New land-lease policy of railways

The Union Cabinet’s decision to revise the railway land policy is well-intended. One of the ways to improve economic outcomes is to use the available resources more efficiently.

What is the proposal?

• It has been argued for long that the Indian Railways holds excess land all across the country, which can be monetised to not only increase revenue for the national transporter, but also push up overall economic activity.
• The government’s decision is intended to rapidly move in this direction. For cargo-related activities, for instance, the land will be given for up to 35 years at 1.5 per cent of the market value per annum. Currently, land for such activities is leased only for five years at a much higher rate.
• The government expects the policy to enable the building of 300 PM-Gati Shakti cargo terminals over the next five years, which would potentially generate 120,000 employment opportunities.

How will it be beneficial?

• The revised policy, in principle, will have multiple benefits. Longer-term leasing of railway land will provide visibility to entities looking to build cargo terminals.
• Lower cost would encourage more entities to set up such terminals. The development of more cargo terminals and efficient handling will help increase its freight revenues.
• The Indian Railways has lost freight business to road transport over the decades. Efficient handling of cargo could help it regain some of the lost ground. The movement of cargo by railways is also comparatively more environment friendly.
• Further, better visibility and lower cost will help the government complete the strategic sale of Container Corporation of India or Concor. It had approved the privatisation of Concor in November 2019, but it could not be completed.

What are the other proposals?

• Besides the cargo business, the government has eased the norms for a host of other activities on railway land. It can be used for utilities such as electricity, water supply, gas, and urban transposition at 1.5 per cent of the market value per year.
• The policy is also open to the development of social infrastructure, such as hospitals in public-private partnership mode and schools by the Kendriya Vidyalaya Sangathan.
• Besides, railway land can be used for setting up solar plants at a nominal cost. The government aims to prepare a comprehensive policy document and implement the proposals within 90 days.

Way forward –

In this context, the government will need to make sure that the policy is implemented transparently. The valuation of land will need to be tackled carefully because the policy will require dealing with a potentially large number of both public and private entities at multiple locations.

Conclusion –

Successful implementation of the policy would not only improve prospects for the railways but also help increase efficiency and overall activity in the country.

Source – Business Standard

QUESTION – Government’s rationalisation of railways land-lease policy will improve prospects for the railways and help increase efficiency and overall activity in the country. Discuss in brief the recent land-leasing policy for the Indian railways.