letter of comfort from Indian Railways.
Under the tutelage of Piyush Goyal, Indian railways are being transformed at a fast pace and the modernization plans are being put forth. Indian Railways has operated with socialist era hangover for far too long and Goyal is trying to make it market friendly, public finance friendly and consumer friendly. Recently, the cabinet approved a plan for 100 percent electrification in railways despite some opposition from key policymakers. 55 percent of Indian railway still operates on fossil fuel. The electrification drive will make railway operations cheaper as well as environmentally sustainable. Speaking on fiscal efficiency through electrification, Piyush Goyal said, “Reducing cost is the most important thing. If we were to electrify large parts of our network, we can easily save around Rs 15,000 crore in fuel bill itself.”
Freight transportation, which is the main source of profit for the railways, will also get a boost under his tenure. The Railways Ministry loses money on passenger train operations while the golden quadrilateral freight corridor is a piggy bank for it. The Railway Minister said “just by introducing modern signaling on the golden quadrilateral route, we can increase the line capacity by 50%. These lines currently carry 58% of freight, imagine the kind of revenue we can get by just investing Rs 12,000 crore in signaling, which will allow us to run more trains in shorter blocks.” Piyush Goyal has completed only 1 year as railways minister and he has already made it safer, cleaner and environment friendly, if he gets another term of a full 4-5 years, Indian railways will definitely be overhauled completely.
