Process of monetization of public assets was initiated first in 1993 following the globalization of Indian economy having been set in motion by Narasimha Rao Government in July 1991, where Ministries of Defence, Railways, Surface Transport since redesignated Highways, Transport and Shipping, Communications and Urban Affairs had undertaken exercise for monetization of parts of their unutilized, non-utilised and surplus landassets. But it came a cropper following resistance of the State Governments in view of the fact that Land is a State Subject in the Constitution of India and the Union Government and its public sector undertakings (PSUs) buy land from the State Governments for which after the sales deeds the Centre pays rentals to the States.
Union Government’s proposal to monetize some vital public assets to reduce its public debt and to enhance infrastructural development for faster growth of the nation, as announced by Finance Minister in the General Budget 2021-22 in Parliament on February 1, 2021, is difficult to implement in view of the resistance from the States as land comes in the State List of the Constitution of India and without their concurrence and sharing the proceeds from monetization with them (State concerned) Central Government will find it impossible to monetise impugned assets with it.
Budget 2021-22 has proposed a national monetisation of potential brownfield projects involving transfer of five operational roads to the InvIT of National Highway Authority of India (NHAI) worth rupees 5000 crore, shift rupees 7000 crore transmission assets to PowerGrid’s InvIT. Other similar plan includes monetisation of upcoming Railways Dedicated Freight Corridor (DFC) assets, operating toll roads of NHAI, oil and gas pipeline of Indian Oil Corporation (IOC), Gas Authority of India (GAIL), warehousing assets of Central Public Sector Enterprises (CPSEs) and Airport Authority of India (AAI’s) airports in tire 2 and tire 3 cities.
According to official sources, proposed monetization of public assets is intended to convert unutilized public assets into economic value and garner financial resources for modernization and upgradation of the concerned public assets for efficient utilization of such unutilized or sub optimally utilised assets. Process of monetization will involve parternership with private investors, wherein government’s input will include unutilized or surplus land and its economic utilization by private investors may be in the denomination of 50:50 sharing of their proceeds/profits. The government to oversee workings and implementation of monetization policy is working out modus operandi (institutional framework) for such policy implementation. Other gains, according to the government, will help fund the national infrastructure to reduce pressure on the exchequer and the taxpayers. This process will be completed in five years and NHAI intends to raise rupees 1 trillion from demonetization of its assets.
Process of monetization of public assets was initiated first in 1993 following the globalization of Indian economy having been set in motion by Narasimha Rao Government in July 1991, where Ministries of Defence, Railways, Surface Transport since redesignated Highways, Transport and Shipping, Communications and Urban Affairs had undertaken exercise for monetization of parts of their unutilized, non-utilised and surplus landassets. But it came a cropper following resistance of the State Governments in view of the fact that Land is a State Subject in the Constitution of India and the Union Government and its public sector undertakings (PSUs) buy land from the State Governments for which after the sales deeds the Centre pays rentals to the States. States wanted pie in the reuse of such lands for development in the concerned areas. Government of India would insist that the proceeds of monetization will go to national kitty for overall country’s development. Added to that the Union Ministry of Home Affairs (MHA) put spanner in several of such proposed monetization scheme on the ground of breaching national security and the matter stuck there.
However, the proposal of demonetization of strategic defence cantonment land, strategic major port land and air space on railways was put in cold storage on security grounds at the instance of MHA. A restaurant on rooftop (air space) of Church gate station in Mumbai, started by then Railway Minister Madhavrao Scindia in 1986 by a private restraunteur that had a roaring business and earned crores of rupees in profits to the Railways, was dismantled after three years following advice of the MHA. Ministry of Railways, however, monetized part of its unutilized land in Mumbai and Ministry of Surface Transport part of similar strategic land of Calcutta Port. Thereafter, there has been no progress in the monetization drive in the Union Government although Ministry of Railways went ahead and set up the Railways Land Development Authority and the matter is stuck there itself. One does not know how the government will go ahead and implement the proposal.
Indian Railways have 47,000 hectares of sub-optimally used/ unutilised/surplus land and idle airspace. Its monetization can go ahead within the frame of its futuristic requirements of expansion, upgradation and modernization. So the decision of the Centre to tread the most intricate and complicated path of mega monetization of some of its assets to mobilise additional resources is most difficult and challenging and the government will have to navigate very difficult tasks ahead before the proposal fructifies!