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The government’s plan to monetise surplus land of public sector enterprises (PSEs) to improve their bottom line, especially the ones making losses, has come a cropper.
Protests from labour unions and opposition parties, lack of land records and inordinate delays in approvals from different ministries have come in the way.
The proposal for monetisation of PSE land is not new. The matter grabbed public attention after a committee headed by economist Vijay Kelkar recommended in September 2012 the government sell the unused and underused land bank of PSEs, port trusts and railways over the next 24-36 months.
However, there has not been much progress, except that the government has initiated the process of setting up a Public Sector Land Development Authority, which will prepare and implement a plan for monetising prime land available with about 50 loss-making PSEs.
According to government estimates, 60 sick PSEs together have about 20,000 hectares (49,400 acres) of land that can be monetised.
“The key reasons why the PSEs could not monetise their surplus land are protests from the opposition political forces, corruption, and scams that have taken place earlier. Also, there is the issue of illegal encroachment, which is mostly motivated by local political forces. While it may take time, the whole exercise can be conducted in a transparent manner,” said a consultant with a global consultancy firm who did not wish to be named.
Amber Dubey, partner (infrastructure advisory) at global consultancy KPMG, said: “Given the sensitivity around land in India and its use as a political tool for embarrassing the government in power, adequate care should be taken while undertaking land monetisation. The surplus land should be carved out after accounting for future expansion needs of the PSE. The transactions should have robust documentation, clear land titles, mandatory clearances, well-designed master plans and risk protection for the private developer. Above all, the transactions should be completely transparent and should involve comprehensive stakeholder interactions.”
Amid protests by workers’ unions, state-run telecom company Mahanagar Telephone Nigam Limited (MTNL) has hired a consultant to help it monetise about 6.10 million square feet of surplus land.
According to MTNL executives, the consultant will help the struggling telecom PSE in leasing a bulk of its 0.78 million square feet of built-up office space in Delhi and Mumbai, and will assist in finalising a business plan to develop its land bank.
The consultant has suggested MTNL enter into joint ventures with developers and investors to monetise about 50 land parcels totalling 6.10 million square feet in the two metros. It is expected that MTNL will be able to garner about Rs 5,000 crore from land monetisation.
Last year, Bharat Sanchar Nigam Limited Chairman RK Upadhyay, in a presentation to Communications Minister Kapil Sibal, had said BSNL would be hiving off about 4,400 hectares (10,868 acres) of its total land bank. “To monetise the real estate value, BSNL has taken up a pilot project for commercial exploitation of 10 parcels of land, which is expected to bring in Rs 250 crore in 2013-14 and an annual rental income of the same amount from 2016,” Upadhyay had said.
BSNL and MTNL together are expected to get about Rs 1,00,000 crore through monetisation of unused land.
As part of the revival process of BSNL, the Department of Telecommunications (DoT), has sought approval from a group of ministers (GoM) to monetise some of its land valued, based on the circle rates, at Rs 13,439.5 crore. According to DoT’s note to the GoM, BSNL has identified 82 land parcels across the country for monetisation through partnerships with private companies. In the first phase, it has asked for approval for 10 parcels, beginning with five as a pilot project.
The government has already prepared a list of PSEs for possible monetisation of surplus land, but there are about 38 central ministries involved that would need to give clearances, according to a top government official who did not wish to be named. “Most of them have given their nod in principle after inter-ministerial consultations. But this will go through the Cabinet,” added the official.
Loss-making central government undertaking NEPA, a paper mill currently undergoing a revival process, has 350.51 acres of freehold and 2,320.08 acres of leasehold land. Navratna company BHEL has 8,000 acres of freehold and 7,000 acres of leasehold land. Cement Corporation has about 2,526 acres of freehold land, HMT has 2,790 acres and NTC 2,239 acres.
Air India, which proposed to get about Rs 5,000 crore by way of selling some of its land, has also been facing problems. While there are issues like rights to sell properties that the airline owns, it also failed to get clearance from some ministries in a few cases. The airline’s board has cleared the sale of land in Coimbatore, Chennai and Kolkata and its properties in Hong Kong and Tokyo. But the sale of its property on Baba Kharak Singh Marg in New Delhi, which is expected to give Air India about Rs 1,500 crore, is still stuck.
According to a report by global consulting firm Deloitte, major ports in the country have combined land assets of 2,58,000 acres, of which around 20 per cent can be leased out. On the other hand, the Airports Authority of India has about 49,400 acres of unused land, and the defence services have about 17,00,000 hectares (about 41,99,000 acres).
“Surplus PSE land can be leveraged for industrial, commercial and residential purposes. This catalyses economic activity, additional jobs and increased tax revenue. The PSEs earn rentals, royalties and/or revenue share that shores up their bottom line. A classic win-win that should be encouraged by the new government at the Centre,” said Dubey.
According to a report by the Railways Modernisation Committee, the department has about 10,000 acres of surplus land in urban centres identified for commercialisation, which is expected to generate Rs 50,000 crore. The total vacant railway land is about 113,000 acres.
Early this year, the Cabinet had approved policy guidelines for 265,000 acres of land belonging to the 12 major ports, paving the way for monetising the plots.
