Govt's Plan to Sell/Lease Surplus Land to Ease Financial Stress
Boost to Real Estate Growth in Indian Metros
The Indian Government, facing higher financial stress, is considering selling or leasing surplus land to generate revenue. This move is expected to provide more land for construction in metropolitan cities like Delhi, Kolkata, Mumbai, and other notable Indian cities, thereby boosting real estate growth.
Recommendations of the Vijay Kelkar Committee
The Vijay Kelkar Committee on fiscal consolidation suggested the government to sell or lease surplus land to ease the financial burden. Acting swiftly, the Finance Ministry prepared a Cabinet note within a week, outlining the proposal.
Key Points of the Cabinet Note:
- Proceeds from the sale or lease of surplus land will be considered non-performing assets.
- Income generated will be utilized for loan repayment or creating capital assets that yield revenue for the Government.
- Cabinet approval is mandatory for selling land worth over ₹ 50 crore.
- Land valued below ₹ 50 crore can be sold through e-auction procedures.
Government's Preference for Selling Over Leasing
The Government, aligned with the committee's proposal, prefers selling surplus land over leasing. Leasing may not significantly ease financial stress due to market-value-based rentals. Moreover, regaining leased land after the tenure can be challenging, requiring repeated leasing processes.
Expected Revenue from Surplus Land
Various government departments, including Shipping, Posts, Defense, Airport Authority, and Indian Railways, hold substantial land banks. Specifically:
- Indian Railways can potentially generate ₹ 50 crore by monetizing around 10,000 acres of land in urban centers.
- Port trusts can monetize approximately 2.5 lakh acres of surplus land.
Caution Against Mismanaged Asset Exploitation
The Vijay Kelkar committee warned that mismanaged exploitation of government assets could exacerbate the fiscal deficit, potentially leading to a crisis worse than that of 1991.
Rays of Hope for the Real Estate Sector
This Government decision brings optimism to the real estate sector, offering a new platform for ventures in capital cities and beyond. With more land available for development, realty firms foresee lucrative opportunities.