The Kelkar Committee on fiscal consolidation has suggested, among other things, that the central government should monetise land resources, especially to fund urban infrastructure. Adam Smith had written: “In every great monarchy of Europe, the sale of the crown lands would produce a very large sum of money, which, (can be) applied to the payment of public debt.” Further, he theorised that when the crown lands became private property, they would generate higher revenue for the government.
The biggest landlords among the central government departments are defence (with about 17.53 lakh acres) and the Railways (with about 10.5 lakh acres). The major ports have about 2.58 lakh acres, including prime urban land in Mumbai and Kolkata and vast areas in Kutch. Several other departments and public sector undertakings also own unused or under-utilised land.
The earliest rules governing defence land are of 1925, with several subsequent notifications on the use of various categories of land for various purposes. The Indian Railways has set up the Rail Land Development Authority with the primary objective of commercially developing vacant railway land, and thereby raising revenue through a non-tariff measure. The shipping ministry has issued land policy guidelines to the major ports.
The rules and guidelines are regulatory in nature. There has been no planned action for generating value from government land. Even the Railways has achieved only nominal success despite creating a separate statutory authority for the development of land. There are several issues associated with the transfer of ownership or possession of government land to the private sector.
First, there has to be a clear policy perspective, recognising that land is an invaluable resource, which is to be utilised for the most appropriate purpose and that it would be necessary or even desirable to transfer the land to private entities for deriving maximum economic benefits for the state. Many of the arguments in favour of disinvestment of public enterprises are relevant here also, but there are major differences. Land is a permanent asset, it is immobile, its supply is fixed and the price movement generally predictable, it does not normally depreciate in value, its utilisation