INDIAN GOVT. CAN COLLECT RS. 80,000 CRORES

LYING INSIDE NEW DELHI RAILWAY STATION

MONETISE ARIEL SPACE OVER PLATFORMS BY CONSTRUCTING MEGA BUSINESS COMPLEX

Chongqing Highspeed Railway Terminal (300 Meter Office Towers)

INTRODUCTION

Railway Minister Shri D.V. Sadananda Gowda, in his 2014 Budget Speech has mentioned, “in the last 10 years, 99 New Line projects worth ` 60,000 crore were sanctioned out of which only one project is complete till date. In fact, there are 4 projects that are as old as 30 years, but are still not complete.” The principal reason attributed by the Hon’ble Minister for the dismal performance is lack of availability of adequate financial resources. The Hon’ble Minister has further announced some new projects. But the big question is how the Railways will fund these schemes.  

Traditional funding sources have already been exploited to their optimum level. Now the Railway Board has to look for some unconventional sources to fund the operational and developmental projects.….. including Prime Minister, Narendra Modi’s Bullet Train. If, the authorities involved in the process look beyond their centuries old rule book…….solutions are not far from reach.  

To be more precise, the freely available Railway Real Estate assets have the required potential to generate enormous surplus to meet its financial needs and also to strengthen the Railways Balance Sheet to the envy of any successful corporate in the world.

India has at least 500 - 700 major Railway Stations Real Estates assets, which can be developed for augmenting Railway revenue. Each of the Railway Station occupies sizable land. This station land over the platforms and adjoining Railway lines can be easily monetized. A multi-story multipurpose complex can be constructed without disturbing the regular functioning and movement, over the Railway platforms. This real estate can be easily marketed to generate capital and revenue profits. The monetary valuations of these properties can run into astronomical figures.

Keeping in view the size of the city, a multistory complex can be erected over any railway stations. The construction can be done on BOT basis or contract basis etc. depending on various factors. The research data suggests, the space available can be easily marketed as the railway stations are always city centers and enjoy tremendous locational advantages. 

LATENT SPACE POTENTIAL
According to a rough estimate, an average Railway Station occupies at least 3,00,000 sq. mtrs.(750 mtr. *400 mtr. ). So, each station can provide a minimum developable land base area of 750*400 = 3,00,000 sq. mtr. If a 60 story building is constructed over New Delhi Railway Station utilizing the entire 3,00,000 sq. mtr. of  land space, it will provide a Building Complex consisting of 1.8 crore sq. mtrs. of usable floor space. This will be the most attractive property in town due to its central location and confirmed foot fall. Besides, the backing of the Government will do the needful branding for enhanced property valuations. The building complex can be designed considering the population and business requirements. The numerics of the project are presented herein below.

PROPOSED MULTISTORIED BUILDING COMPLEX OVER RAILWAY PLATFORMS
TOWN POPULATION (IN LAKHS)	100+	100 - 75	75-50	50-25	25
NO. OF PROPOSED FLOORS	60	40	30	10	8
FLOOR APPLICATION
FOR RAILWAY PURPOSES	12	8	6	2	1
HOTELS & RESTAURANTS	8	6	4	1	1
SHOPPING ARCADE	9	6	4	1	1
HOSPITALS	8	6	4	1	1
OFFICES	9	6	4	1	1
SPORTS	3	1	2	1	1
PARKING	8	5	4	1	1
Non-Usable (Facilities)	3	2	2	2	1
HELIPAD	ROOF	ROOF	ROOF	ROOF	ROOF

FINANCE FOR DEVELOPMENT

The investments for the development can be channelised through private sector participation. Besides, World Bank, Asian Development Bank and other International Financial Institutions offering low rate funding can also be roped in. The private sector can join hands on BOT basis. However, the Government or Railways will not be required to spend or invest any amount in this project as they are contributing land into the kitty. In fact, the Railways may expect substantial cash advances from day one from Real Estate Developers and through advance bookings of real estate. Since, an income generating assets is being created the funding from International Financial Institutions will also be feasible. 

COST - BENEFIT ANALYSIS
To explain the cost benefit analysis, New Delhi Railway Station can be a representative sample.

Cost Presumptions:

Cost Presumptions
1. Size of the Proposed Multi-Storied Complex
	a. Length			750 Sqm.
	b. Breadth			400 Sqm.
	c. No. of Floors			60
	d. Total Area			1.80 Crores Sqm.
2. Cost of Construction				Rs. 40,000 sqm.
3. Cost of Construction				Rs. 72,000 Crores
4. Incidental/ Interest Cost				Rs. 8,000 Crores
5. Total Cost				Rs. 80,000 Crores

Building Valuations:

Building Valuations
1	Constructed Area			1.8 Crores Sqm.
2	Most Conservative Rate of Commercial Property in Central Delhi			Rs. 3,00,000 / Sqm.
3	Value of New Assets			Rs. 5,40,000 Crores
4	Notional Cash Profit from one Railway Station			Rs. 5,00,000 Crores

Revenue Calculations:

It is presumed that, 20% ( 12 Floors ) of the space will be offered to the Railways for their use without any cost. Out of the balance 80%, 30% ( 18 Floors ) is sold on ownership basis at commercial rates in the market and  the rest 50% ( 30 Floors ) is leased out to earn regular cash income to meet the annual operational cost of the Railways.

Revenue Calculations
				Nil ( Free )
1. Revenue from Railways ( 12 Floors)
2. Revenue from 30% ( 18 Floors ) salable area
(Shopping Arcade + Office Space)
= 54 Lakh Sqm @ Rs. 3,00,000				Rs. 1,62,000 Crores
3. Cost of 30% Salable Construction Area				Rs. 24,000 Crores
=54 Lakh @ Rs.40,000 Per Sqm
4. Cash Profit from 30% Area				Rs. 1,38,000 Crores
5. Annualised Rental Earnings ( 30 Floors )
	a. Hotels (24 Lakh Sqm. @ Rs. 18,000 Sqm)			Rs. 4,320 Crores
	b. Hospitals (24 Lakh Sqm. @ Rs. 4,500 Sqm)			Rs. 1,080 Crores
	c. Sports (9 Lakh Sqm @ Rs. 4,500 Sqm)			Rs. 405 Crores
	d. Parking (24 Lakh Sqm. @ Rs. 4,500 Sqm)			Rs. 1,080 Crores
	e. Surplus Floors ( 9 Lakh Sqm @ Rs 4,500 Sqm )			Rs.  405 Crores
	Total Annualised Rental Earnings			Rs. 7,290 Crores

It is mind boggling to note that, one single station has the potential to provide Rs. 1,38,000 Crores of Capital Profit, an Annual Rental Earning of Rs. 7,290 Crores and a Fixed Asset addition of Rs. 3,78,000 Crores to the Balance Sheet of the Railways. If the figures are multiplied appropriately, keeping in mind total number of Railway Station available in the country for development, the result will be astonishing. It may also be noted that all figures have been conservatively considered from revenue point of view.

Michigan Central Railway Station in Detroit, This was tallest rail station in the world when it was built in 1913.

We have noted some reservations about the operational feasibility of this project. A few intellectuals and academic scholars have also put forward their qualms about the viability of the project. Their views are summarised here in below. 

1. India does not have technology to construct such big building complex.

2. India does not have cement and steel for this mega requirement. 

3. India does not have trained engineers to handle these projects 

4. India does not have construction equipment.

5. India does not have political will to do innovative projects. 

6. Indian bureaucrats may not like such out of box thinking.

7. Delhi does not have required electricity and water for the projects. 

8. There will be problem of fire safety.

9. Terrorist, Pakistan / China may bomb the building in case of war.

10. There will be dislocation of train movement during construction.

11. Airport Authority will not agree with the project.

12. Ministry of Environment will not agree as it does not have adequate sever facilities for such mega projects.

13. In democratic country such schemes are not possible. 

14. Indian Courts will stop the construction on any ground.

15. The ASI may say,  it will destroy the historical beauty of the Railway Station.

16. It will be difficult to save the building in case of earthquake.

17. Big buildings should not be constructed in large towns. 

Besides, above many other objections can be placed against any scheme of development. Nevertheless, if country has to go forward only strategic thinking and audacious decisions are the answers. In Detroit, United States a multi-storied building over the railway station was constructed in 1913 almost 101 years before. Delhi Metro in its initial stage faced far more resistance than what is mentioned above. No body believed that, Metro Tunnel can be constructed without demolishing Chandni Chowk and adjoining Chawri Bazar Market. People also said that, “Metro will always be a security risk”. Metro provided superb market to steel and cement companies. International Construction Companies with experience of such gargantuan projects are ever ready to undertake projects in India in partnership with Indian companies. When China had to construct a water reservoir and dam for electricity generation, it gently moved thirteen large cities and hundreds of villages from their original location. This success was achieved because of support to the working executives in field and determination of the Governing Bodies. In case of Delhi Metro also, Mr. Shiridharan provided the leadership and direction and he was whole heartedly supported by Bureaucracy, Judiciary and the Government. Very fortunately Indian NGOs and the opposition parties also did not play negative.

Such projects can also come up on public utility buildings used as Bus-Stands in small towns, Sea-Ports and surplus government properties.

If the Hon’ble Railway Minister and our enterprising Prime Minister can implement this project, no surprise the entire country will be covered by the network of Bullet Trains.

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*********The author CA A. K. Jain invites suggestions, views and opinions from the readers. Please use the comment box herein below. – Thank You*********