Bypassing Land Acquisition Trouble: Govt may use surplus PSU land for new projects

Under the proposal considered by NDA regime, the government will ensure securing necessary clearances and required linkages for an acquired land before a project is awarded.

Written by Priyadarshi Siddhantha | Published: July 22, 2015 2:23 am
Farm, agricultrure, monsoon, weather, Maharashtra farmers, Marathwada, Western Vidarbha, Ram Shinde, India Meteorological Department, india news, news The initial due diligence has found that over 2.35 lakh acres of surplus land is available with 58 sick Central PSUs, which have accumulated losses of Rs 56,845 crore as per the Public Enterprises (PE) Survey 2013-14.

With political uncertainty dogging the Land Acquisition Bill, the government is moving ahead to finalise a policy to utilise over 2.35 lakh acre of surplus land lying with the state-run companies for infrastructure and industrial projects, including those under the plug-and-play mode. But the complexities involved may make the government’s job difficult in doing so.

But neither these companies are willing to do so, nor are those who have managed them endorse such a move. Top officials of at least five state-run companies voiced their opposition to acquisition of land of their companies saying that doing so would amount to selling their jewels and would also dissuade them from taking up capacity expansions. Refusing to be named, they further argued that the land which appears to be surplus with them today may not be so tomorrow if they take up capacity expansion programmes.

Banking on plug-and-play mode

Under the proposal being considered by the NDA regime, the government will ensure securing necessary clearances and required linkages for an acquired land before a project is awarded through a transparent bidding system. The trigger for doing so is the announcement made by finance minister Arun Jaitley in Budget 2015-16 on five new ultra mega power projects (UMPPs), each of 4,000 Mw, in the plug-and-play mode to help unlock investments of nearly Rs 1 lakh crore. Jaitley had also said the government would consider similar projects in roads, ports, rail lines and airports in the plug-and-play mode.

The Department of Public Enterprises (DPE), which is learnt to be doing the due diligence in this regard is of the view that since acquiring land is a lengthy and tardy process, a relatively comfortable beginning can be made with the land available with Central PSUs, especially the sick ones. Since some of this land is within the vicinity of highways, railway network and ports, the developers in these sectors would be expectedly enthused to bid for a project which would be free of encumbrances, a senior DPE official told The Indian Express.

The initial due diligence has found that over 2.35 lakh acres of surplus land is available with 58 sick Central PSUs, which have accumulated losses of Rs 56,845 crore as per the Public Enterprises (PE) Survey 2013-14. These include National Textile Corporation (NTC), Bharat Wagons and Engineering, Braithwaith & Company, Richardson and Cruddas Limited; Bengal Chemicals and Pharmaceuticals Limited, Heavy Engineering Corporation and Hindustan Antibiotics Limited. According to the survey, selling of “excess land” and fixed assets could be one of the key ways to finance restructuring programmes of the sick PSUs. As on March 31, 2014, profitable Central PSUs had over Rs 2.60 lakh crore as cash and bank balance.

Differing Voices

Former CMDs of mega state-run companies are divided on the issue of selling surplus land of the PSUs, whether sick or otherwise. Former chairman of NMDC Limited Rana Som argued that given the current economic scenario where several proposed projects of the private sector are either stranded or facing cash crunch, it would be the public sector which would drive the economic growth. “Together all PSUs have sizeable cash reserves and those in steel and power sectors are in an expansion mode. They would need additional land for expansions. If their land is parcelled and sold, where would they get additional land? Rather then branding them as unviable, the PSUs should be encouraged to expand,” Som said.

Former chairman of Rashtriya Ispat Nigam Limited (RINL) PK Bishnoi reasoned that if any PSU does have surplus land and have no expansion plans, the government can seek details of such land and decide on its fate. “However, before acquiring the land of a PSU, the government should have a blueprint on how it plans to utilise it. A land after being acquired should not remain fallow. Most importantly all necessary clearances should be secured forehand before they are utilised,” Bishnoi contended.

Acquisition hiccups

The DPE official, however, cautioned that not all PSUs have encroachment free land. This is because people residing within the vicinity of some of them have built up dwellings within the townships for seeking better livelihood. Another issue is that some of the land of Central PSUs belong to the state governments from whom those were leased decades ago. So unless these states decide to wind up the operations of the sick companies, their land cannot be used commercially, he argued. Money raised through monetisation of land will be used for payment of statutory dues of these companies and also pay off the states for the land they had leased out. There is no estimate of the surplus land available with the sick central PSUs individually with the government.

The previous government had considered unlocking the land bank of sick PSUs to generate revenue. In August 2012, the DPE had prepared a proposal to set up a public sector land development authority (PSLDA) to identify excess land with sick units that can be sold for commercial use. But the proposal did not sail through owing to inter-ministerial differences. Acquisition of PSUs land may become more complex as the state governments seemed to have hardened their position on the Land Acquisition Bill.

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