NEW DELHI: The government is pushing a plan to set up a Land Authority of India that will take over all under-utilised and unused government land and monetise them, leading to a windfall of an estimated Rs 1 lakh crore that can give succour to the country's burgeoning fiscal deficit. 

The ambitious proposal for a national body, which has to pass muster with a lot of government bodies that have occupied prime land but have put them to little use was put forth by the Union urban development minister Kamal Nath last month, and has been discussed among other key ministries that include thefinance ministry as well as the prime minister's office. 

"Surplus land across the country with bodies such CPWD, DDA, Railways, Defence, public sector undertakings and other government agencies can be put in the sale basket," Nath told ET. "All the land will vest, by a notification, in the Land Authority of India. Let them sell it," Nath said. 

"This can help us raise over Rs 1 lakh crore in six months and help us rein in the fiscal deficit," he said. The policy, the minister said, "should be to either utilise the land or sell it". A scarcity of land has led to the price of land shooting up across the country. 

In March last year, the government had budgeted a fiscal deficit of Rs 5.14 lakh crore, or 5.1% of the gross domestic product ( GDP), for the fiscal year 2012-2013. 

Nath has proposed that the authority should be chaired by the finance secretary, and the last three CVOs and CAGs should act as its members. 

Huge tracts of land that currently are under government civic bodies such as the Delhi Development Authority(DDA) and Cental Public Works Department, among others, have been encroached upon. 

Nath's ministry is learnt to have recently written to an agency, which occupies a big tract of land in central Delhi that they could risk forfeiture if the land is not redeveloped efficiently within a certain time limit. 

According to official estimates, close to 60 sick PSUs in the country together hold about 20,000 hectare of vacant land. 

The national flag carrier Air India, for instance, is in need for money and they have land worth over Rs 700 crore in Delhi that was given to them for their housing colony that was never used. 

"They should sell it," Nath said. The Indian Railways owns about 4.59 lakh hectares of land of which 0.38 lakh hectares is lying vacant and the Rail Land Development Authority develops vacant land for commercial use to generate revenue. 

In Lutyens Bungalow Zone in central Delhi—home to top politicians, bureaucrats, judges and Army officers—there are several empty plots of land that can also be given to the new Authority. 

The new Authority can be set up through a Cabinet sanction. A top bureaucrat, who did not wish to be named, said that since this involves multiple ministries, views would need to be taken from all of them.