Current Affairs 2022: National Land Monitisation Corporation

By Ankita Rawat

National Land Monitisation Corporation will the nodal agency to be set up by the government of India. Read here complete details about the National Land Monetisation Corporation (NLMC).

Recenlty, Finance Minister of India Nirmala Sitharaman announced that National Land Monetisation Corporation (NLMC) will be set up in India during the budget speech 2021-2022. The government is planning to set up NLMC under the Public Enterprises department to speed up the monetisation of land and non-core assets of enterprises belonging to the central public sector.

National Land Monetisation Corporation (NLMC)

Monetisation means to convert or express something into the form of currency, so monetisation is the use of the source of profit or can be converted as an asset into legal tender or money. The monetisation of the country’s debt from the government by obtaining debt treasuries will increase the supply of money and the debt will turn into money.

NLMC will be set up under 100% government ownership with INR 5000 as an initial authorized share capital as informed by several media houses. National Land Monetisation Corporation will be governed by the board that includes secretaries from the relevant ministries and investment bankers, real estate businessmen, etc. For day-to-day operations, NLMC will be managed by the CEO. However, the proposal is still in the stage to get approval from the cabinet. National Land Monetisation Corporation will work as an asset manager for lands owned by central public sector enterprises as well as the Union Government. The corporation is allowed to raise capital from the equity market that will be based on the value of its leased assets. NLMC needs to work with various government departments for monetising land.

After forming the corporation, NLMC will identify and manage the surplus assets and lands through SPV. The new SPV will be assigned hiring experts and formulate the method to monetise government buildings, departments and the land of public sector undertakings. If the land titles are transferred to the company then they will earn through sales, but if the titles remain with the ministries or CPSEs, a fee will be charged for the development process or sale.

Currently, CPSEs have referred 3,400 acres of land and non-core assets for monetisation from CPSEs including BSNL, B&R, MTNL, HMT, BEML, BPC Ltd, Instrumentation Ltd. According to the economic survey, there’s a total monetisation potential of INR 6 lakh cr through core assets of the central govt over a period of 4 years from 2021-2022 to 2024-2025. The top five sectors including railways, roads, oil, power, gas pipelines, telecom account for nearly 83% of the total value. The monetisation of non-core assets foresees releasing of the value of these assets, thus under-utilized assets and induce returns on the equity invested by the government.

The special purpose vehicle might operate on the fee-based model and most probably become a permanent system to monetize land on regular basis. As per Tuhin Kanta Pandey, secretary, Department of Investment & public asset management, the value can be identified and unlocked after demerging some land assets and look it as real estate instead of a part of an operating company. There will be concession agreements developed by the corporation for land development and sale, design and bid process management, legal management of litigation/ encumbrances. Further, he added that the upcoming 5-10 years will become a really big opportunity because the lands are not valued that much and a lot of lands can be used for urban renewal along with good strategic land will also become available.

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About the Author

  Ankita Rawat is doing graduation in BA(JMC) from JIMS Vasant Kunj, New Delhi.