INDIA: Support to the monetization of Public Land for the development of Infrastructure

India has been facing an accelerating need for substantially augmenting financial resources for urban infrastructure investments. In this context, the Indian government has been incentivizing public sector companies to monetize their assets. Moreover, the government of India (GoI) recognized that improving public lands management can provide greater impetus for accelerated growth, diversification of the economy, and increased public revenues. 

As a consequence, on February 28, 2019, the government of India passed an Asset Monetization Procedure and Mechanism for realizing the potential of leveraging public lands (among other assets) for development. The Procedure and Mechanism were sponsored by the Department of Investment and Public Asset Management (DIPAM). It provides a framework and an umbrella policy for unlocking urban development, investment, and living conditions improvement potential by monetizing public lands and assets held by government agencies and SOEs. 

In response to the request of the GoI need for access to finance for infrastructure, the World Bank (WB) carried out a Reimbursable Advisory Service Technical Assistance (RAS TA) to DIPAM on Public Land and Building Asset Monetization. The objective of the RAS TA was to strengthen the institutional capacity, operational framework, and policies of DIPAM, as well as stakeholder awareness in monetizing public land and building assets in India. This supported the government of India in moving towards its goal to:

1. Unlock the value of investments made in public assets which have not yielded appropriate or potential returns.
2. Create hitherto unexplored sources of income.
3. Contribute to a more accurate estimation of public assets, which would help to better financial management of government/public resources over time.

In parallel and to complement this work, PPIAF funded the implementation of the ‘’Leveraging Public and State Lands and Property for Good Urban Development in India’’ technical assistance to increase the impact of work beyond DIPAM to selected authorities, municipalities, etc. implementing the new strategy and Procedure and Mechanism for public assets monetization.

The overall objective of the PPIAF TA was to improve capacity, options, and processes for monetizing public lands in India. While the larger RAS TA “Public Land and Building Asset Monetization (P173561)” supported the Department of Investment and Public Asset Management (DIPAM), the PPIAF-funded activity was intended to expand the initiative’s impact beyond DIPAM to address broader systemic issues such as related to limitations with public lands and assets inventories in India, valuation infrastructure, and systems planning, permitting and construction monitoring, and access to external financing. It aimed to help raise awareness and capacity among selected authorities, states, and municipalities to implement the new strategy, procedure, and mechanism for public assets monetization.

The outputs produced directly impacted the incorporation of the National Land Monetization Corporation (NLMC) SPV to undertake the monetization of non-core land and building assets in the hands of CPSEs, ministries, and departments. On July 7, 2021, the Committee on Establishment Expenditure (CEE) of India approved the NLMC with INR 5,000 crores capital and INR 150 crores shared capital. On March 2022, the Cabinet approved the NLMC formation. The findings of this activity are being used and replicated in Pakistan and Indonesia.