 "National Land Monetisation Corporation: What is it, and why was it needed?")
After nearly a year of being established, the National Land Monetisation Corporation is preparing its groundwork to auction assets for the first time. The company was established as a part of the government's asset monetisation programme to fully utilise and monetise unused land owned by the centre. Here is everything you need to know about the company, its incorporation, and its purpose.
What is the National Land Monetisation Corporation?
The National Land Monetisation Corporation (NLMC) was conceptualised in the Union Budget 2021-22 and approved by the Union Cabinet, chaired by Prime Minister Narendra Modi on March 9, 2022.
Officially incorporated in June 2022, the NLMC is a special purpose vehicle (SPV) wholly owned by the government of India that is undertaking the monetisation of surplus lands and building assets of the Central Public Sector Enterprises (CPSEs) and other government agencies. This means that the government is identifying and either selling or finding an alternative way to monetise its properties with little to no business activities.
Why was the NLMC needed?
Many CPSEs currently possess non-core assets such as land and buildings that are surplus, unused, or under-utilised. For CPSEs undergoing strategic disinvestment or closure, monetising these assets to realise their value is crucial. The NLMC aims to support and facilitate the monetisation process of such assets. Therefore, it will enable the productive utilisation of under-utilised assets and help stimulate private sector investments, foster new economic activities, boost local economies, and generate financial resources for economic & social infrastructure.
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Role and responsibilities of NLMC
The NLMC is responsible for owning, managing, and monetising surplus land and building assets of CPSEs under closure and surplus non-core land assets of government-owned CPSEs under strategic disinvestment. By taking over these assets, the NLMC aims to expedite the closure process of CPSEs and streamline the strategic disinvestment of government-owned CPSEs. The corporation will also guide and support other government entities, including CPSEs, in identifying surplus non-core assets and monetising them professionally and efficiently to maximise their value.
In cases involving ongoing CPSEs and listed CPSEs under strategic disinvestment, the NLMC will undertake surplus land asset monetisation as an agency function. It is expected that the NLMC will become a repository of best practices in land monetisation and offer advice to the government on implementing asset monetisation programs.
Management and leadership of NLMC
The Department of Public Enterprise under the Ministry of Finance was responsible for establishing the NLMC and serving as its administrative ministry. According to the Ministry of Finance, in 2022, the Union Cabinet decided that the board of directors for NLMC would consist of senior Central government officers and experienced experts to ensure professional operations and management. The chairman and non-government directors of the NLMC would be appointed through a merit-based selection process.
For specialised roles, the ministry was instructed to hire skilled professionals from the private sector for roles such as real estate market research, legal due diligence, valuation, master planning, investment banking, land management, and related areas; the NLMC plans to hire professionals from the private sector.
The government had appointed a joint secretary to the Department of Public Enterprises (DPE), Sanjay Kumar Jain, as the interim chief executive officer (CEO) of NLMC. The finance minister opened an application for a full-time CEO position in May. The selection of a chairman, CEO and board-level members will be made by a search-cum-selection-committee (SCSC) under the chairmanship of the cabinet secretary.
Like other specialised government companies, such as the National Investment and Infrastructure Fund (NIIF) and Invest India, the NLMC operates as a lean organisation with minimal full-time staff.
Funding and budget
The firm received an initial authorised share capital of Rs 5,000 crore and a paid-up share capital of Rs 150 crore.