Special purpose vehicle for non-core assets to draw talent from private sector

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October 04, 2021 4:30 AM

These units have been unable to attain closure due to various reasons including delay in disposal of immovable assets such as 15,000 acres of land across the country.

India JobsThe idea is to crowd in private investments in infrastructure by making matching public funds available.

The Union Cabinet will likely consider a proposal soon to set up a special purpose vehicle (SPV) for monetisation of non-core public assets such as land parcels under departments and central public sector enterprises (CPSEs), sources told FE. The SPV will have its chairman from the private sector and CEO from the government, they added.

The entity, being set up with initial capital of Rs 150 crore, will likely have manpower of about two dozen drawn from the private sector as well as the government. The Centre has inserted a provision in the Finance Act 2021 to waive stamp duty on the transfer of immovable properties of the CPSEs to the proposed SPV, helping fast-track closure of sick CPSEs. However, the stamp duty at applicable rates will be paid when the assets are finally sold by the SPV.

The SPV, which will come under the department of public enterprises, will help in de-linking the process of closure of a CPSE from the disposal of its immovable assets to avoid any delay in the closure of the loss-making entity.

Currently, there are 21 sick/loss-making CPSEs which have received Cabinet nod for closure, some nearly a decade back. These units have been unable to attain closure due to various reasons including delay in disposal of immovable assets such as 15,000 acres of land across the country.

The new policy will also aid the objective of the new strategic sector policy which envisages closure of CPSEs wherever required and cut the losses to the exchequer. The proceeds from non-core asset monetisation of departments and those identified for closure would largely boost the non-tax revenues of the government.

On August 23, the Narendra Modi government had unveiled a National Monetisation Pipeline (NMP), seeking to generate upfront revenues of Rs 6 lakh crore in four years starting from FY22, out of operational infrastructure projects, under various innovative log-term lease plans that involve minimal ceding of government’s ownership of the assets. The move is in step with a plan to revert to the path of fiscal consolidation without any lapse of time and create the fiscal heft to finance the Rs 111 lakh crore National Infrastructure Pipeline and other capital-intensive ventures. The idea is to crowd in private investments in infrastructure by making matching public funds available.

The assets to be monetised, through “structured contractual partnership as against privatisation or slump sale of assets”, will include highway stretches, power transmission networks, freight corridors, airports, ports, gas pipelines, and warehousing facilities.

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