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Cabinet nod to National Land Monetisation Corp for monetisation of surplus land

  • Published
    11th Mar, 2022
Context

The Union Cabinet recently approved the setting up of a National Land Monetisation Corp (NLMC) to monetise surplus land and buildings of PSUs that are being sold off or are on the verge of closure, and government agencies. 

About

About National Land Monetisation Corp (NLMC):

  • NLMC will be set up as a wholly-owned government of India Company with an initial authorized share capital of Rs 5,000 crore and paid-up share capital of Rs 150 crore.
  • The NLMC board will comprise senior Government officers and eminent experts, while its chairman and non-Government directors will be appointed through a merit-based selection process.
  • The Corporation will have minimal full-time staff, hired directly from the market on a contract basis.
  • Flexibility will be provided to the Board of NLMC to hire, pay and retain experienced professionals from the private sector.

How will NLMC function?

  • NLMC will undertake monetization of surplus land and building assets of Central Public Sector Enterprises (CPSEs) and other government agencies.
    • With monetization of non-core assets, the government would be able to generate substantial revenues by monetizing unused and under-used assets.
  • NLMC will support and undertake monetization of these assets. For CPSEs undergoing strategic disinvestment or closure, monetization of these surplus land and non-core assets is important to unlock their value.
  • NLMC will also enable productive utilisation of these under-utilized assets to trigger private sector investments, new economic activities, boost local economy and generate financial resources for economic and social infrastructure.
  • The NLMC will own, hold, manage and monetise surplus land and building assets of CPSEs under closure and surplus non-core land assets of Government-owned CPSEs under strategic disinvestment.
    • This will speed up the closure process of CPSEs and smoothen the strategic disinvestment process of Government-owned CPSEs.
  • NLMC will undertake surplus land asset monetisation as an agency function, and assist and provide technical advice to the Centre in this regard.
  • NLMC will hire professionals from the private sector as in the case of similar entities like the National Investment and Infrastructure Fund (NIIF) and Invest India.
    • This is needed since real estate monetisation requires specialised skills and expertise in areas such as market research, legal due diligence, valuation, master planning, investment banking and land management.

Challenges:

Among the key challenges that NLMC might face include:

  • lack of identifiable revenue streams in particular land assets
  • dispute resolution mechanism
  • various litigations
  • lack of clear titles
  • low interest among investors in remote land parcels

About Asset Monetisation:

  • Monetisation refers to the process of turning a non-revenue-generating item into cash.
  • In the context of monetisation of public assets, it means the process of creating new sources of revenue for the Government and its entities by unlocking the economic value of un-utilised or underutilised public assets.
  • A public asset can be any property owned by a public body, roads, airports, railways, stations, pipelines, mobile towers, transmission lines, etc. and land that remains un-utilised.

 

About Department of Investment and Public Asset Management (DIPAM):

  • The Department of Disinvestment was set up as a separate Department on 10th December, 1999 and was later renamed as Ministry of Disinvestment form 6th September, 2001.
  • From 27th May, 2004, the Department of Disinvestment is one of the Departments under the Ministry of Finance.
  • The Department of Disinvestment has been renamed as Department of Investment and Public Asset Management (DIPAM) from 14th April, 2016.
  • Department of Investment and Public Asset Management (DIPAM) deals with all matters relating to management of Central Government investments in equity including disinvestment of equity in Central Public Sector Undertakings.
  • The Four major areas of its work relates to Strategic Disinvestment, Minority Stake Sales, Asset Monetisation and Capital Restructuring.
  • It also deals with all matters relating to sale of Central Government equity through offer for sale or private placement or any other mode in the erstwhile Central Public Sector Undertakings.
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