Recently the Union cabinet approved the creation of a National Land Monetisation Corporation to monetise the surplus land holdings of Central Public Sector Enterprises (CPSEs) and other government agencies.
- Surplus land asset monetisation will be an agency role for NLMC, and it will assist and give technical assistance to the Centre in this respect.
- To ensure professional operations and administration of the organisation, the Board of Directors of NLMC would be made up of top Central Government executives and recognised specialists.
- The new firm will be established under the financial ministry’s administrative control.
- NLMC, like previous specialised government firms like the National Investment and Infrastructure Fund (NIIF) and Invest India, will employ specialists from the private sector.
How it helps
- A detailed and comprehensive inventory of the state’s land holding will not only help it identify the surplus land, and push for monetising it, but will also help create a database for potential investors. After all, properly marked land parcels with geographical identifiers, with their boundaries clearly demarcated, and with the legality of title well established, will provide greater clarity and certainty to private investors.
- Public sector entities hold vast tracts of land that are either unused and underused land. As per reports, the total vacant land available with Railways is estimated at around 1.25 lakh acres. Thus, collating them under a single entity will lead to a more efficient monetisation drive, and better utilisation of these assets.
- Proceeds from the monetisation of these assets will help generate additional resources, boosting government coffers.
- Auctioning off surplus land will increase the supply of land, which may address the issue of the “artificial” scarcity of land that exists in certain areas. This could depress prices and thus have a moderating effect on costs of projects
- This will allow for the productive use of underutilised assets, resulting in private sector investments, new economic activity, a boost to the local economy, and the generation of funds for economic and social infrastructure.
- NLMC will also be responsible for owning, holding, managing, and monetizing surplus land and building assets of CPSEs that are closing down, as well as surplus non-core land assets of Government-owned CPSEs that are being strategically disinvested. This will accelerate the closure of CPSEs and make the strategic disinvestment of government-owned CPSEs go more smoothly.
- It requires “specialised skills and expertise” in areas such as “market research, legal due diligence, valuation, master planning, investment banking and land management.”
- The estimation of surplus land may be a contentious issue. Ministries, departments, and public sector entities may be reluctant to demarcate land parcels as “surplus”.
- The corporation will have to grapple with issues such as the absence of clear titles, ongoing litigation, and muted investor interest.
- There is also the issue of the encroachment of government land to contend with.
- Other stakeholders must do their part if the infrastructure development plan is to succeed.
- State governments and its Public Sector Enterprises, as well as the private sector, are among them.
- In this regard, the Fifteenth Finance Commission has advocated the formation of a High-Powered Intergovernmental Group to re-examine the Centre’s and States’ fiscal responsibility laws.
- Maintaining transparency is essential for proper asset value realisation.
- Recent experience reveals that PPPs now include transparent auctions, a clear knowledge of the risks and payoffs, and an open field for all interested parties.
- As a result, the value of PPP in greenfield projects cannot be overlooked.
How to structure
1) Give an intro about the land monetisation measures
2) Explain in detail, along with National Land Monetization Corporation
3) Analyse both sides- how surplus land monetisation can help and how it may not be a feasible solution
4) Suggest measures