Sansad TV Perspective: NLMC: Utilising Unused Land

In the series Sansad TV Perspective, we bring you an analysis of the discussion featured on the insightful programme ‘Perspective’ on Sansad TV, on various important topics affecting India and also the world. This analysis will help you immensely for the IAS exam, especially the mains exam, where a well-rounded understanding of topics is a prerequisite for writing answers that fetch good marks.

In this article, we feature the discussion on the topic: NLMC: Utilising Unused Land

Anchor: Teena Jha 

Participants:

1. Vijoy Kumar Singh, Additional Secretary, Ministry of Textiles
2. R. Gopalan, Former Secretary, Financial Services, Ministry of Finance, GoI
3. Vinod Kumar Yadav, Former Chairman, Railway Board

Context: The Union Cabinet has approved the establishment of a National Land Monetisation Corporation with the primary objective of monetising the surplus land and building assets of Central Public Sector Enterprises and other government agencies. This move of the government has attracted various discussions pertaining to the need to set up a National Land Monetisation Corporation, its roles and responsibilities along with the challenges.

What is meant by Land Monetisation?

• Land monetisation refers to the betterment in the usage of lands that are unused resulting in the generation of revenue streams, the development of social infrastructure such as retail development, banking and so on. 
• This is a viable option for economic development for the Public Sector Undertakings and urban local bodies.
• It is a potential mechanism that contributes to planned urbanisation, tourism and employment generation. 
• The monetisation of land can be executed through direct sale or concession or by similar means. 
• Under the National Land Monetisation Corporation, the government transfers revenue rights to private parties for a particular period of time in return for upfront money, revenue share and commitment of investments in the assets. 
• It will undertake the monetization of surplus land and building assets of Central Public Sector Enterprises (CPSEs) and other agencies of the government. 
• This proposal of setting up the NLMC was announced during the Budget session for 2021-22 along with the plan of establishing a Special Purpose Vehicle for this purpose. 

Ways to monetise land:

• The monetisation of certain offices can be done by the Real Estate Investment Trust which is a company that owns and operates a land asset and sometimes funds income-producing real estate. 
• The government assets can be monetised through the Public Private Partnership model. 

NLMC: Related Facts

• The NLMC is envisaged to play a pivotal role in generating revenue by monetising unused and under-used assets. 
• According to the sources, Railways, Telecommunications and Defence are among the key ministries that possess a majority of the surplus land along with parcels of several Central Public Sector Enterprises. 
• According to the Economic Survey 2021-22, at present, about 3400 acres of land of CPSEs have been subjected to potential monetisation. 
• The plan to monetise idle land will also be a component of the Centre’s strategy for the creation of assets for the future. 
• The ownership and management of the surplus land and building assets of the CPSEs under closure and the government-owned CPSEs under strategic disinvestment will be under the purview of NLMC once it is operationalised. 

To get more comprehensive information about NLMC, follow the link.

Target:

• During the budget estimates for 2021-22, the government had set a target of Rs. 1.75 lakh crore through disinvestment. This target was revised to Rs. 78,000 crore and for the financial year 2022-23, the target is Rs. 65,000 crores.

Key Challenges:

• NLMC might face a lack of identifiable revenue streams in certain land assets.
• Lack of proper dispute resolution mechanisms.
• Various litigations act as impediments towards the smooth monetisation of assets as many have challenged the age-old practice of privatisation in the courts.
• Absence of clear titles and low interest among investors in remote land parcels. 
• There are some arguments that perceive the entire concept of having NLMC as a weapon against the famous philosophy of disinvestment that says ‘the business of government is not business’. 
• The roles and responsibilities of NLMC tend to overlap with the Department of Investment and Public Asset Management (DIPAM), especially in the areas of strategic disinvestment, capital restructuring and asset monetisation. This might lead to a clash of interests between DIPAM and NLMC. 
• The LIC IPO which was supposed to raise a considerable amount (Rs. 60,000 crore) is now in the midst of uncertainty due to the ongoing crisis posed by the Russia-Ukraine conflict making stock markets volatile. The delay in IPO hitting the markets will make it difficult for the government to meet its disinvestment targets by a wide margin. 

Objectives of NLMC:

• NLMC will aim at undertaking professional and orderly monetisation of land and other non-core assets referred to it. 
• The supreme aim of the government to monetise assets is to create new sources of revenue. 
• It will also advise and assist government departments, statutory bodies, authorities and corporations on the monetisation of surplus and under-utilised non-core assets. 
• It is all set with the objective of identifying surplus land and building assets to create an inventory for monetisation in consultation with CPSE/other government agencies. 
• It will act as a repository of best practices in land monetisation, assist and provide expert technical advice in the implementation of asset monetisation programs. 

Incorporation of NLMC:

• The incorporation of NLMC is underway and will be administered by the Department of Public Enterprises, Ministry of Finance.

The much-needed interventions: Avenues for Future

• It has been precisely pointed out by an expert that the dispute resolution process of assets needs more clarity, especially in the context of the authority that NLMC will be provided with to resolve such disputes. 
• It shall be the collaborative efforts of all other ministries to ensure that NLMC doesn’t face any problem in identifying the surplus land and the land that shall be used for monetisation.
• The state governments and the stakeholders must be involved in enabling clear legal titles to the land parcels. 
• The valuation of the land that will be transferred from the department/ministry to NLMC must be determined with clarity. 
• The responsibility and jurisdiction of NLMC in matters relating to land encroachment and other issues related to the management of the land are to be specified. For example, the manner in which encroachment of land can be removed under the aegis of NLMC. 
• As the ownership of NLMC is entirely with the government, it is possible to a greater extent that the roles and responsibilities are demarcated and specified by the government to avoid the clash between DIPAM and NLMC. 
• Despite the prominent signs of challenges, the constitution of an agency like NLMC is witnessed as a welcoming step to offer the required set of skills and fill the gaps of expertise required in the process of land monetisation creating new and sustainable avenues for economic development.

Read more summaries of Perspective in the link.

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