Land holdings are a single of the government’s most substantial tangible assets, no matter if owned by central ministries, state governments, public sector undertakings or nearby bodies. Monetizing these land assets, on a single hand, can be a substantial supply of finance for the respective agencies, when on the other, pave way for redevelopment or superior usage of the land parcel.
The 13th Finance Commission of India also underlined the significance of guaranteeing appropriate use of land held by the Central and state governments, as properly as Public Sector Undertakings. There is a substantial prospective for creating a lot-necessary more revenues, provided the beneath-utilized prime lands of Public Sector Undertakings, Port Trusts, Airports, Railways, municipal corporations and so on. Various estimates in the public domain peg the extent of land held by several government agencies in excess of 5 lakh hectares, of which, more than 160,000 hectares are held across several airports, seaports and railways. There is certainly a crucial need to have to evaluate these land holdings and prioritize these with substantial market place possibilities to unlock worth in the quick term. Unlocking the worth of public lands has been recognized as a potentially substantial supply of finance for upgrading urban and social infrastructure projects.
Implications of land monetisation
Monetisation of land is a single of the most viable solutions for government or nearby bodies for creating the a lot-necessary funds for upgradation or improvement of necessary infrastructure devoid of burdening the state or the Central government in the kind of grants, and so on. Availability of land in otherwise land locked regions gives the a lot necessary relief to occupiers/ finish customers in the kind of controlling the actual estate costs and gives the chance for investors/ developers to provide the infrastructure in alignment with the needs of the government agency. It additional makes it possible for particular State/ Centre funded projects to be produced and financed from otherwise defunct/ nonfunctioning assets or beneath-utilized land parcels.
For instance, to maximize its revenues, Airports Authority of India (AAI) plans to partially monetize about 7591 acres of vacant land owned close to eight big airports. The land could be utilized for industrial purposes, such as for hospitality organization and warehousing. In addition, AAI has also effectively undertaken privatization of six airports which let concessionaire to use/ redevelop the land related with the airport to assure passenger comfort and satisfaction.
Another instance wherein monetization has been purposefully been pursued is the land at the moment beneath possession with the Railways sector. As portion of the strategic initiative the government has firmed up plans to modernize roughly one hundred stations wherein the developers are getting provided unutilized land parcels adjoining the stations in lieu of dollars spent by investor/ developer towards modernizing and upgrading of the railway station, an workout which would otherwise burden the exchequer beneath considerable debt additional impacting the fiscal deficit. The above initiatives would not only outcome in considerable employment generation in the area in the course of and just after the improvement but also provide the a lot-necessary infrastructure which compares with international requirements, as a result advertising tourism, improvement in financial profile and high quality of life in the area.
Purpose of monetisation
The monetisation approach will have to aim to capture the actual estate worth of public land lying idle in monetary terms as to increase or strengthen the finances of government bodies and nearby authorities. Transparency in the approach is of utmost significance and has to be maintained all through the monetization approach. The facts of the land to be monetized need to be in the public domain, so that all stakeholders viz. prospective bidders, funding agencies, common public, and so on. would have a comprehensive understanding of the objective, intended use, expense of improvement and estimated timelines of the proposed project.
For instance, the Delhi government lately initiated the greatest land monetisation workout in India by placing up 10 million sq. ft of land for industrial improvement, hoping to create income about Rs 6000 crore. This will not enable towards urban improvement but will also play a large function in job creation.
Process of land monetisation
For a effective monetization approach, it is critical for the authority to assure that they have all the necessary land documents to comprehensive the legal due diligence approach. Additionally, a detailed techno-industrial evalution along with valuation of the land need to be undertaken. As portion of this workout, a detailed evaluation of the asset, existing and future prospective of land, understanding the prevailing policies of the government is crucial. Managing all stakeholders and executing the project in a way that that fulfills the envisioned objective is crucial to assure that future projects get the requisite help. The project need to be independently viable if intended for industrial usage and need to create enough revenues for the shareholders of the project. The Public-Private partnership (PPP model) has emerged as a viable solution for improvement more than the previous couple of years, as it marries the market place efficiency, professionalism and experience of the private sector to the objectives of the government/ public sector.
As described earlier, valuation of the land parcel plays an integral function in selection-producing approach, and therefore, need to be arrived at subsequent to a thorough evaluation of the prevailing market place prices and the inherent income creating prospective of the proposed project.
Despite the big availability of land banks with Central and state government bodies, there has been restricted progress on the monetisation front, owing to the complicated process and time-consuming approach for getting the necessary approvals from several civic authorities. While there have many initiatives taken at the Central and state levels to speed up the existing approach, a lot more is preferred to catapult the monetization approach in constructing an Atmanirbhar Bharat.
(By Preetham Mehra, Executive Director and Head-Government Practice, CBRE)