Family silver: Modi govt chalks out grand plan to monetise assets

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Updated: July 3, 2019 6:58:44 AM

With the tax revenue growth tapering, the Centre will tap non-tax sources of revenue with unprecedented vigour over the next few years. According to official

tax revenue, tax revenue growth, Centre, real estate, real estate investment trusts, economy newsTax-efficient real estate investment trusts (REIT) and infrastructure investment trusts (InvITs) will run the revenue-generating assets and investors could buy REIT/ InvITs units.

With the tax revenue growth tapering, the Centre will tap non-tax sources of revenue with unprecedented vigour over the next few years. According to official sources, the government has identified 60 assets — from surplus land and telecom towers to gas pipelines and railway station premises — for outright sale/leasing out to the private sector under different commercially viable models.

The department of investment and public asset management (DIPAM), they added, is preparing six-seven models for monetisation of the various brownfield assets with the public sector. The proceeds of monetisation from the assets directly owned by the government will boost the budget as non-debt capital receipts and these will be used only for creation of assets or repayment of debt. Simultaneously, the assets of PSUs and other government undertakings will be tapped for extra-budget capital investments.

Tax-efficient real estate investment trusts (REIT) and infrastructure investment trusts (InvITs) will run the revenue-generating assets and investors could buy REIT/ InvITs units.

Besides, more operational stretches of the national highways will be identified and handed over to for private investors with deep pockets under the toll-operate-transfer (TOT) model.

Assets such as land and buildings of two dozen PSUs identified for strategic sale, pipelines of GAIL, transmission lines of Power Grid Corp, telecom towers of BSNL/MTNL, a few airports of Airports Authority of India, ports and railways stations are among the targets for the proposed ‘asset recycling’/monetisation.

The under-utilised land assets with the public sector is huge. The Indian Railways, for instance, has over 47,000 hectares of ‘vacant’ land, and a portion of this can be used for commercial purposes (90% of the transporter’s land is on the sides of tracks). The Rail Land Development Authority (RLDA), set up in 2007, has so far been given just only a tiny portion of this land scattered over cities and towns, and the monetisation has been below par. Te idea is to generate some Rs 20,000 crore over the next few years via this route and use the proceeds for railway capex.

Major Ports, another public-sector landlord, holds 2.58 lakh acres of land, a fifth of which is believed to be surplus, which includes prime urban land in Mumbai, Kolkata, Chennai and elsewhere. The government has recently privatised six profit-making AAI airports based on the per passenger fee (to be paid to the AAI) criteria under the PPP model. There are over 100 functional airports in India. BSNL gets about Rs 1,100 crore per annum as rent for sharing its tower infrastructure with other telecom players. In FY18, NHAI raised Rs 9,681 crore in the first TOT tranche and more such tranches are in the pipeline.

“If the plans materialises, a lot of money can be realised from locked-up assets. Foreign funds don’t want to take project risks and prefer to invest in brownfield assets,” an official aware of the plan said.

While the Centre would retain 100% of the proceeds from monetisation of non-core assets of units identified for strategic sale and enemy properties, it could share a large chunk of the proceeds from other deals with CPSEs for their capex or to use these to repay debt. The revenue from asset monetisation will likely be modest in FY20 as the process for large-scale use of this route might take time. According to the guidelines issues by DIPAM in this regard, state-run companies will have 12 months to monetise non-core assets identified by a ministerial panel headed by the finance minister. Non-compliance would invite penalties such as reduction in performance related pay to the staff of CPSEs and blocking of budgetary support to such entities.

The asset monetisation policy could also be tapped to use defence land for commercial purposes like in the US and Canada, the sources added.

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