After 3,000 workers in five sick PSUs were separated via VRS recently, the government on Wednesday commenced the process to monetise nearly 1,675 acres of land and some buildings belonging to these firms, which are being wound up. Besides meeting the cost of the VRS packages, the sale proceeds would be used to clear the statutory dues and debts of Hindustan Cable, Instrumentation, HMT Bearings, HMT watches and Tungabhadra Steel. The five PSUs are being shut down in a time-bound manner, as notified by the government on September 7, 2016.
State-run construction engineering firm NBCC, which has been nominated as a land-management agency for sick PSUs, on Wednesday invited proposals from government organisations to purchase parcels of land/ building with the above PSUs across several states, including the national capital.
NBCC is expected to complete sales within six months. Unsold land parcels, if any, would be auctioned by the government or be used for affordable housing and other government programmes, official sources said.
NBCC will get a commission at the rate of 0.5% (subject to a ceiling of Rs 1 crore) of the value realised from disposal of land in each case.
Monetisation of surplus land with government undertakings is seen by policymakers as a way to boost resources and increase capital investments by the government. What could be garnered from sale of lands of sick PSUs being wound up is, however, only a tiny fraction of the potential revenue from sale of surplus land with various government agencies like the railways, major port trusts etc (see chart).
According to the department of public enterprises (DPE), some of the PSUs have over 8 lakh acres set aside for development using external resources. While the revival of some sick PSUs could hinge on land monetisation, the better-off ones could use the route to bolster their business. In a large number of cases of the ailing PSUs, the land utilisation could be a way to recoup the investments made by the government as the companies are wound up.
According to the guidelines issued by the DPE, the sick units will be closed, including disposal of immovable assets within one year from the date of issue minutes of the Cabinet approval, as against years it took earlier. The speeding up of closure of the sick units will help in curbing recurring costs such as salaries of employees of sick units, which are a drag on the Centre’s finances.
The NITI Aayog has identified 74 loss-making PSUs. Of these, 26 have been recommended for closure.