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India’s largest landowner, the Indian Railways, is turning to its vast land holdings to raise funds for infrastructure development. Through its land development arm, the Rail Land Development Authority (RLDA), the railways is leasing prime parcels across the country, with a particular focus on Mumbai’s lucrative real estate market. In September, the RLDA invited bids to lease approximately 10.11 hectares across four prime locations in Mumbai, aiming to raise at least Rs. 8,000 crore.
These plots are part of a broader plan to lease nearly 340 hectares nationwide, with Mumbai alone expected to see 110 hectares leased in a phased manner. Other cities with identified land parcels include New Delhi (Lodhi Colony, Chanakyapuri), Bengaluru, Lucknow, Gwalior, Chennai, Secunderabad, and Amritsar. According to a senior railway official, “This is part of the national policy on asset monetisation. The funds raised will be used for development and expansion of passenger infrastructure.”
The National Monetisation Pipeline and Past Challenges
The central government launched the National Monetisation Pipeline (NMP) 2021–25 to encourage departments to generate non-fare revenue, with a cumulative target of Rs. 6 lakh crore, of which the railways’ share was Rs. 1.5 lakh crore. However, by the end of the plan, the railways had raised just Rs. 28,717 crore, falling short by over Rs. 1.23 lakh crore.
The slow pace of monetisation was attributed to regulatory complexities, reluctance among ministry officials, and the absence of a central regulatory authority. To address these issues, Niti Aayog has announced the second phase of the NMP, urging the railways to streamline processes and tap into their vast land assets more efficiently.
Railways’ Land Bank
As of March 2024, the Indian Railways held about 4.9 lakh hectares, with nearly 62,068 hectares (13%) vacant. Of this, 43,000 hectares are under the RLDA, which has been tasked with commercially exploiting these parcels to generate revenue.
The process involves zonal railways identifying land that is not expected to be needed for operational purposes. Once identified, these parcels are handed over to the RLDA for commercial development. Since commercial leasing began in 2016, the railways has leased close to 8,812 hectares, transforming underutilised land into revenue-generating assets while supporting urban development.
Prime Mumbai Parcels
The RLDA plans to lease 110 hectares in Mumbai, with three key plots already up for bids for residential and commercial development.
- Mahalaxmi: A 2.66-acre plot near Mahalaxmi station, with a potential FSI of 4.05, is expected to generate nearly Rs. 1,000 crore from a 99-year lease. The plot benefits from excellent connectivity via Dr E Moses Road and Shakti Mill Lane, and proximity to business hubs like Lower Parel, Nariman Point, and BKC.
- Parel: A 5.6-acre plot at Supari Baug, Parel, is earmarked for residential development with an FSI of 4.05. It is free from encumbrances such as encroachments, with a reserve price of Rs. 1,734 crore.
- Bandra East: The largest plot at nearly 11.6 acres, located along the Western Express Highway, has an FSI of 4 and a reserve price of Rs. 5,365 crore. Situated 300–500 meters from Bandra station’s east and close to an upcoming metro station, it is ideal for commercial offices, retail spaces, and restaurants.
Elsewhere, the railways is exploring an 11-hectare parcel near New Delhi railway station for five-star hotels and a 2.2-hectare plot near Chanakyapuri for commercial development. Other cities such as Lucknow, Bareilly, and Gwalior have roughly 90 hectares earmarked for residential projects.
Funding Infrastructure Through Non-Fare Revenue
For years, the government has encouraged the railways to boost non-fare revenue to become more self-sustaining. In 2024-25, total railway earnings stood at Rs. 2.65 lakh crore, of which Rs. 1.71 lakh crore came from freight, Rs. 75,239 crore from passenger revenue, and only Rs. 11,562 crore from non-fare sources, just 4.5% of total earnings. By comparison, non-fare revenue contributes 34% for Germany’s Deutsche Bahn, 30% for Japan Railways, and 10% for France’s SNCF.
Net revenue for FY25 was Rs. 2,342 crore, down from Rs. 3,259.68 crore in FY24, while revenue expenditure has historically consumed 99% of internal receipts, leaving little for capital projects.
A Niti Aayog vision document highlighted that, “Indian Railways, a vital backbone of the economy, primarily generates revenue from freight and passenger operations. However, non-fare revenue generation has emerged as a crucial strategic focus to create a self-sustaining and commercially vibrant network.” Currently, 488 projects worth Rs. 2.92 lakh crore are ongoing nationwide.
Land monetisation, officials note, will not only boost revenue but also help build a sustainable passenger network, drawing lessons from profitable passenger rail systems worldwide.
