National Land Monetization corporation: Cabinet clears agency to monetise Govt land

To be fully owned by the Centre, under the administrative jurisdiction of the Finance Ministry, NLMC will have an initial authorised share capital of Rs 5,000 crore and paid-up share capital of Rs 150 crore.

“With monetisation of non-core assets, the Government would be able to generate substantial revenues by monetising unused and under-used assets. At present, CPSEs hold considerable surplus, unused and under-used non-core assets in the nature of land and buildings,” the Government said in a statement after a Cabinet meeting chaired by Prime Minister Narendra Modi.

In the Union Budget 2021-22, Finance Minister Nirmala Sitharaman had announced plans to set up a special purpose vehicle for this purpose.

Sources said Railways, Telecommunications and Defence are among key ministries holding the maximum surplus land, while parcels of several CPSEs are in prime areas with good potential.

Apart from the strategic sale and privatisation of state-owned companies, monetisation of idle land is part of the Centre’s strategy to reduce its business presence to a bare minimum and generate resources for future asset creation.

Last September, the Government had put out a four-year National Monetisation Pipeline (NMP) worth an estimated Rs 6 lakh crore. Roads, Railways and power sector assets will comprise over 66 per cent of the total estimated value of assets to be monetised.

However, progress on these fronts has been less than encouraging so far, with the Government scaling down its disinvestment targets substantially. 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.

“For CPSEs undergoing strategic disinvestment or closure, monetization of these surplus land and non-core assets is important to unlock their value. NLMC will support and undertake monetization of these assets. This will also enable productive utilisation of these under-utilized assets to trigger private sector investments, new economic activities, boost local economy and generate financial resources for economic and social infrastructure,” the Government said.

The NLMC will own, hold, manage and monetise surplus land and building assets of CPSEs under closure and surplus non-core land assets of Government-owned CPSEs under strategic disinvestment. This will speed up the closure process of CPSEs and smoothen the strategic disinvestment process of Government-owned CPSEs, the statement said.

NLMC will undertake surplus land asset monetisation as an agency function, and assist and provide technical advice to the Centre in this regard. The NLMC board will comprise senior Government officers and eminent experts, while its chairman and non-Government directors will be appointed through a merit-based selection process, the statement said.

While the Government had set a target of Rs 1.75 lakh crore through disinvestment in its Budget estimates in 2021-22, the target has been revised to Rs 78,000 crore — for the year 2022-23, the target is Rs 65,000 crore. Any move to raise the target amount of Rs 78,000 crore will depend on the completion of the proposed public issue of Life Insurance Corporation by March-end.

In 2021-22, the Government has raised Rs 12,423.67 crore through various modes of disinvestment. While the Government has been able to sell Air India and Neelachal Ispat Nigam Limited to the Tata Group, privatisation of state-owned banks and a PSU general insurer is yet to gain momentum. The BPCL privatisation is also being pushed forward due to lack of investors’ interest.

NLMC will hire professionals from the private sector as in the case of similar entities like the National Investment and Infrastructure Fund (NIIF) and Invest India. This is needed since real estate monetisation requires specialised skills and expertise in areas such as market research, legal due diligence, valuation, master planning, investment banking and land management, the Government said.

The Corporation will have minimal full-time staff, hired directly from the market on a contract basis. “Flexibility will be provided to the Board of NLMC to hire, pay and retain experienced professionals from the private sector,” it said.

So far, CPSEs have referred around 3,400 acres of land and other non-core assets to the Department of Investment and Public Asset Management (DIPAM) for monetisation. Monetisation of non-core assets of MTNL, BSNL, BPCL, BEML, HMT, is currently at various stages of the transaction, as per latest data in the Economic Survey 2021-22.

BEML, for instance, has identified surplus land in Karnataka — around 123.39 acres in Bangalore and 401.23 acre in Mysore — which will be demerged and subsequently monetised during the strategic disinvestment process. HMT Limited which is under closure, has also earmarked land of around 89.506 acre in Bangalore for monetisation.

The Rail and Defence ministries are the biggest government land-owners in the country.

According to available Government data, the total land available with the Railways is 4.78 lakh hectares (11.80 lakh acres) of which 4.27 lakh hectares is under operational and allied usage while around 0.51 lakh hectare (1.25 lakh acres) is vacant.

The Defence Ministry, the biggest land-owner, has about 17.95 lakh acres of which around 1.6 lakh acres is within the 62 cantonments, and about 16.35 lakh acres outside their boundaries, according to data from the Directorate General, Defence Estates.

According to the Government statement issued Wednesday, monetisation of land can be through direct sale or concession, or by similar means. Under the process, the Government is essentially transferring revenue rights to private parties for a specified transaction period in return for upfront money, a revenue share, and commitment of investments in the assets.