The government is studying a number of global land banks operating sovereigns and may adopt a model such as Canada. It is going to finalize the formation of a Special Purpose Vehicle (SPV) for the sale of assets of government companies.
A top government official said that the Department of Investment and Public Asset Management (Deepam) is studying the model of Canada Lands Company, a union government company specializing in the management of real estate and tourist destinations. Deepam considers it good to adopt its model in India too. Finance Minister Nirmala Sitharaman had proposed in the budget speech to create an SPV, which would sell government departments and public sector units (PSUs). Sitharaman had said, ‘The land will be sold directly or by concession or similar methods.’ Over the years PSUs have failed to sell their land assets due to pending legal matters and lease terms. The SPV will have experienced professionals who will help PSUs sell their excess land assets trapped in litigation.
The official said that Canada Lands Company has been successful in selling additional land of government departments and Deepam is investigating it. He said the government was considering whether the Canadian model could be adopted. But at the same time it will try to keep the SPV distinct in the Indian context. “We are studying the Canadian model, including other models from the UK,” the official said. He said that the World Bank is also helping the government in this process. The official said that the structure of the organization will be finalized soon. The government is also considering how these assets will be transferred to the SPV and then sold to the buyer. He said, ‘It is possible that it is not a direct sale. It can also be a concession or public private partnership system.
Canada Lands Company was established in 1956 and is a self-funded federal government corporation. The company does not take any money from the government and pays dividends to the Canadian government from its profits. The company works closely with local government and communities to create projects that are financially viable. Its purpose is value creation. One of the company’s functions is the systematic sale of select additional assets at the best price. When this institution was established, government departments were encouraged to sell their assets, but there were no immediate benefits. This paved the way for better utilization of these assets for the private sector.