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Potential investors and other buyers could soon get to purchase land parcels from the government through its e-marketplace (GeM) portal.

PK Singh, chief executive officer, GeM, told FE that the platform has initiated discussion with the department of public enterprises (DPE), the ministry of home affairs and agencies like the Delhi Development Authority to conduct land auctions on behalf of various government ministries and departments.

GeM was lunched as an online platform to enable the government and related entities to buy goods and services in a transparent manner nearly six years ago.

“We have made a presentation to the DPE (which is involved in the government’s land monetisation initiative). If all goes well, we will soon do land auctions. We are ready for this,” Singh said, adding that the platform may come in handy for the government’s land monetisation drive as well.

The GeM’s move will give a leg up to the government’s land monetisation drive and boost its non-debt receipts. Separately, the government is also monetising its various brownfield infrastructure assets. Under an asset monetisation pipeline, where it targets to raise Rs 6 trillion in four years through FY25, the government raised close to Rs 1 trillion in FY22.

The idea for starting land auctions emanated from GeM’s recent Swachhta (cleanliness) drive, Singh said. Many government departments have piled up a huge number of old files and papers, computers, furniture, etc. And when they sell these items, they don’t get much. So, as an experiment, GeM recently started the exercise of selling the junk products of government departments on its platform. “Even in our office, whatever we used to get earlier by selling our old stuff to people like scrap dealers, we are now getting five-six times more money. Then we thought, why not start land auctions on the portal? We can play a great role here.” Singh said.

Explaining the idea further, Singh said any government department or entity that wants to sell land or give it on lease typically has certain conditions. GeM will build those riders into the auction process, so that the seller is satisfied.

Moreover, at present, each department may have a select number of bidders who bid on every occasion. But once the auctions are conducted on the GeM platform, the universe of bidders will be much broader, so the government will get a good deal, Singh said. GeM platform currently has about 60,000 buyers, and four million sellers of goods and services (of which 1,25,000 are active). Of course, these participants are not expected to buy land (some companies that sell their products may still be interested in it if there is a good deal). But GeM, given its growing presence as a marketplace, has potential to draw many bidders.

Moreover, GeM will charge only up to 0.5% in fees, which are much lower than those charged by some other entities conducting such auctions now (which can go up to 3%), Singh said. Moreover, GeM is willing to do it practically for free if a single transaction exceeds Rs 200 crore.

Among government ministries, railways and defence are the biggest official land-owners. The total land available with the Railways is close to 1.18 million acres, of which roughly over 1,25,000 hectares is vacant. Data compiled by the Directorate General of the Defence Estates show that the defence ministry has about 1.8 million acres, of which 1,60,000 acres is within the 62 cantonments, and about 1.6 million acres outside their boundaries.

As for CPSEs, the Cabinet last month approved the setting up a wholly-owned National Land Monetisation Corporation. So far, CPSEs have referred about 3,400 acres and other non-core assets to the finance ministry for monetisation.

A spurt in purchases by various ministries and departments drove up the procurement of goods and services through the GeM portal to a record Rs 1 trillion in FY22, reflecting its growing acceptability as an online marketplace. Before the latest feat, procurement through the portal had breached the Rs 1-trillion mark in as many as four-and-a-half years.

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Author: Howard Caldwell