Centre plans loss-making PSU land bank

The government is looking at creating a bank from the land available at loss-making state-run enterprises as part of its efforts to sell these entities and push the overall disinvestment programme.

What’s the plan?

The idea is to create a special purpose vehicle (SPV) which will hold all the land resources from loss-making public sector enterprises. The SPV then can give the land for other projects which may come up.

Background:

The government has accelerated efforts to wind up several loss-making state-run firms and the NITI Aayog is drawing up a strategy on the issue. Land available with state-run firms is seen as an asset and several defunct PSUs have huge tracts of land available with them. Latest data shows there are 77 CPSEs which incurred a loss of Rs 27,360 crore in 2014-15.

•   The effort to monetize land with government entities is not new. In 2012, a government panel headed by former finance secretary Vijay Kelkar had backed the idea of monetizing government’s unutilized and under-utilized land resources.

Benefits:

These resources can finance infrastructure needs, particularly in urban areas. Such a policy has been effectively utilized in many countries, including USA, France, Canada, Australia and China. For monetizing land resources, the potential is considerable given the under-utilized prime lands of PSU’s, port trusts, railways.

Way ahead:

The plan is at a preliminary stage and several rounds of consultations are expected before a final decision is taken.