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Indian Real Estate News : Kolkata
Land parcels open up in Calcutta
Source: The Telegraph Nov 01, 2013
The Bengal government today took a baby step towards restructuring the ailing transport sector by inviting bids for 373 cottahs lying unused at six depots of one of the transport corporations.

The decision, apparently aimed at unlocking assets of corporations that chug on subsidies, marks several firsts of sorts for the 29-month-old regime but an IIT professor said the initiative should be complemented with freedom for the operators to set realistic fares.

This is the first time the Mamata Banerjee government is putting land on the block.

The leaseholders will have the freedom to use the property as they wish.

No consent will be required from the government to sub-let the property, making it freely transferable.

The developers can freely mortgage the land to financial institutions to raise loans.

The leaseholders will get the Calcutta Tramways Company (CTC) land parcels for 99 years with a provision for renewal. (See chart)

The annual subsidy burden on the five loss-making transport corporations is around Rs 700 crore. The outgo on CTC alone is Rs 210 crore.

The lease decision was announced by transport minister Madan Mitra. While no one in the government would hazard a guess how much the leases in prime locations like Tollygunge, Kalighat and Shyambazar might fetch, real estate developers raised the possibility of earnings of over Rs 350 crore.

The government has - at least on paper - drawn up a unique utilisation plan for the proceeds.

"The proceeds from the deals would be kept in an escrow account," said Alapan Bandopadhyay, transport secretary. "We have already decided to buy 800 new buses under the JNNURM. Besides, we have bought land in Rajarhat and Newtown for setting up bus terminuses," he added.

Sources in the transport department said the proceeds could also be used to offer VRS to employees in an attempt to “optimise manpower” at the corporation.

Attempts by the Left Front government to restructure the loss-making transport corporations by trimming the workforce had become a political hot potato for the Buddhadeb Bhattacharjee government because of resistance from Citu, the labour arm of the CPM.

"If this government can pull it off, it will be an achievement," said a senior government official, adding that plans were afoot to monetise the assets of other corporations.

Bhargab Maitra, professor of transportation planning and public transport system at IIT Kharagpur, sounded a few words of caution for the government.

According to him, the success of restructuring the corporations will hinge on their ability to run without any budgetary support.

"This will require freedom for the corporations to set fares as per the cost structure…. I don’t know whether the corporations will have the freedom to price tickets to cover costs," he said.

Ignoring repeated pleas —and threats of continuous strikes — from the bus operators, the state government has not allowed fare hikes since November 2012, although fuel prices have gone up significantly since then. The refusal to raise fares has reduced the number of buses on the roads, but the government has not budged from its stand.

Some officials said that the plan to buy 800 buses under the JNNURM was aimed at reducing the city's dependence on private bus operators, whose fleet accounts for over 70 per cent of its public transport.

"The government can increase its presence in public transport but the corporation has to be run efficiently…. The government can sell land this time but what will happen after the losses mount again after a few years?" asked Maitra.

The freeing up of land in the city was greeted by realtors who forecast the creation of about 1 million square feet of additional space. "It is not a big volume but the locations are prime. I am sure all developers in the city will be interested in these plots. It is a good move," said Pradip Sureka, former president of Credai Bengal, a body of real estate developers.

Sources said that the government was keen on participation by developers from outside Bengal to realise the maximum value from the lease deals.

"We expect to complete the formalities by December so that money flows into the state coffers by February, ahead of the financial year-end," said an officer.

According to him, the emphasis has been on transparency in the entire exercise. The KPMG has been inducted as transaction adviser while Fox & Mondal will handle the legal affairs in the exercise.

"Citu is bound to oppose the move and transparency will be key," said the officer.

Former transport minister Shyamal Chakraborty, who is also the Citu state president, said the union would oppose the leasing of assets of the corporation.

"This government has the money to give doles to clubs and spend on fairs and utsavs, but they don’t have the money to run buses…. Leasing out land for money can't be the logic. This government has been moving towards privatization and this is one clear step towards it," Chakraborty said.
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