Track2Realty-Agencies: The government should take steps to monetize under-utilized land resources of public sector enterprises, port trusts and railways, a panel set up to chart out the roadmap on fiscal consolidation has recommended.
The panel headed by former Finance Secetary, Vijay Kelkar also outlined a series of policy steps to repair the battered public finances and help promote growth against the backdrop of a difficult global situation.
The committee examined various measures which are needed to be undertaken by the government for fiscal consolidation in the medium term. These include raising the tax-to-GDP ratio, policy measures for pruning expenditure on subsidies and other items of expenditure, rightsizing of plan support, and steps for increasing disinvestment proceeds.
“The Indian economy is presently poised on the edge of a fiscal precipice, making corrective measures aimed at speedy fiscal consolidation an imperative necessity if serious adverse consequences stemming from this situation are to be averted in an efficient and timely manner,” the panel said in its report.
The report said an additional source is the disinvestment of minority government equity stakes in private entities, such as the holdings in Suuti, HZL and Balco.
“There is practically no economic or strategic rationale for holding on to these minority share holdings in such companies, which are essentially privately owned. Since divestment in these companies will meet a substantial part of the disinvestment target fixed for the current year, it is necessary that the government take effective steps expeditiously to realize these receipts,” the panel said.
“In our assessment, if these measures are adopted, the disinvestment target by the budget estimates, of Rs 30,000 crore, can be achieved,” the report said.
The panel said that over the next 24-36 months, there is yet another policy instrument for raising resources for development and that is monetizing government’s unutilized and under-utilized land. These resources can finance infrastructure needs in urban areas.
“For monetizing land resources, the potential is considerable given the under-utilized prime lands of PSUs, port trusts, railways etc. Towards this we recommend setting up of a group to work out the policy framework and institutional modalities,” the panel said. “Such a policy has been effectively utilized in many countries including US, France, Canada, Australia and China,” it said.
The panel also said central public sector undertaking holding large cash balances should be urged to look for sound investment in key area.
“If the CPSEs are, however, unable to find good investment outlets during this fiscal year, then the government, should, as majority owner, call for a special dividend on a ‘use it or lose it’ principle,” the panel said.
It said that in the base year of 2012-13, it is possible to achieve a fiscal deficit target of 5.2% with various policy initiatives, which involve limiting expenditure on subsidies, meeting the tax receipts and disinvestment targets set at the budgetary estimates stage and effecting savings in plan expenditure by rationalizing expenditure.
