About NLMC

• The Union Cabinet has approved the setting up of a new government-owned firm for pooling and monetising sovereign and public sector land assets. 
• The National Land Monetisation Corporation (NLMC) is being formed with an initial authorised share capital of ₹5,000 crore and paid up capital of ₹150 crore.
• The government will appoint a chairman to head the NLMC and hire private sector professionals with the expertise required for asset monetisation in areas such as real estate market research, legal due diligence, valuation, master planning, investment banking and land management.

Objectives

• The NLMC will undertake monetisation of surplus land and building assets of Central public sector enterprises (CPSEs) as well as government agencies. 
• With monetisation of non-core assets, the government would be able to generate substantial revenues by monetising unused and under-used assets.
• The proposal is in pursuance of the Budget announcements for 2021-22, which included an ambitious National Monetisation Pipeline (Refer Pulse August 2021 edition) to garner revenues from public assets.
• The new corporation will also help carry out monetisation of assets belonging to public sector firms that have closed or are lined up for a strategic sale. As per the plan, the surplus land and building assets of such enterprises may be transferred to the NLMC, which will then manage and monetise them.
• Apart from executing the monetisation plan, the NLMC will advise other government entities to identify their non-core surplus assets and generate maximum value by monetising them in a professional and efficient manner.
• It is expected that NLMC will act as a repository of best practices in land monetisation, assist and provide technical advice to the government in implementation of asset monetisation programme.

What are non-core assets?

• The assets held by the government/public sector entities/statutory bodies broadly include operational/under-construction projects, land, buildings, investment in subsidiaries/joint ventures, etc.
• From amongst these, assets which are central to the business objectives of such entities and are used for delivering infrastructure services to the public/users are considered as core assets. The core assets include asset classes such as transport (roads, rail, ports, airports), power generation, transmission networks, pipelines, warehouses etc.
• The other assets, which generally include land parcels and buildings, can be categorised as non-core assets.
• For instance, according to the Economic Survey 2021-2022, CPSEs have put nearly 3,400 acres of land on the table for potential monetisation. They have referred this land to the Department of Investment and Public Asset Management (DIPAM).
• The NLMC would pool together all the assets in the form of land and buildings owned by the government that can be sold and then implement a plan of either selling these or leasing these out to other parties (primarily to private players).

Challenges

• Among the key challenges that NLMC might face include:
  • lack of identifiable revenue streams in particular land assets,
  • dispute resolution mechanism,
  • various litigations and lack of clear titles, and
  • low interest among investors in remote land parcels.

Why in News?

• Paving the way for big-ticket asset monetisation in the public sector, Niti Aayog has identified over 50 assets that could be put on the block.

Reference:

1. https://psuwatch.com/niti-aayog-readies-the-list-for-psu-asset-monetisation