Capital Markets: Challenges and Developments

The National Land Monetisation Corporation (NLMC)


From UPSC perspective, the following things are important :

Prelims level: NLMC

Mains level: Land Monetization

The National Land Monetisation Corporation (NLMC) has decided to involve international property consultancy firms to speed up the process of making money by selling or leasing the land owned by the government.

What is NLMC?

  • NLMC is a Special Purpose Vehicle (SPV) announced in the Union Budget 2021-22 to carry out monetisation of government and surplus land holdings of public sector undertakings (PSU).
  • It falls under the administrative jurisdiction of the Ministry of Finance and is set up with an initial authorised share capital of ₹5,000 crore and a paid-up capital of ₹150 crore.
  • It is a firm, fully owned by the government, to carry out the monetisation of government and public sector assets in the form of surplus, unused or underused land assets.

Aims and objectives

  • Monetize underutilised or unused land parcels of Central Public Sector Enterprises (CPSEs)
  • Facilitate the monetisation of assets belonging to PSUs that have ceased operations or are in line for a strategic disinvestment.
  • Transfer of revenue rights: When the government monetises its assets, it essentially means that it is transferring the revenue rights of the asset (could be idle land, infrastructure, PSU) to a private player for a specified period of time.
  • Govt as facilitator: In such a transaction, the government gets in return an upfront payment from the private entity, regular share of the revenue generated from the asset, a promise of steady investment into the asset, and the title rights to the monetised asset.

Significant outcomes of land monetization

  • Maximum value realization: It will help monetise them in an efficient and professional manner, maximizing the scope of value realisation.
  • Speed up the process: The setting of the NLMC will speed up the closure process of the CPSEs and smoothen the strategic disinvestment process.
  • Capitalize land assets: It will also enable productive utilisation of these under-utilized assets by setting in motion private sector investments.
  • Economic revitalization: It will boost new economic activities such as industrialisation, boosting the local economy by generating employment and generating financial resources for potential economic and social infrastructure.
  • Advisory to the govt: Besides managing and monetising, the NLMC will act as an advisory body and support other government entities and CPSEs in identifying their surplus non-core assets.

Need for land monetization

There are different reasons why the government monetizes its assets.

  • New sources of revenue: One of them is to create new sources of revenue essential to fulfil the government’s target of achieving a $5 trillion economy.
  • Plummeting underutilized assets: Monetisation is also done to unlock the potential of unused or underused assets by involving institutional investors or private players.
  • Capital generation: It is also done to generate resources or capital for future asset creation, such as using the money generated from monetisation to create new infrastructure projects.

Possible challenges for NLMC

(1) Volatile market situation

  • The performance and productivity of the NLMC will also depend on the government’s performance on its disinvestment targets.
  • In FY 2021-22, the government has hardly been able to raise expected amounts through various forms of disinvestment.

(2) Issues with transfer of rights

  • The process of asset monetisation does not end when the government transfers revenue rights to private players.
  • Identifying profitable revenue streams for the monetised land assets, ensuring adequate investment by the private player and setting up a dispute-resolution mechanism are also important tasks.

(3) Unattractiveness of PPP Model

  • Posing as another potential challenge would be the use of Public Private Partnerships (PPPs) as a monetisation model.
  • For instance, the results of the Centre’s PPP initiative launched in 2020 for the Railways were not encouraging.

(4) Red tapism

  • The success of the initiative will depend on a range of factors, including the availability of suitable land parcels, market demand etc.
  • It will be highly dependent upon the ability of the government to execute the transactions efficiently.


  • The government’s move to monetize its vast land assets is aimed at reducing the fiscal burden and boosting infrastructure development in the country.
  • By bringing in international property consultants to help with the process, the government hopes to improve efficiency and transparency, and maximize the returns on its land assets.
  • If successful, the government’s land monetization drive could provide a much-needed boost to the economy and create new opportunities for private investment in the real estate sector.


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