In her Budget speech 2021-22, finance minister announced setting up of an agency to carry out monetization of the land and other non-core assets of Government agencies and PSUs. In pursuance, National Land Monetisation Corporation (NLMC) has been recently set up.
Understanding Asset Monetisation
- Government agencies and PSUs own both core and non-core assets. Core assets are assets which are integral to the functioning of PSUs. While non-core assets include land and buildings.
- For ex, NHAI's core assets would include National Highways which it has built. While non-core assets would include surplus land and buildings owned by it.
- Some of these core and non-core assets may be under-utilised or unused. Selling or leasing these assets would help us unlock their value, raise capital and undertake investment for creation of new infrastructure projects.
- Monetisation of core assets is undertaken under National Monetisation Pipeline. Monetisation of non-core assets (sale/lease of land and buildings) would be undertaken by National Land Monetisation Corporation.
Need for NLMC
- At present, CPSEs hold considerable surplus, unused & under-used non-core assets in land and buildings.
- Desired skill set to take on responsibility of management and monetization of non-core assets in Government is limited
- Establishment: Set up as a wholly owned Government of India company with an initial authorised share capital of Rs 5000 crore and paid-up share capital of Rs 150 crore.
- Nodal Ministry: While the National Monetisation pipeline is steered by NITI Aayog, the NLMC functions under the Department of Public Enterprises under the Ministry of Finance.
Mandate of NLC
- Surplus land and building assets of PSUs would be transferred to NLMC. NLMC would then undertake monetization of surplus land and building assets. As part of such an exercise, NLMC would either sell or lease the surplus land and buildings to the private sector.
- NLMC will also act as an advisory body and support other government entities and CPSEs in identifying their surplus non-core assets and monetising them in an efficient and professional manner.
- Act as a repository of best practices in land monetization.
Working Mechanism of NLC
- Board of Directors of NLMC will comprise senior Central Government officers and eminent experts to enable professional operations and management of the company.
- The board of directors would have specialised skills and expertise required for asset monetization such as real estate market research, legal due diligence, valuation, master planning, investment banking, land management etc.