India Renews Push To Sell Land, Other Assets of State-Owned Entities

The government is working on monetising non-core assets of state-run firms and government departments to mop up revenue, an official told BloombergQuint on the condition of anonymity. Earlier attempts by the government to sell land holdings of public sector undertakings had faced obstacles like litigation and ongoing disputes on land holdings.

The Narendra Modi administration had announced in its annual budget for 2016-17 that it will leverage assets of public sector undertakings to raise funds for new projects. In February last year, the government finalised a policy for monetising assets of such entities and other government organisations. Non-core assets of such entities, according to the guidelines, were to be hived into a special purpose vehicle through a demerger that would hold and monetise the assets.

The move comes as tax collections are expected to drop in the ongoing financial year as a nationwide lockdown imposed to contain the spread of the pandemic froze all but essential economic activity, and decimated consumption in the first two months of the fiscal. India has started reopening in phases and the government announced relief packages, yet the economy is expected to contract for first time in four decades.

To deal with the roadblocks, the Department of Investment and Public Asset Management has classified non-core assets of public sector units into assets that don’t have any pending disputes or can be quickly resolved and those with long-pending disputes, the official cited earlier said.

State-owned firms have been asked to settle their long-pending disputes so that such land holdings can also be hived off, the official said.

The department has identified assets of entities that include Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd. The government had given the two telecom companies a target of Rs 37,500 crore to monetise their assets over three years.

Some of the properties identified, in consultation with the divestment department, are in prime residential and commercial areas in metropolitan cities which will attract great value once the real estate market revives, the official cited earlier said.

The official said it would take 2-3 months for the real estate market to revive.