The higher financial stress of the Government makes them think of selling or leasing of the surplus land. This will provide more land for construction in metropolitan cities like Delhi, Kolkata, Mumbai and other such notable cities of India.The decision will boost the real estate growth. Realty firms are sure to cast their hawk’s eye on this land and make the profit out of it.
The Vijay Kelkar Committee on fiscal consolidation suggested the government to sell or lease the surplus land to ease the stress. Within a week time Finance Ministry acted accordingly to the recommendations of the committee. Finance Ministry prepared a Cabinet note which states that the proceeds or income generated from the sale or lease of surplus land will be considered as a non-performing asset. Finance Ministry added that this income will be used only for the repayment of loans or for the creation of capital assets which will bring revenue to the Government. Approval of the Cabinet is required for sale of any land worth more than र 50 crore. The land with a market value of less than र 50 crore can be sold on the basis of e-auction procedure.
The proposal of the committee laid stress on selling. The Government too prefers selling to leasing or any other mode of earning. Moreover leasing – rent will be according to the market value and so there is not so much of easing of financial stress. Government finds it difficult to regain the land after the period of lease. After the completion of the period the government has to regain and lease it again. The Vijay Kelkar committee proposed to fix the rental based on the land’s expected appreciation and the market value.
Shipping, posts, defense, airport authority and Indian railways hold large land banks. There are departments with no surplus land at the same time. It is estimated that railways alone can generate र 50 crore in the cities by monetizing around 10,000 acres of land which they hold in urban centers. In the same way port trusts are capable of monetizing around 2.5 lakh acres of their surplus land. Vijay Kelkar committee warned that the exploitation of government assets should be well managed to cover up fiscal deficit. If this is not taken care properly a worse crisis situation than that which existed in 1991 will be created.
This decision of the Government gives rays of hopes to the real estate sector as they can benefit from this decision as it will open a new platform for some new ventures in the capital city and around. More land will be available for development and the realty firms can easily make profit out of it. Whatever be the real estate firms look at this with joy and happiness over their great expectation of good fortune.