Railway Station Redevelopment: How The Railways Is Going About The Overhaul Effort

The Prime Minister on 21 June laid the foundation stone for the redevelopment of the Bengaluru Cantonment and Yesvantpur Junction railway stations. The stations are to be revamped at a cost of around Rs 500 crore and Rs 375 crore respectively.

The proposed redevelopment is part of an ongoing effort undertaken across many railway stations in the country.

The Impetus

The Indian Railways has one of the largest transportation and logistics networks in the world. It runs 23,000 trains, including 13,500 passenger trains to carry 24 million passengers per day, connecting about 8,000 stations spread across the Indian subcontinent.

Apart from the services of a well-managed catering and vending system for supply of wholesome food at reasonable and affordable prices, rail passenger traffic of this magnitude needs adequate amenities at stations as well as on board.

The Railways endeavours to provide adequate amenities to passengers at the stations. Certain amenities are provided at the time of construction of new stations based on anticipated volume of traffic. These amenities are further augmented from time to time with growth in passenger traffic at stations, based on the felt need, expectations of the travelling public, and availability of funds.

Modernisation Of Railway Stations

Modernisation, or upgradation or beautification, of stations based on an identified need to provide enhanced passenger amenities has been undertaken under various schemes such as the model station scheme, the modern station scheme, and the adarsh station scheme.

The model station scheme was in existence from June 1999 to November 2008. Under this scheme, 594 stations were selected for upgradation. Of these, 590 stations have been developed, two stations closed, and two stations dropped by zonal railways.

The modern station scheme ran from 2006-07 to 2007-08. Under this scheme, 637 stations were selected for upgradation and developed. The scheme has since been discontinued.

Presently, stations are upgraded under the adarsh station scheme, which was launched in 2009. Under the scheme, 1,253 stations have been identified for development, of which 1,213 stations have been developed and the pending 40 stations are targeted for modernisation in the financial year 2022-23.

Modernisation To Redevelopment

Thus far, the focus under various modernisation schemes has been on improving passenger amenities at select stations.

This includes improving amenities like the facade of a station building, the waiting hall with bathing facilities, and TV for upper classes ('A1' and 'A' category stations), signages, foot over-bridges, and prepaid taxi/radio taxi booth. These upgrades have been generally funded by the Railways under its "Plan Head 53, ‘Passenger Amenities’."

However, this ambitious programme of railway station redevelopment needs a lot of investment, which the Railways is unable to make. The Railways has to invest in other infrastructure projects, such as new lines, gauge conversion, and other essential projects that are required for network expansion and safety works.

As such, it was decided that any future upgradation or modernisation should be cost-neutral to the Railways; that is, the cost of such an endeavour should be met by commercial exploitation of vacant land and air space in and around railway stations.

Thus, the Indian Railways, in 2009-10, decided to develop or redevelop certain railway stations of metro cities and important junctions as world-class stations, upgraded to international standards and capacity with modern facilities and passenger amenities.

This will primarily be done through leveraging commercial development of land and air space in and around the stations through innovative financing on a public-private partnership (PPP) mode.

Trajectory Of Redevelopment

The proposal for redevelopment of 400 erstwhile ‘A1’ and ‘A’ category stations as 'world-class stations' was approved by the Cabinet on 24 June 2015 on ‘as is where is’ basis.

Bids were invited from interested parties with their designs and business ideas duly providing for amenities and other requirements of the Railways, including permitting commercial development by zonal railways.

The Indian Railways had initially identified 19 stations for development, as per issued guidelines. Later, this number was raised to 50.

The Expert Group on Modernisation of the Indian Railways subsequently recommended modernisation of 100 major stations at a cost of Rs 1.10 lakh crore over five years under the PPP mode.

Further, a dedicated organisation, the Indian Railway Stations Development Corporation Limited (IRSDC), was set up to undertake redevelopment of stations to international standards.

Six stations, namely Anand Vihar, Bijwasan, Chandigarh, Habibganj (Bhopal), Shivaji Nagar (Pune), and Gandhinagar were entrusted to the IRSDC for redevelopment.

After taking note of the recommendations of the Expert Group and emergence of the IRSDC, the first phase of the station redevelopment programme was launched on 8 February 2017. Accordingly, bids were invited for redevelopment of 23 stations. However, 21 bids had to be foreclosed due to poor response from the bidders.

During various interactions with developers, investors, and other stakeholders, various issues, including longer lease period for commercially developed assets, multiple sub leasing, and simplified bid procedures, were repeatedly raised.

Accordingly, the Ministry of Railways revised the strategy and obtained Cabinet approval in October 2018. Station redevelopment is now planned by leveraging the real estate potential of sparable land and air space in and around the stations, inviting private participation.

For this, the Railway conducts techno-economic feasibility studies of stations across the country. Based on the outcome of these feasibility studies, stations are taken up for redevelopment in phases.

Concept Note

Redevelopment means focusing on improving passenger amenities at railway stations by leveraging the real estate available with the Railways to fund the development.

The private sector invests capital to develop state-of-the-art amenities to provide a world-class experience to passengers. They also bring innovation and efficiency to the project. In turn, they are ensured a steady stream of revenue in lieu of investment into the station — a proposition made possible because these stations are at prime locations in various cities and also offer guaranteed footfall.

The developer is required to construct the mandatory component of the station, including the concourse. Furthermore, the developer will have to spend on operations and maintenance to maintain the standard of facilities during the concession period.

The facilities proposed in a redeveloped station include congestion-free, non-conflicting entry-exit to the station premises, segregation of arrival-departure of passengers, adequate concourse without overcrowding, integration of both sides of the city wherever feasible, integration with other modes of transport systems (bus, metro, and so on), user-friendly international signage, well-illuminated circulating area, and sufficient provision for drop-off, pick-up, and parking.

The developer, in turn, earns their revenue from kiosks, food and beverages, and shopping outlets on the concourse. With assured footfall, the sale of items from these shops will pick up and the licensing of these kiosks will be given by the developer to different retailers.

Parking fee is another source of revenue.

Some real estate development rights are also given to the developer from where they can generate revenue for investment into the station.

At the same time, a user charge is proposed to be introduced. This will be added to the ticket cost of the passenger and transferred to the developer from time to time. It will act as a continuous steady stream of revenue once the station is redeveloped.

To use the redeveloped facilities, passengers will have to pay a nominal user fee depending on the class of travel.

Work In Progress

The Gandhinagar capital railway station in Gujarat and the Rani Kamlapati railway station in Madhya Pradesh were redeveloped and commissioned as the country’s first and second 'world-class stations' of the Indian Railways.

The Gandhinagar station is the country’s first redeveloped railway station in line with the government’s plan to modernise railway stations through the PPP mode. It was commissioned on 16 July 2021.

The redeveloped Rani Kamlapati railway station in Bhopal was developed and commissioned on 15 November 2021.

The Sir M Visvesvaraya railway station has been commissioned as the country’s third world-class railway station. The Prime Minister on 20 June inaugurated the air-conditioned railway station at Baiyappanahalli, which has been developed along the lines of a modern airport at a total cost of around Rs 315 crore.

Work is in progress at five stations, namely Ayodhya (Uttar Pradesh), Bijwasan (Delhi), Safdarjung (Delhi), Gomtinagar (Uttar Pradesh), and Ajni (Maharashtra). Tendering is on for Tirupati (Andhra Pradesh), Udhna (Gujarat), and Gaya (Bihar) by the zonal railways.

Chhatrapati Shivaji Maharaj Terminus (CSTM) railway station in Maharashtra and New Delhi Railway Station in Delhi have been identified for development under the 'hybrid build, operate, and transfer' (HYBOT) model of the PPP mode.

According to a report in the Economic Times, the Indian Railways intends to award around 40 stations for redevelopment in 2022-23. Out of them, 32 will be redeveloped by the various zones of the Indian Railways while eight will be done by the Rail Land Development Authority.

The Setback

The railway station development programme of the current government had taken a hit when the IRSDC was abruptly shut down in October 2021.

The special-purpose vehicle IRSDC, a joint venture company of RLDA and Ircon International Limited (IRCON), was incorporated under the Companies Act 1956 on 12 April 2012. This was created specifically for the purpose of development or redevelopment of stations.

The 2018 Cabinet approval also made the IRSDC the nodal agency for redevelopment of all stations in the country. The IRSDC was also made the main project development agency (PDA). However, the Railway Ministry on a case-to-case basis can designate zonal railways/RLDA or any other central government agency as the PDA.

The activities carried out by both the IRSDC and RLDA under the station development or redevelopment programme were identical. As such, a need was felt that one of the two bodies should be identified as the sole functioning entity and given full responsibility.

So, it was decided that the IRSDC be closed and the works presently assigned to the IRSDC be transferred to the RLDA, being a statutory authority under the Railway Act 1989 and zonal railways.

At the time of being shut down, the IRSDC was working on redeveloping around 63 railway stations. These were handed back to the zonal railways, setting back the process of station modernisation by a few months.

Current Policy Regime

The Ministry of Railways has planned for redevelopment of railway stations through zonal railways, RLDA, and other central government agencies.

All major stations on the Indian Railways have been entrusted to these agencies for undertaking the techno-economic feasibility studies. Based on the outcome of the studies, the stations are planned to be taken up for redevelopment in phases. The selection of developers is being carried out following a transparent and competitive bidding process.