According to expert analysis from Business Standard, states possess significant dormant assets that can be converted into long-term financing capabilities. These include vast urban land parcels, industrial estates, mineral rights, and equity in state enterprises that currently earn negligible returns. The proposed solution involves creating three professionally-managed institutions: an asset management agency, a permanent endowment, and a state investment fund. As per the latest expert views, for India to become Viksit Bharat by 2047, large states will need to sustain exceptionally rapid growth while being fiscally constrained, with annual budgets poorly suited for making investments that unfold over decades.
The first institution would be a statutory asset management agency that prepares a complete, geotagged register of state assets with independently assessed valuation ranges. As reported by Business Standard, this agency would raise capital through long leases, redevelopment concessions, joint ventures, land value capture, real estate investment trusts (Reits) and infrastructure investment trusts (Invits). The agency creates value by addressing issues such as unclear titles, incomplete records, restrictive zoning, and parcels locked in low-value captive uses. According to the latest expert analysis, government land trades at steep discounts because titles are unclear, records are incomplete, zoning is restrictive, and parcels sit locked in low-value captive uses. The agency creates value by curing these defects, with clean, litigation-free title raising realisable prices and change of use converting idle acreage into buildable potential.
The second institution would be a state endowment governed by specific rules written into state law, with all net monetisation proceeds credited to the Consolidated Fund and transferred into the endowment. According to the analysis, the endowment may distribute up to 3 per cent of its rolling five-year average value annually, preserving the corpus in real terms while shifting funds from land into diversified professional portfolios. The governance structure would mirror global best practices, with professional managers paid market compensation and investment committees making decisions on commercial criteria. The corpus is shifted steadily out of land into a diversified portfolio managed by professionals on fixed terms.
As reported by Business Standard, Kerala Infrastructure Investment Fund Board (KIIFB) has approved 1,149 projects worth over ₹88,000 crore and issued India's first sub-sovereign masala bond, raising ₹2,150 crore on the London Stock Exchange and repaying it in full in 2024. However, KIIFB's borrowings were serviced by escrowed motor vehicle taxes and fuel cess, leading to off-budget treatment by the Comptroller and Auditor General. Kerala has now proposed redirecting these revenues to the treasury. The latest expert analysis notes that Kerala provides the essential Indian benchmark, with KIIFB issuing India's first sub-sovereign masala bond in 2019 and successfully repaying it in full in 2024.
The third institution would be a state-level National Investment and Infrastructure Fund (NIIF) built to the same design as the national NIIF, with the Government of India owning 49 per cent of the investment manager. According to the analysis, this state NIIF would finance capital assets with a target of four rupees of institutional capital for every rupee of state equity. The fund would be overseen by a single State Development Capital Council chaired by the chief minister with the finance minister as vice-chair, ensuring independent oversight and professional management standards. The state's endowment should invest in this state-level NIIF, with the Government of India owning 49 per cent of the investment manager and investment committees taking every decision on commercial criteria, free of government direction. The Union Cabinet has doubled its commitment to ₹60,000 crore, attracting the Abu Dhabi Investment Authority, Canada Pension Plan Investments and Temasek.
