The
central and state governments are faced with an acute challenge of raising
revenues. The Governments need to come up with newer ways of managing its cash
flows without burdening the common man. In this context, the monetisation of
assets is a viable option.
In
2012, to erase India’s metropolitan problems and open up enormous revenue,
monetising of excess government land from port trusts, railways and public
sector undertakings was suggested by a government team led by Vijay Kelkar.
This fiscal solidification plan was also advised by the SK Roongta Committee
formed by the Planning Commission.
Monetisation
of land is slowly gaining currency as stakeholders are warming up to the idea
of unlocking the tremendous benefits of leasing of land.
MEANING
& PURPOSE OF LAND MONETISATION:
Asset or land monetization is basically a
business transaction that converts a dead/idle asset or land into an income
generating one. This is basically done through leasing of land to private
individuals or commercial undertakings. Land monetisation enables the retention
of land ownership while realising market rent (if the revision of rent is
periodic and on agreed principles).
For example, Railways owns a great deal of
land in india. Most of them are lying idle, giving no incomes to it. Now, if
Railways gives them to private commercial ventures on a lease basis, this is
called monetization of land assets.
The purpose of land monetization is to
unshackle the value of investment in lands which have not produced proper
returns.
Benefits:
> Open up a stream of revenue for governments, PSUs and local bodies, unburdening them of lower collection of revenue and higher expenditure.
> Put land to better uses
> Speed up the process of private investment creating lakhs of jobs that India needs
> Fuel the demand for social infrastructure such as school, hospitals, retail and banking.
> It can also solve the problem of residential projects in urban areas
> It also contributes to planned urbanization, boosts tourism and generates employment
> Land monetization has cascading effects on economic development and quality of life of citizens.
Challenges:
> Identify and locate such lands that could be monetized for better uses
> Clear encroachments, if any, and secure possession
> Map the vacant lands across the country, update records and enlist these in the public domain.
> The real estate developers and relevant stakeholders in the segment should be involved for better realization of land value
> It warrants leveraging public-private partnerships (PPP). The PPP model has emerged as a viable option for development over the past few years, as it combines the best of both entities—public interest of the public sector and professionalism and expertise of the private sector.
Why is it a viable
option:
> It will generate a revenue stream and also entails several other benefits.
> It puts the land to better use.
> The commercial development of land accelerates the real estate prospects in the vicinity.
> It will fuel the demand for social infrastructure such as retail development, banking, etc.
> It also contributes to planned urbanisation, boosts tourism and generates employment.
> It has cascading effects on economic development and the quality of life of citizens.
> Land exchange/swap can also be used as an instrument if suitable options for exchange exist with any other government entity.
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National Land Monetisation Corporation (NLMC):
> It was announced in the Union Budget 2021-22, to carry out the monetization of non-core assets of CPSEs and other Government agencies and was incorporated in June 2022 as a wholly-owned government company.
> It falls under the Ministry of Finance and has been set up with an initial authorised share capital of Rs. 5,000 crore and a paid-up capital of Rs.150 crore.
> NLMC is a Special Purpose Vehicle (SPV) that owns, holds, manages, and monetizes surplus land and assets of CPSEs under closure and the surplus non-core land assets of Government CPSEs under strategic disinvestment.
> It also acts as an advisory body and supports in identifying CPSEs surplus non-core assets to monetise them, maximising value realisation. The utilisation of these under-utilised assets sets in motion private sector investments, industrialisation, and employment.