Thread by @finshots

Why is the Indian govt. pushing for a 'land bank'?

In her 2021 budget speech, FM Nirmala Sitharaman announced that the govt will set up a land bank. And recently, the Department of Investment and Public Asset Management (DIPAM) has finalized the structure of this bank to get rid of unproductive landholdings of PSUs

So what exactly is a ‘land bank’? Basically, it is an entity to help manage and dispose of vacant land & to put it to better, more productive use. This single entity will handle all the landholdings of the PSUs.

Lately, parting ways with land assets has become a priority for the government. Various Indian govt agencies cumulatively have ~1 mn acres of surplus land on their hands. These assets can be used to generate additional revenue for the govt at times of growing fiscal deficits.

But why can’t the PSUs themselves sell off these parcels of land? Well, It’s not that easy. There are multiple issues from lack of adequate land records, illegal encroachments to legal tussles over the land. This is where the land bank will step in.

It will have professionals resolve legal disputes hampering the sale of such properties. The entity will also maintain a database of land records, making the process easier.

The bank will either pursue a direct sale of the land or a concession of land ( basically leasing the land to another party ). The govt is also looking at converting better pieces of land into revenue-generating projects rather than disposing of them at low valuations.

These may be converted into IT Parks or Special Economic Zones. Moreover, it's now easier to transfer land from one ministry or govt department to another as the govt has scrapped stamp duty on such a transfer.
It remains to be seen how successfully the bank liquidates idle land.