Maharashtra to examine the land monetization models of NY, Shanghai to mop up Rs 2 lakh crore

Limitations in raising taxes, loans and budgetary constraints seen as trigger to consider the move

The Maharashtra government is exploring monetising land to raise Rs 2 lakh crore to fund infrastructure projects. A committee headed by Additional Chief Secretary (Finance) DK Jain has been set up to prepare a plan for the sale of land in possession of various departments and suggest steps to mortgage land.

Maharashtra’s key infrastructure projects include completion of over 400 irrigation projects (Rs 80,000 crore), the Mumbai-Nagpur super communication highway (Rs 40,000 crore), upgrading state highways (Rs 40,000 crore), and reducing distribution losses of Maharashtra State Electricity Distribution Company (Rs 30,000 crore).

Jain admitted in the government resolution issued on August 16 it would not be possible to make budgetary allocations for some of these projects, especially when proceeds of tax collection were limited to meeting non-plan expenditure.

“The committee will examine land monetisation models in New York, Shanghai and a couple of other cities and submit its report in three months,” Maharashtra’s Finance Minister Sudhir Mungantiwar said.

“It is not the sale of land alone, the committee will look into options like sale of transfer of development rights, raising funds after land development, and converting land under lease to ownership. This apart, loans can be raised by mortgaging land,” he added.

Mungantiwar clarified the state government could not raise loans in excess of the limit set by the Centre and the Reserve Bank of India.

“About Rs 23,000 crore will be required for rural roads, Rs 10,000 crore for farm equipment, and Rs 10,000 crore for drip irrigation. This is in addition to projects mentioned in the resolution,” Mungantiwar said.

Jain referred to China where land was the main resource for the government to raise funds.

He said the Maharashtra government would not have to increase taxes if it could monetise its land.
FUNDING INFRA

• Huge land parcels are under the possession of various departments currently lying idle
   
• About Rs 23,000 crore will be required for rural roads, Rs 10,000 crore for farm equipment, and Rs 10,000 crore for drip irrigation