Who owns India’s wealth?

Surprisingly, a lot of it is with the government

iven the numbers involved—$164 trillion across the world—it is not surprising that so much has been made of the latest Boston Consulting Group report on private financial wealth. While fund managers typically look after this wealth, scant attention is paid to what Dag Detter and Stefan Folster call the ‘public wealth of nations’ and conservatively put at around $77 trillion based on IMF and other public sources— just managing these assets better, the authors of a forthcoming book contend, can yield an extra $2.7 trillion annually, an amount that is greater than the total global spending on national infrastructure. According to The Economist whose latest edition has a feature on the book, only 1.5% of these public assets are currently held in politically insulated national wealth funds that nurture and grow these assets. Indeed, were such wealth to be managed properly, The Economist quotes the authors as saying—the newsmagazine reckons America’s federal government owns buildings with a book value of $1.5 trillion and a fourth of the country’s land—the privatise versus not-privatise debate will get irrelevant since professional managers can be appointed to sweat the assets.

In India, as in the rest of the world, there has been no consistent attempt to either map such assets, much less to try and maximise their value. There have, though, been sporadic attempts to capture part of the value of, for instance, land or the rights that go with it such as advertising. The Delhi airport, for instance, was to a large extent financed through a large parcel of land given to the developer for the life of the project; the Delhi Metro is one of the few financially viable ones primarily due to its very large land holdings and other metros too are being built on this model. Indeed, the redevelopment of the Delhi railway station, both proposed and scuttled during the UPA tenure, was also capitalising on the value of the real estate by allowing the developer to develop commercial properties on railway land.

Though there are some estimates of how much land various public sector organisations have, the list is not exhaustive and there is virtually no attempt to see whether even the titles to such properties are kosher—a decade ago, the sale of the Ashok Hotel in the capital had to be put off for this very reason. The Railways are supposed to have 4.6 lakh hectares of land of which around a tenth is vacant, but the Rail Land Development Authority which was tasked with monetising this has just been given 900 hectares over the past 8 years—and a large part of this was taken back after RLDA found land titles missing/unclear. The country’s major ports hold 2.58 lakh acres of land, of which around a fifth is said to be surplus but very little progress has been made on leasing out the land or doing anything with it. Various central PSUs are supposed to own 8 lakh acres of land but, as of now, there is no centralised list of this land, how much has clear title, how much is actually spare or whether selling the land would be a more profitable strategy than selling the PSU itself. How slow the process is can best be judged by the VSNL saga, a company that was privatised in 2002. In order to ensure the new buyers, the Tatas, did not benefit from the 773 acres of land the company owned, a plan to create a separate company was agreed upon—it has been 13 years since, and there has been little progress in selling the land. Atal Bihari Vajpayee’s government benefited from a separate disinvestment minister, perhaps Narendra Modi’s would do well to have a real estate minister.