Bhuvan Bhaskar
On Wednesday, the Narendra Modi government took a historic decision regarding the disinvestment of government assets. The cabinet approved the formation of a company named National Land Monetization Corporation (NLMC), which would be wholly under the Government of India. With this, the Modi government turned the cycle of the process in the field of disinvestment, which was started by the government of Atal Bihari Vajpayee on 10 December 1999. On that day, for the first time, the Department of Disinvestment was set up as an independent department within the Ministry of Finance.
Later in 2001, the Atal Government constituted disinvestment as a separate ministry. But after the Manmohan Singh government came to power in 2004, once again the Ministry of Disinvestment was closed and it was made a department under the Ministry of Finance. Since then it has remained a single department, however, on 14 April 2016, the Modi government changed its name to the Department of Investment and Public Asset Management (DIPAM).
What is the advantage?
Since the year 2000, in every general budget, all the governments started declaring the disinvestment target, it is a different matter that hardly any government has been able to meet its disinvestment target in any year. A major reason for this was perhaps the deviation of priority, in which goals were fixed, but no one was accountable. Now with the formation of NLMC, it can be expected that along with the priority of the government, accountability will also be fixed.
NLMC will be formed as a Special Purpose Vehicle (SPV) as announced by Finance Minister Nirmala Sitharaman while presenting the Union Budget for 2021. The authorized share capital of NLMC will be Rs 5000 crore and the paid-up share capital will be Rs 150 crore. The company will have a Chief Executive Officer (CEO) and a technical team to assist it in land monetization.
This company will also be allowed to raise capital from the stock market on the basis of the value of the leased land. The working of the company will be headed by senior officials from the Ministry of Finance, Department of Public Enterprises, Ministry of Housing and Urban Affairs besides independent directors from the finance and real estate industries.
According to the statement issued by the government, the mandate of NLMC will be monetization of unused or surplus land lying with government agencies and Central Public Sector Enterprises (CPSEs) and other assets held by them apart from their core business.
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How will the fund be raised?
In the Economic Survey 2022, it has been made clear that the government will not do this monetization by selling those lands or assets, but by developing them commercially, money will be earned from them through lease. The technical team will be responsible for advising on this.
This move of the Modi government can be counted as another major economic reform. The Economic Survey presented this year states that a total of Rs 6 lakh crore can be mobilized through monetizing the core assets of the central government in 4 years between 2021-22 and 2024-25. Roads, railways, power, oil and gas pipelines and telecommunications sector accounts for 83 per cent of this amount. Obviously, the arrival of such a huge amount with the government will directly mean a big increase in government investment, which will directly affect the GDP growth of the country.
lands will be monetized
The Economic Survey also said that other CPSEs including Bharat Sanchar Nigam Limited (BSNL), Mahanagar Telephone Nigam Limited (MTNL), Bharat Petroleum Corporation Limited (BPCL), B&R, BEML Limited, HMT Limited have so far acquired 3400 acres of such land. marked, which can be monetized.
The question here is not just about earning money from monetization. The biggest thing is that by making better use of thousands of acres of land which are lying idle, the National Gross Domestic Product (GDP) can be increased, which in the end will improve the economic condition of the common man. If the idle land is developed, then the opportunities for real estate in the surrounding areas will also increase and the demand for social infrastructure like retail development, banking will also increase.
A glimpse of how NLMC will work can be got from the functioning of Railway Land Development Authority (RLDA). The Railways is already well ahead in monetizing its surplus land among Government of India undertakings. RLDA has been formed for this work in the Railways, whose job is to develop the vacant land of the railways for commercial use.
Railways alone currently have about 1.10 lakh acres of vacant land across the country, out of which 79 places are likely to be leased. These lands are awarded to developers through an open and transparent bidding process. RLDA plans to build 84 railway colonies and 62 railway stations.
The government has made its intention clear by announcing the formation of NLMC, but the experience of the last two decades shows that only intention will not work. The government will have to take permission from the local administration and state governments on the development of the lands. The land which will be developed will have activities ranging from electricity, water to construction, so the permission of the local authorities at the right time will play a big role in making this plan successful or unsuccessful.
(The author is a specialist in agriculture and economic affairs)
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