Mumbai: India should look at selling enemy properties valued at over Rs 1 lakh crore to take care of the current expenditure which will drive growth, Nilesh Shah, a part-time member of the Economic Advisory Council to the Prime Minister, said on Monday. Both India and Pakistan had brought in legislations to take over enemy properties following the 1965 war. While Pakistan was able to liquidate the assets in 1971, India is 49 years behind, Shah said.
“You need to monetise government assets so that we have money available for spending,” Shah, the managing director and chief executive of Kotak Mutual Fund, said while speaking at an IMC webinar. He said the assets were valued at Rs 1 lakh crore three years ago and added that this is the best time to remove encroachments and clear title deficiencies to sell such properties.
Shah said there are 9,404 such properties under a government-appointed custodian taken over in 1965. ”Liquidate these properties and raise Rs 1 lakh crore or so to fund your expenditure,” he said while replying to a question on ways to push up the sagging economic growth.
It can be noted that despite widespread calls for a stimulus, the fiscal math has resulted in the government stretching its expenditure by only under 2 per cent of GDP in the face of the coronavirus crisis. Speaking at the same webinar, SBI Mutual Fund Chief Investment Officer Navneet Munot said there is a need to take fiscal measures to spur growth, rather than leaving it all to monetary authorities.
Shah also suggested tapping into the unaccounted gold held by Indians, and said doing so can make available USD 300 billion for new expenditure and investments. He said a scheme has to be devised to get at least 10 per cent of the estimated 25,000 tonnes of gold held by Indians, which will get USD 50 billion in taxes and another USD 150 billion for spending or investments.
He also welcomed the work done by gold finance companies, helping put gold for productive purposes, but added that there is a need to ”magnify” the same. Both Shah and Munot said liquidity is driving the current rally in the equity markets even as the economy contracted by nearly a fourth in the first quarter.
They said the markets may be looking at the future with more optimism which is driving the rally.
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