A land pipeline

Dipam's plan to sell PSU land worth expanding

The Department of Investment and Public Asset Management (Dipam) is reportedly considering a proposal to sell some of the land currently controlled by public sector units (PSUs). The PSUs in question include the two state-owned telecom companies and the Shipping Corporation. The sale is to be conducted by auction, using the website developed for the steel “miniratna” MSTC, formerly the Metal Scrap Trade Corporation. There are very few details available about this plan, perhaps given that it has not even received approval from the Union Cabinet yet. Officials have placed different numbers on the value of the land assets to be sold, from Rs 600 crore to Rs 1,000 crore. Naturally, the true value of the land can be discovered only after auctions are conducted.

It has long been correctly argued that the government needs to start divesting itself of some of the land in its control. Much of that land is of course with PSUs, but other parcels are especially with the defence ministry, and also the Railways and the urban development ministry. Identifying land tracts with PSUs that can be sold without encumbrance is an important first step towards ensuring that land is more productive. But there is no question that PSUs alone should not pay — the military, for example, occupies far more expensive urban land than can be justified for national security. The government must move on this land as well as on PSU land.

The question — as with the National Monetisation Pipeline announced recently — is exactly how this land is going to be identified, and whether the sales will go through without subsequent challenges. It is worth remembering that land owned by public sector telecom companies was identified for sale almost two decades ago, but that sale did not go through because of legal action and other controversies. While the land lots identified for these auctions are, reportedly, to be those without any current litigation attached, the fact is that if they are related to existing PSUs or ones that are about to go through the privatisation process, there is no guarantee that threats of litigation will not be made before the land can be sold. Thus determination and clarity will be needed to push these sales through.
 

It is also essential that the government not see this purely as a method of raising revenue. Some of this land will be in areas that are pivotal for future urban development. The end-use of the land should fit in with the broader requirements for those urban areas. Further, the revenue raised should not be treated purely as some padding for current expenditure. The sale of capital, in this case land, must finance the acquisition of capital. This is a basic principle of divestment that the government stands in danger of forgetting in its current quest for revenue. This proposal needs to be examined carefully by the Union Cabinet to ensure that it serves long-term interests, and not just the concerns of a finance ministry squeezed by the pandemic. The basic principle, however, is not just sound but also should be extended to military and other land.