Monetization plan for Indian Railways assets worth Rs 1.5 lakh crore in 5 points and charts

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New Delhi: FM Nirmala Sitharaman recently revealed the Centre’s ambitious Rs 6 lakh crore asset monetization plan, which encompasses important sectors like roads, railroads, and power generation. The monetization proposal was originally mentioned in the Union Budget Speech for the years 2021-22. The assets will stay in the government’s ownership, according to Sitharaman. The National Monetisation Pipeline accounts for Rs 6 lakh crore of the total (NMP) and sees asset monetization as a possibility of a total of 1,52,496 crores for Indian Railways. This is almost 26% of the whole NMP plan for the next four years, with the exception of roadways, which are estimated to cost Rs 1,60,200 crore.

According to the NMP, major expenditures would be required to alleviate capacity issues as Indian Railways focuses on enhancing infrastructure to allow freight and passenger transportation. The NMP lays out asset monetization strategies for railway stations, passenger trains, hill railways, freight sheds, Dedicated Freight Corridors, and track infrastructure, among other things.

The assets were chosen with the understanding that the majority of them, such as stations and goods sheds, are often strategically placed in high-traffic areas with great economic potential. The National Infrastructure Pipeline (NIP) and the Draft National Rail Plan (NRP) 2020 are asset-level plans for railway development. The NIP estimates that the center and states will spend Rs 13.7 lakh crore on capital expenditure in FY 2022-25. The PPP route will account for Rs 1.6 lakh crore of this. The NMP lays out the strategy for monetizing railway assets with the support of the private sector.

Railway station redevelopment: Indian Railways has launched a programme to redevelop railway stations with the goal of offering world-class passenger amenities and transforming them into economic development hubs. According to NMP, this will be accomplished by utilizing the economic development possibility of land and air space surrounding the station. The nodal institutions for the project rehabilitation of 400 stations will be IRSDC and RLDA. Tier 1: 50 stations, Tier 2: 100 stations, and Tier 3: 250 stations have been classified into three groups based on their commercial viability and possible scale of development.
The following are some of the major railway stations that have been identified:
New Delhi, Mumbai (CSMT), Nagpur, Amritsar, Tirupati, Dehradun, Gwalior, Sabarmati, Nellore, Puducherry

The indicative monetization value has been arrived at based on the capital cost towards the redevelopment of railway stations. Rs 400 crore is the maiden Capex per railway station. With this as the base, Capex per railway station for the three categories of assets was estimated as follows: Tier 1 – Rs 500 crore per station, Tier 2 – Rs 300 crore per station, and Tier 3 – Rs 85 crore per station.

Passenger train operations: By enlisting the help of the private sector to run passenger trains, Indian Railways hopes to meet the demand of people on the waiting list. The passenger industry is worth an estimated $7.5 billion every year. In the form of waitlisted passengers, railways have consistently reported 15% unsatisfied demand.

The first round of cluster bidding is underway. 150 passenger trains will be available for private operators to operate over 12 clusters and 109 Origin-Destination pairs of routes. Mumbai, Delhi, Howrah, Secunderabad, Chennai, and Bengaluru are among the clusters. In FY 2022, the concession is likely to be awarded. These trains will be phased in over the next few years, from FY 2023 to FY 2025.