Monetisation of land is a viable option for PSUs and urban local bodies
Monetisation of land is a viable option for public sector undertakings and urban local bodies. It will not only generate a revenue stream, but also entails several other benefits.
By Ved Parkash Dudeja Urban land is a tangible asset that has not been tapped to its fullest potential. With the central and state governments facing a dearth of revenue streams, the monetisation of assets is a viable option. Monetisation of land is slowly gaining currency as stakeholders are warming up to the idea of unlocking the tremendous benefits of leasing of land.
Monetisation of land is a viable option for public sector undertakings and urban local bodies. It will not only generate a revenue stream, but also entails several other benefits. It puts the land to better use. The commercial development of land accelerates the real estate prospects in the vicinity and fuels the demand for social infrastructure such as retail development, banking, etc.
It also contributes to planned urbanisation, boosts tourism and generates employment. It has cascading effects on economic development and the quality of life of citizens.
Land monetisation will enable the retention of land ownership while realising market rent (if the revision of rent is periodic and on agreed principles). It should be a well-thought process, weighing the potential benefits and viability. The experience and future risks should be considered before choosing a suitable tool. Also, infrastructure-serviced land will fetch better value.
Land exchange/swap can also be used as an instrument if suitable options for exchange exist with any other government entity. Land monetisation should entail the engagement of all the stakeholders. Mass sensitisation and awareness programmes should be organised for the local community to educate them on the benefits of the process. Every land monetisation process should have a commercial aspect to enable the project to be viable and generate revenues.
The crucial step in the land monetisation process is to map the vacant lands across the country and enlist these in the public domain. This step will ensure transparency and accountability in the process. It warrants leveraging public-private partnerships (PPP). The PPP model has emerged as a viable option for development over the past few years, as it combines the best of both entities—public interest of the public sector and professionalism and expertise of the private sector.
The best-performing assets serve as a benchmark for the rest of the entities to emulate. The real estate developers and relevant stakeholders in the segment are formidable partners in the process. Partnering with the government not only allows private players to tap new avenues and geographical regions, but also diversify their offerings and generate revenue. It reinforces their role in contributing to urban development and shaping the growth trajectory of the economy.
Despite large tracts of commercially-viable land being available, there has been limited progress on this front. The major hurdle is the time-consuming process of approvals from the various civic authorities. The confidence-building measures for the revival of the economy post-Covid-19 need to be supplemented by fast-tracking the approval processes. We need to convert this challenge into an opportunity to build an Atmanirbhar Bharat.
The RLDA, a statutory body under the ministry of railways, is entrusted with the development of vacant railway land for commercial use. Currently, Indian Railways has approximately 43,000 hectares of vacant land across India. The RLDA has over 79 sites for leasing, and eligible developers for each will be selected through an open and transparent bid process. The RLDA will also redevelop 84 railway colonies and 62 railway stations. Strategic land monetisation can usher in massive transformation of the urban landscape and contribute to economic development.
The author is vice-chairman, Rail Land Development Authority