After employing convoluted and rather creative methods to meet its disinvestment targets in its previous term, it is good to see the NDA government in its second stint turn to the more straightforward idea of monetising idle assets. The Department of Investment and Public Asset Management (DIPAM) has invited bids to empanel global consultants to help it monetise non-core assets such as land, buildings and operational assets held by state-owned firms. The DIPAM expects the consultant to prepare feasibility reports for individual assets and to design both the model and the bidding process for asset sales. While it is good to see the Centre move ahead with plans to unlock value from unproductive assets, it would be both undesirable and unrealistic to expect this asset monetisation exercise to raise quick cash to meet this year’s disinvestment target.

Before any private sector consultant can take on the task of preparing feasibility reports and devising models for the sale of the government’s non-core assets, enumerating and identifying such assets is an essential first step. But this promises to be a long-drawn affair. Given the peculiarities of government accounting which focus mainly on cash receipts and expenses of the state, government departments in India have historically taken a lackadaisical approach to identifying and maintaining their immovable assets, leading to both loss of value and misuse. Despite FRBM rules mandating that all government arms must maintain an Asset Register many years ago, the CAG has had to repeatedly flag lapses by government bodies even in maintaining this simple list of fixed assets at their original cost. This lack of oversight is precisely the reason why both the Indian Railways and Air India, holders of large tracts of government land, have made scant progress with their own asset monetisation efforts. The Indian Railways’ Rail Land Development Authority which was set up a decade ago to monetise its landholdings has been stonewalled by title and encroachment issues. Air India’s plans to raise over ₹5,000 crore through asset monetisation have yielded only a tenth of that number, due to similar problems. Therefore, to set the ball rolling on its asset monetisation plans, the Centre must first get its numerous arms to comply with basic accounting norms on their fixed assets.

Once such asset sales do begin to generate cash flows, the Centre must also look to sequester these proceeds instead of mingling them with revenue receipts in the Union Budget which are frittered away in salary, interest and subsidy pay-outs. Gains from asset monetisation represent a one-off opportunity for the Centre to raise capital for productive use. In the interests of inter-generational equity, the windfalls should ideally be re-invested in creating capital or infrastructure assets that can yield future returns to the exchequer. Treating asset sales as just another source of income that fills the budget gap would be tantamount to selling the family silver to meet daily expenses.