National land monetization corporation:
The Union Cabinet has approved the creation of the National Land Monetisation Corporation (NLMC), the Special Purpose Vehicle (SPV) announced in the Union Budget 2021-22.
|The NLMC will be a firm, fully owned by the government, to carry out the monetisation of government and public sector assets in the form of surplus, unused or underused land assets.
It will fall under the administrative jurisdiction of the Ministry of Finance and will be set up with an initial authorised share capital of ₹5,000 crore and a paid-up capital of ₹150 crore.
Apart from monetising underutilised or unused land parcels of Central Public Sector Enterprises (CPSEs), the Corporation will also facilitate the monetisation of assets belonging to PSUs that have ceased operations or are in line for a strategic disinvestment.
The surplus land and building assets of such enterprises are expected to be transferred to the NLMC, which will then hold, manage and monetise them.
Monetization and its benefits:
- When the government monetises its assets, it essentially means that it is transferring the revenue rights of the asset (could be idle land, infrastructure, PSU) to a private player for a specified period of time.
- In such a transaction, the government gets in return an upfront payment from the private entity, regular share of the revenue generated from the asset, a promise of steady investment into the asset, and the title rights to the monetised asset.
- It helps create new sources of revenue for the government.
- It can unlock the potential of unused or underused assets by involving institutional investors or private players.
- it is also done to generate resources or capital for future asset creation, such as using the money generated from monetisation to create new infrastructure projects.
What will the NLMC do?
- The setting of the NLMC will speed up the closure process of the CPSEs and smoothen the strategic disinvestment process.
- It will also enable productive utilisation of these under-utilised assets by setting in motion private sector investments.
- It will boost new economic activities such as industrialisation, boosting the local economy by generating employment and generating financial resources.
- the NLMC will act as an advisory body and support other government entities and CPSEs in identifying their surplus non-core assets.
- According to the Economic Survey 2021-2022, as of now, CPSEs have put nearly 3,400 acres of land on the table for potential monetisation.
- They have referred this land to the Department of Investment and Public Asset Management (DIPAM).
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