Kelkar's sugar coating PDF Print E-mail
Tuesday, 25 September 2012 00:00
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Selling surplus land is easier said than done

Given the vast surplus land banks the government has—over a lakh acres with the Railways, over 50,000 acres with the 12 major ports and several lakh acres with the defence ministry—the Kelkar committee on fiscal consolidation has done the right thing by zeroing in on the obvious cash trove for a cash-strapped government. As has been demonstrated so well with NTC’s mill-to-mall strategy of selling erstwhile textile mill land in Mumbai to shopping malls, the government can end up getting several tens of thousand crore from such sales over a period of time. And, unlike in the case of disinvestment, and we’re not even using the P-word, the chances of political flak are negligible in the case of land sales/leases. Given the furore over the 2G and coal block allocations, of course, the method of sale will have to be open and transparent, and only through public auctions.

The good news, however, stops right here. As our lead story today points out, the Kelkar committee has set very stiff targets, both in terms of a 3% fiscal deficit target in another 3 years and in terms of phasing out all petroleum subsidies other than those on kerosene within the same period. Second, while selling surplus land sounds very easy to do, it’s a lot harder to implement. NTC managed its mill-to-mall strategy with aplomb, but it took a decade to even transfer the excess land in the VSNL sale to a separate company, the actual sale of land is still to happen. The same issues that cropped up in the case of VSNL—why should Tatas pay the capital gains tax and the stamp duty when they were not going to benefit from the land sales?—will come up in the case of port/Railway/defence land. There are also the issues that effectively blocked the sale of the Ashoka Hotel in the capital when Arun Shourie was the disinvestment minister—while doing the due diligence for the sale, the government found it did not have the original title deeds to the land the hotel was located on; it also found large amounts of encroachments on land the hotel thought belonged to it.

While the sale of surplus land is likely to be a complex task, and will not provide easy and quick money to the government, it would be a good idea to create a separate group within the disinvestment ministry, whose job is to consolidate details of government holdings, get the relevant departments to sign off on hiving off these lands, and to put together the relevant paperwork including who will pay the relevant stamp duties and capital gains taxes. At least the next government will then be able to utilise these funds to help finance health and education, even defence expenditure.


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