MUMBAI: In a bid to redevelop Asia's largest slum sprawl in Dharavi , Maharashtra government has clinched a deal to take over 45 acres of railway land in central Mumbai on a 99-year lease for Rs 3,800 crore.

Railway minister Piyush Goyal , making the announcement on Monday, said the Rail Land Development Authority (RLDA) will hand over 45 acres of "surplus" land to the Dharavi Development Authority (DDA) for the redevelopment." The decision will "help transform the lives of lakhs of Dharavi residents," he added.

Sources said this is a rare instance of railways handing over land for a project to be executed by a state. Governments in the past three decades have made several attempts to rehabilitate Dharavi's residents. Today, the total cost of the project is estimated at Rs 26,000 crore.

Western and Central Railways have two parcels of land abutting Dharavi-one measuring 17 acres and relatively unencumbered; the second of 90 acres has godowns, a scrap yard and encroachments on it. The state had sought the entire 107 acres of land to resettle shanty dwellers in transit camps during redevelopment. The railways has agreed to transfer around 45 acres.

The deal was struck in the face of strong resistance from railway officials, some of whom feared it may engender allegations of graft, besides drawing adverse remarks from the comptroller and auditor general of India for conceding prime land.

Also, some of them said surrendering land close to railway tracks may affect future expansion plans.

The deal was sealed after much bargaining. Railway had sought an upfront payment of Rs 1,200 crore of the total Rs 3,800 crore, while the state was willing to pay Rs 800 crore. It was finally settled at Rs 1,000 crore, of which Rs 800 crore will be paid immediately and the balance in six months. Of the remaining Rs 2,800 crore, Rs 2,500 crore will come through profits generated from sale of surplus flats in the Dharavi project and the rest will be adjusted against construction costs of 850 units of railway quarters on the same land.

