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What is the news?
After unveiling the Rs 6-lakh-crore asset monetization program, the government has accelerated efforts to separate surplus land. The government will soon seek Cabinet approval for setting up a specialized entity (special purpose vehicle, or SPV) to undertake such transactions for state-run companies, ministries and departments. The entity will also handle land transactions of state-run firms that have closed or are facing closure.
Why a specialized entity?
Monetizing of land can either be by way of direct sale or concession, or by similar means. This requires special abilities and expertise. Hence, for this purpose, a special purpose vehicle was proposed in the budget speech this February.
- The new entity will be staffed with domain experts as well as people who are trained in complex transactions.
Mandate of the specialized entity
This entity will be in the form of a company to monetize non-core assets, which is largely surplus land of ministries, departments, and PSUs.
- The new entity will undertake land transactions for PSUs and other government agencies for a fee and will act as an agency where land assets will be pooled before being sold off.