Brain Booster for UPSC & State PCS Examination (Topic: National Land Monetisation Corporation)

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The Union Cabinet on 9 March approved the setting up of National Land Monetisation Corporation (NLMC) as a wholly-owned government of India company to undertake monetisation of surplus land and building assets of Central Public Sector Enterprises (CPSEs) and other government agencies.

The National Land Monetisation Corporation will be a firm, fully owned by the government, to carry out the monetisation of government and public sector assets in the form of surplus, unused or underused land assets.
It will fall under the administrative jurisdiction of the Ministry of Finance and will be set up with an initial authorised share capital of ₹5,000 crore and a paid-up capital of ₹150 crore.
The Corporation will also facilitate the monetisation of assets belonging to PSUs that have ceased operations or are in line for a strategic disinvestment, with the aim of unlocking the value of these land holdings.
The surplus land and building assets of such enterprises are expected to be transferred to the NLMC, which will then hold, manage and monetise them.
NLMC will speed up the closure of loss-making CPSEs and smoothen the strategic disinvestment process.
NLMC will act as an advisory body and support other government entities and CPSEs in identifying their surplus noncore assets and monetising them in an efficient and professional manner, maximising the scope of value realisation.

The assets which are central to the business objectives of entities and are used for delivering infrastructure services to the public/users are considered as core assets.
The core assets include asset classes such as transport (roads, rail, ports, airports), power generation, transmission networks, pipelines, warehouses etc.
The other assets, which generally include land parcels and buildings, can be categorised as non-core assets.

When the government monetises its assets, it essentially means that it is transferring the revenue rights of the asset to a private player for a specified period of time.
In such a transaction, the government gets in return an upfront payment from the private entity, regular share of the revenue generated from the asset, a promise of steady investment into the asset, and the title rights to the monetised asset.

The firm will hire professionals from the private sector with a merit based approach.
This is because asset monetisation of real estate requires expertise in valuation of property, market research, investment banking, land management, legal diligence and other related skill sets.
The NLMC will undertake monetisation as an agency function and is expected to act as a directory of best practices in land monetisation.

According to the Economic Survey 2021-2022, as of now, CPSEs have put nearly 3,400 acres of land on the table for potential monetisation.
They have referred this land to the Department of Investment and Public Asset Management (DIPAM).
PSUs such as MTNL, BSNL, BPCL, B&R, BEML, HMT Ltd, Instrumentation Ltd etc are in the foray.
The Railways and Defence Ministries, meanwhile, have the largest amount of government land in the country.

The performance and productivity of the NLMC will also depend on the government’s performance on its disinvestment targets.
In FY 2021-22, the government has just been able to raise ₹12,423.67 crore against a target of ₹78,000 crore which was brought down from ₹1.75 lakh crore.
The Life Insurance Corporation IPO, is in doldrums due to Russia-Ukraine war.
Air India sell-off also took a lot of time.
Identifying profitable revenue streams for the monetised land assets, ensuring adequate investment by the private player and setting up a dispute resolution mechanism are also important tasks.
Another challenge would be to use the Public Private Partnerships (PPPs) as a monetisation model.
The presence of just a few serious bidders would also give rise to the possibility of a monopoly or duopoly in operating surplus government land.