On Monday, Nirmala Sitharaman, the Finance Minister of India, announced a Rs 6 lakh crore National Monetisation Pipeline (NMP). This ambitious scheme aims to unlock the value of infrastructure assets across all sectors, from power to railways and roads. The NMP outlines assets and asset classes under various infrastructure ministries that are expected to generate revenue over time.
The central government plans to monetize properties worth about Rs 15,000 crore. This includes several residential colonies in the nation's capital and eight hotels owned by the India Tourism Development Corporation (ITDC) as part of the National Monetization Pipeline (NMP). Seven colony renovation projects are planned during the NMP period.
In the ‘urban real estate assets’ category under NMP, the government has identified revenue generation from seven colonies to be reconstructed, as well as the construction of residential and commercial properties on a 240 hectare land parcel in Ghitorni, Delhi. Additionally, the government is planning to monetize eight ITDC hotels through various routes.
Redevelopment of Colonies
According to a recent document prepared by Niti Aayog, the real estate in cities has a revenue potential of about Rs 15,000 crore during the financial year 2022-25. The Ministry of Housing and Urban Affairs (MoHUA) owns and manages the land through the Land Resources and Development Office (L&DO).
In this category, the government has identified the renovation of seven General Pool Residential Accommodation (GPRA) areas in Delhi. These seven areas are located in Netaji Nagar, Naoroji Nagar, Srinivaspuri, Sarojini Nagar, Mohammadpur, Kasturba Nagar, and Tyagraj Nagar. The total estimated investment in the reconstruction of these seven colonies is about Rs 32,276 crore.
The center has also identified the construction of residential/commercial units on a 240 hectare site in Ghitorni, Delhi. The project consists of 8,000 GPRA units and 3,000 units for migrant construction workers. The estimated capital for this project is Rs 15,000 crore.
"The Ministry of Housing and Urban Affairs (MoHUA) owns and manages the land through the Land Resources and Development Office (L&DO), according to the Niti Aayog report."
PPP Model for Redevelopment
Further, the Niti Aayog report stated, “The PPP model is suggested for the redevelopment of such GPRA projects cross-subsidized through the sale/lease of commercial BUAs (built-up areas).” “The proposed projects are real estate projects that involve mixed-use of vacant lots/old plots in excellent locations in Delhi-NCR. These include the development of residential and commercial office complexes in one of the most privileged areas of the city through a self-financing mechanism."
Considering the privileged location and attractive commercial potential of the project, Niti Aayog recommended that these projects should be developed with the participation of the private sector. According to the report, this will not only improve business and operational efficiency, but it also provides an initial/periodic review of the authorities/Ministry of Housing and Urban Planning.
According to the PPP-based model, the entire plot area for such projects must be transferred to an SPV owned by the authority. With the necessary change of land use, etc., when necessary.
Monetization of 8 Major Hotels of ITDC
The Indian Tourism Development Corporation (ITDC) is administered by the Ministry of Tourism. The eight hotels selected for monetization are Hotel Samrat, New Delhi; Hotel Ashok, New Delhi; Hotel Kalinga, Bhubaneshwar; Hotel Pondicherry, Puducherry; Hotel Anandpur Sahib, Rupnagar; Hotel Jammu Ashok, Jammu; Hotel Nilachal, Puri; and Hotel Ranchi, Ranchi.
“Projects which are pre-obtained by the Authority and housed in the SPV require multiple statutory clearances. The SPV then auctioned under the PPP mechanism through a transparent competitive bidding system, the report states.
The Hospitality Assets section of the report states, “Total 8 ITDC hotel assets were considered for revenue generation/monetization in the financial year 2022 to 2025.”
“Long-term leases, sales, and long-term OMT (operation, maintenance, and transfer) can be explored as potential revenue-generating models that can be identified on a case-by-case basis through detailed asset-level due diligence.” the report added.