Airport privatisation: TN plans comprehensive policy for land compensation

The DMK-led Tamil Nadu government’s latest policy note is based on the idea of soil, or land, that holds an important place in Dravidian culture and philosophy, according to an Indian Express report. The note says the government should claim a proportionate value, or revenue, from the Airports Authority of India (AAI) if the Union Ministry of Civil Aviation decides to privatise airports in the state. The claim is based on the premise that the state originally gave land for free or at concessional rates for central public sector undertakings and projects of the Union government.

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Industries Minister Thangam Thennarasu presented the policy note in the Assembly last week. Late last year, finance minister Palanivel Thiagarajan had also raised the subject during a review of the Union Budget.

The Indian Express quoted Thiagarajan as saying: “All our actions, let it be Bills or statements, follow that (Dravidian) philosophy. Ever since we came to power, we have been consistent about this stand, about the significance and value of ‘land’, not to let any public land go encroached or abandoned or alienated.”

“That is why the DMK government is moving towards a comprehensive policy on land leases in order to address the challenges faced in leasing government land and to put in place a fair and transparent manner for leasing of government land,” he added.

‘Incentivise states’

At the Union Budget review meeting, where Union Finance Minister Nirmala Sitharaman was also present, Thiagarajan had said, “In the past, the Government of Tamil Nadu has given land for free or at concessional rates for many central public sector undertakings and projects of the Union government. During the privatisation of such organisations, the state government should be justly compensated for the land either through payment of land cost at current market value or through an equivalent equity stake in the new entity. Further, to incentivise states to show more interest in projects of the Union government, I request that a policy may be formulated in this regard and announced in the Budget.”

The latest government note explains how such a policy should be executed, the newspaper reports. Pointing out that the state’s policy in 2007 was to acquire land and hand it over free of cost, “without any encumbrance,” to the AAI for the construction of new airports, or airport expansions, the policy note said land cost forms the bulk of the overall cost of a project.

Sharing of revenue

“The AAI is actively pursuing the policy of privatisation of airports. Therefore, a decision has been taken that in the event the state government acquires and transfers the land to AAI free of cost and the AAI or government of India transfer the assets to a third party, the value realised or revenue accrued thereby, must be proportionately shared with the state government, reflecting the huge investment in land being made by the state government,” read the note presented in the House. “It has also been decided that at the appropriate stage, it has to be ensured that the value of the land should be converted as equity of the state government in the Airport Project Special Purpose Vehicle or an appropriate revenue sharing arrangement proportionate to investment is arrived at before any asset transfer takes place to a private party.”

The Indian Express report pointed out that the state had applied the principle last December when it objected to the sale of BSNL properties worth about Rs 1,250 crore in Chennai. The state revenue department had told BSNL it could not monetise the properties without the state government’s consent as the land on which they stand was originally acquired by the state and allotted to the telecom department for a specific purpose.

Since coming to power last year, the DMK government has been taking steps to retrieve encroached or abandoned land. Quoting the state government’s “Tamil Nilam” database, the 2021-’22 state Budget said over 2.05 lakh hectares of government land had been encroached upon. The government had allocated Rs 50-crore special fund to retrieve and protect government land, including water bodies, from encroachment.

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