Relevance: GS-3: Indian Economy, mobilization of resources.

Relevance: GS-2: Government policies and interventions for development in various sectors

Key Phrases: National Land Monetisation Corporation, CPSEs, asset monetization, unused and underused land, specialised skills and expertise, public land.

Why in News?

• Monetising surplus land held by state is a good idea, it needs to be done with transparency, sensitivity to public interest.

Context:

• Last week, 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.
• Considering that various arms of the state have considerable land holdings across the country, monetisation of their “surplus, unused and under-used non-core assets in the nature of land and buildings” is a prudent strategy as it will lead to more efficient utilisation of these “under-utilised” assets.
• The asset monetization proposed in last year’s budget is distinct from the government’s disinvestment plan, which involves selling stakes in public sector enterprises.

Benefits of National Land Monetisation Corporation

The rationale for creating a land monetisation corporation is multifold.

• First, 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.
• Second, public sector entities hold vast tracts of land that are either unused or underused land. As per reports, the total vacant land available with Railways is estimated at around 1.25 lakh acres. Similarly, the defence ministry also has considerable land holdings outside of the cantonment boundaries. Thus, collating them under a single entity will lead to a more efficient monetisation drive, and better utilisation of these assets.
• Third, proceeds from the monetisation of these assets will help generate additional resources, boosting government coffers. After all, land in and around prime areas can possibly generate substantial returns.
• Fourth, 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.

Functions of the National Land Monetisation Corporation:

• NLMC will undertake monetization of surplus land and building assets of Central Public Sector Enterprises (CPSEs) and other Government agencies.
• NLMC will also advise and support other Government entities (including CPSEs) in identifying their surplus non-core assets and monetizing them in a professional and efficient manner to generate maximum value realization.
• NLMC will act as a repository of best practices in land monetization, assist and provide technical advice to the Government in implementation of asset monetization programmes.

Way forward:

• Considering that land monetisation is a complex process, entrusting this work to a separate agency is the right way to go about it. As the government itself has acknowledged, it requires “specialised skills and expertise” in areas such as “market research, legal due diligence, valuation, master planning, investment banking and land management.”
• A separate entity, housed with professionals with specialised skills is better suited for this task. However, the entity will have to grapple with several issues.
• First, 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”.
• Second, the corporation will have to grapple with issues such as the absence of clear titles, ongoing litigation, and muted investor interest.
• Third, there is also the issue of the encroachment of government land to contend with. But while this monetisation drive should lead to more efficient outcomes, it does raise questions over the management of commons, and whether public purpose can be better looked after by more effective management of public land by the state.
• While privatisation of PSBs and PSUs has faced challenges, monetisation of idle government land requires specialised skills and expertise. Then, NLMC will have necessary technical expertise to professionally manage and monetize land assets on behalf of CPSEs and other government agencies.

Source: Indian Express

Mains Question:

Q. “Monetising surplus land held by state is a good idea, it needs to be done with transparency, sensitivity to public interest”. Critically analyse the statement.