Government mulls setting up separate authority to manage govt-owned surplus land assets

P Manoj Mumbai | Updated on July 27, 2020 Published on July 27, 2020

The National Land Management Corporation plans to use the special purpose vehicle route to pursue land lease or concessions as a primary mode of commercial exploitation

The government is biting the bullet on the politically-sensitive issue of land by weighing a plan to set up a National Land Management Corporation to facilitate monetisation of land and act as an asset manager for land owned by the Centre as well as central public sector enterprises (CPSEs).

Apart from Railways and Defence, other government departments do not have a specialised organisation to handle commercial development of government land.

There is a need for a separate authority which can work with various departments to utilise the surplus land assets of government and CPSEs effectively, said a government official. The objective is to set up an empowered organisation with competencies to carry out commercial exploitation of land, manage land concessions, as well as raise funds for re-investment in CPSEs and for infrastructure development.

‘Surplus’ land or property are those that are not needed or are not appropriate for provision of public service for which the agency owning the property is responsible. Land which is vacant and not planned for future service use may also be termed as surplus.

A National Land Management Corporation could be a systematic and specialised way of monetising land assets, unlock greater economic benefits for the government and also deal with the restricted supply of land, the official said.

A per initial plans, the Corporation, will use the special purpose vehicle (SPV) route to pursue land lease or concessions as a primary mode of commercial exploitation. However, option of sale of land may also be explored, the source said.

The SPV may be given a legal backing through an appropriate legislation. It will focus on land belonging to Central government ministries/departments or CPSEs. It will also consider development or co-development of land belonging to Defence or Railways if required by these agencies.

The SPV will also consider co-development of private land parcels adjoining government lands so as to maximise revenue.

The board of SPV could have representation from the Ministry of Housing and Urban Affairs, Department of Economic Affairs, Department of Public Enterprises, Department of Investment and Public Asset Management, and independent directors from real estate and finance domains. A professional CEO could be hired from the market along with a sound technical team.

The SPV would concession land following a competitive and transparent processes by auctions. The agency will be responsible for identifying real estate opportunities and optimising value for taxpayers.

Transparency, speedy decisions

A land development and concessioning policy will be framed by the government. The policy will dwell on delegation of powers to the board of the SPV or to an empowered committee, development models, bidding processes, land concession options, contract management, revenue sharing, etc, to enable speedy decisions on individual projects.

All stakeholders, public and private, should receive fair compensation for the land that they make available, as an incentive to participate in the process.

Land-owning departments, including states or local bodies, will also get a share of the proceeds for its schemes, to incentivise release of land for commercial development, the official added.

The SPV will develop model concession agreements for land developments, raise money from the market backed by land assets, look after resettlement and rehabilitation/eviction of occupiers and make timed decisions for concessioning / selling land to avoid disruption to local real estate markets.

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Published on July 27, 2020
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