[Answered] Monetisation of surplus land holdings is a prudent strategy that will lead to more efficient utilization of these “under-utilized” assets. Critically analyze the statement.

Asset monetization is basically a transaction that converts a dead/idle asset into an income generating one. Land monetisation means monetization of “surplus, unused and under-used non-core assets in the nature of land and buildings”. Indian government has also initiated a process of creating new sources of revenue by unlocking the economic value of un-utilized or underutilized public assets, under the national Monetisation pipeline.

Benefits of land monetization:

1. Database for potential investors: The properly marked land parcels with geographical identifiers and with their boundaries clearly demarcated will provide greater clarity and certainty to private investors.
2. Better utilisation of assets: Public sector entities hold vast tracts of land that are either unused or underused land. As per reports, the total vacant land available with Railways is estimated at around 1.25 lakh acres. Similarly, the defence ministry also has considerable land holdings outside of the cantonment boundaries. Thus, monetization of these lands can result in additional revenue stream for the government.
3. Boosting government capitals: Proceeds from the monetisation of these assets will help generate additional resources as land in and around prime areas can possibly generate substantial returns.
4. Increase in the supply of land: Auctioning off surplus land may address the issue of the “artificial” scarcity of land that exists in certain areas. This could decrease land prices and thus have a moderating effect on costs of projects.
5. It could also provide States with the additional resources needed to sustain public investment during this period of stressed public finances.

Constraints:

1. Complex process- It requires “specialised skills and expertise” in areas such as “market research, legal due diligence, valuation, master planning, investment banking and land management.” A separate entity, housed with professionals with specialised skills is better suited for this task.
2. Estimation of surplus land – Ministries, departments, and public sector entities may be reluctant to demarcate land parcels as “surplus”.
3. Absence of clear titles, ongoing litigation and dispute resolution mechanism.
4. The issue of the encroachment of government land to contend with and raise questions over the management of commons, and whether public purpose can be better looked after by more effective management of public land by the state.

The special purpose vehicle like the National Land Monetisation Corporation (NLMC), as a wholly-owned Government of India, is a welcoming step in the monetization of unused land.