TOPIC : LAND MONETISATION- THE LAND OF OPPORTUNITY

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THE CONTEXT: 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.

Steps:

• 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.

WHO OWNS IDLE LANDS IN INDIA?

In India, idle lands are owned by various ministries and departments of central government as well as state government. They are also lying with enterprises of central government and state government.
The defence and railway ministries are the chief landlords of central government. The ministry of defence has approximately 18 lakh acres, of which around 1.5 lakh acres are inside 62 cantonments and about 16.5 lakh acres outside their boundaries. The railway ministry possesses approximately 11.8 lakh acres, of which around 10.54 lakh acres are under operational handling and about 1.26 lakh acres are not in use. 13 major port trusts have 100,000 hectares of land, the International Airports Authority of India has 20,400 hectares of (additional) land.

Hurdles:

1. Absence of accurate records of assets: All government firms should preserve an asset register according to the provisions of the Fiscal Responsibility and Budget Management Act, 2003. But for many years, the Comptroller and Auditor General of India recurrently showed a red card to government associations for not even keeping a modest list of fixed assets at their original cost.
   Although government entities are supposed to maintain a register of all the fixed assets they possess along with details of the original purchase price and related costs, it is an open secret that maintaining proper records is not the government’s forte. Lack of vigorous complete database places these organisations in a dangerous position and they cannot assess the magnitude of their landholding.
2. Infringement of land: For instance, the ministry of railways holds a lot of land in principal residential areas and some in the suburbs. The Railway Land Development Authority (RLDA) is a distinct unit entrusted with the exclusive job of monetising of unemployed land owned by the railway ministry. Regrettably, neither the ministry nor the RLDA could sell or lease the land, leading to numerous trespassers intruding into these properties.
3. Non-existence of ownership documents or records
4. Political powerlessness to take conclusive decisions
5. Policy ambiguities

WAY FORWARD:

• A process needs to be set up by which, as a first measure, detailing the land assets for all government organizations should be undertaken. Once a detailed list of all such assets can be streamlined, it will help bring transparency to the process.
• The government should approach and invite proposals from global advisers to assist in monetising of land, buildings and miscellaneous operational properties by firms owned by different states.
• Consulting companies could then get involved in the process so that the type of “value that can be unlocked” can be detailed for different parcels of land.
• The government should present the idea of a special purpose vehicle or a land bank. This is similar to the Chinese model where a single agency will handle all the landholdings of public sector units.
• The government can consider a lease-only model so that it can reap the benefits of annuity income without bearing any political cost. If one successful project can be showcased, its learning can be used to drive other similar projects in states.
• Earlier efforts to raise resources through disinvestment have kicked up storms over allegations of assets being undervalued and the process being fixed. In order to prevent a repeat of the past, sufficient checks and balances should be incorporated in such an exercise and all the stakeholders including the public should be sensitised.

CONCLUSION:

All these measures can be taken only when land owning agencies first locate, identify and clear infringements of land. A proper land record must be maintained by them before they take a plunge. If properly implemented then monetisation of land can be a game changer for Government revenues.