MUMBAI: India’s largest landowner is leasing prime real estate across the country to fund infrastructure projects. In September, Indian Railways, via its land development authority (RLDA), called for bids to generate at least Rs 8,000 crore by leasing significant land areas in Mumbai. The RLDA plans to offer around 10.11 hectares in four key locations in Mumbai’s bustling real estate market.
These Mumbai plots are part of nearly 340 hectares the RLDA intends to lease to private entities nationwide. The railways aim to lease approximately 110 hectares in Mumbai gradually. Land slices have been identified for auction in upscale areas like Lodhi Colony and Chanakyapuri in New Delhi, as well as in cities like Bengaluru, Lucknow, Gwalior, Chennai, Secunderabad, and Amritsar.
“This initiative is aligned with the national policy on asset monetization. The funds generated will be utilized for the development and enhancement of passenger infrastructure,” stated a senior railway official.
Monetization efforts face challenges
The central government initiated the National Monetisation Pipeline (NMP) for 2021-25, setting a collective target of Rs 6 lakh crore for various departments, with railways assigned Rs 1.5 lakh crore. However, the railways fell considerably short, raising only Rs 28,717 crore, resulting in a shortfall of Rs 1.23 lakh crore.
This slow progress has been attributed to hesitance from ministry officials, regulatory complexities, and the absence of a centralized regulatory body. Niti Aayog is slated to kick off the second phase of the NMP for the next five years and has urged railways to address existing loopholes to boost non-fare revenue.
Overview of railway land holdings
As of March 2024, the railways possessed approximately 4.9 lakh hectares of land, with 62,068 hectares—nearly 13 percent—remaining vacant. Of this, 43,000 hectares fall under the RLDA, tasked with commercially leveraging these spaces to increase revenue for ongoing projects.
Zonal railways are assigned the responsibility of identifying land that won’t be required for operational purposes in the foreseeable future, facilitating its transfer to the RLDA, established in 2007, for commercial development.
This partnership between zonal railways and the RLDA optimally utilizes surplus land, converting unexploited assets into commercial opportunities. Through these developments, the RLDA aims to tap into the hidden value of railway land, contributing to the overall financial health of the railways while supporting urban growth and development.
Since the initiation of commercial land leasing in 2016, the railways have successfully leased around 8,812 hectares.
Valuable real estate opportunities
The RLDA has plans to lease approximately 110 hectares in Mumbai, with bids opened for three prime plots designated for residential and commercial use. These are strategically located near major business districts and transport hubs, making them highly appealing for developers.
Mahalaxmi: Bids have been invited for a 2.66-acre plot in Mahalaxmi near the station, with a potential Floor Space Index (FSI) of 4.05. The RLDA projects to raise about Rs 1,000 crore by leasing the site for 99 years.
This location is well-connected via Dr E Moses Road and Shakti Mill Lane and is positioned next to the railway line along Mahalaxmi station. “The site is adjacent to the Science Centre Metro station and provides excellent access to business areas such as Lower Parel, Nariman Point, and BKC,” said an official from the RLDA.
Parel: The RLDA is also auctioning a 5.6-acre plot at Supari Baug in Parel for a 99-year duration, optimized for residential development with an FSI of 4.05. “The land has a clear title and is free of encumbrances,” an official noted. The reserve price is set at Rs 1,734 crore.
Bandra East: The largest site at nearly 11.6 acres is located adjacent to Bandra East station, along the Western Express Highway, with a reserve price of Rs 5,365 crore and an FSI of 4. “This site is well-connected via Station Road, which will increase footfall for potential commercial spaces, shops, and eateries,” an official remarked. It is also conveniently located within 300-500 meters from Bandra station east and 1.5-2km from an upcoming Metro station, enhancing its suitability for office and retail ventures.
The railways also plan to leverage an 11-hectare parcel near New Delhi railway station for luxury hotels and are considering a 2.2-hectare plot in Chanakyapuri for commercial purposes. Around 90 hectares have been earmarked in Lucknow, Bareilly, and Gwalior for residential projects.
Project and financing updates
For years, the central government has urged the railways to enhance its non-fare revenue streams and achieve self-sustainability. In 2024-25, railways’ total earnings were reported at Rs 2.65 lakh crore, with Rs 1.71 lakh crore from freight, Rs 75,239 crore from passenger services, and just Rs 11,562 crore from non-fare sources. Non-fare revenue accounted for a mere 4.5 percent of total earnings, starkly contrasting with Germany’s Deutsche Bahn at 34 percent, Japan Railways at 30 percent, and France’s SNCF at 10 percent.
The railways noted a net revenue of Rs 2,342 crore for FY25, down from Rs 3,259.68 crore in FY24. Revenue expenditure has averaged around 99 percent of internal receipts, implying that for every Rs 100 earned, railways spend Rs 99, leaving scant surplus for capital projects from its resources.
“As a crucial component of the economy, Indian Railways primarily generates revenue through freight and passenger operations. Nonetheless, to create a self-sustaining and commercially viable network, the focus has shifted towards enhancing non-fare revenue generation,” noted a Niti Aayog vision document. Currently, 488 projects worth Rs 2.92 lakh crore are underway across the country. “Monetizing land will not only enhance revenue but also contribute to establishing a sustainable passenger network. We are learning from successful passenger networks globally,” explained a senior official.
