a year ago

Policy on disposable assets

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The reported drafting of a policy to dispose of the government's assets that have reached the end of useful life is a step in the right direction. The objective of this policy is said to be to increase the government's revenue as well as save on those assets' maintenance costs. Such a policy should have already been in place to ensure the optimum use of the huge quantities of machinery and equipment, lands, buildings, etc that are regularly purchased by the government's procurement department. However, it is better late than never.

Understandably, the magnitude of the undertaking is enormous. For, of the government's total procurement budget equivalent to US$67 billion, 37 per cent or an amount equivalent to US$25 billion is allocated for public procurement. Obviously, it calls for taking extreme care in formulating the guideline so that both the movable and immovable assets to be disposed of are properly categorised and appropriate ground rules set to include those assets in the categories so listed. Also, there should be a standard procedure or methodology to calculate the cost basis of the disposable assets, estimate the useful life of the assets, and, of course, their salvage value. The 'straight line method', as is reported to have been adopted in the draft policy to be used to determine the depreciation schedule of the assets is definitely a well-conceived one. This will enable the estimation of the amount of 'annual depreciation deduction' in a straightforward manner. Finally, a checklist has to be developed to decide which of the articles of zero salvage value are to be destroyed and why, and which ones have any net value. On the whole, to duly follow these steps is essential to ensure that the entire exercise does not go awry.

At this point, it is good to learn that the Central Procurement Technical Unit (CPTU) under the government's Implementation, Monitoring and Evaluation Division (IMED), which is looking after the entire work, has meanwhile sent copies of the draft assets disposal policy to the government bodies concerned for opinion. It was expected that the government bodies in question would duly return the copies of the draft policy bearing their comments by the Sunday (January 15)'s deadline. But, as reported, they are yet to do that. In that case, for the sake of completing the process in time, the sooner they return the copies of the draft disposal policy with their views, the better.

It may be noted at this point that apart from movable assets including vehicles, construction machinery, various types of equipment, to mention a few, there are also government installations including loss making projects whose maintenance costs have proved to be a tremendous drain on the state's resources. Many of those projects are occupying hundreds of acres of land, some with outdated production facilities on then. Maintaining those installations and paying the people running those facilities are undeniably a burden on the state's exchequer. The government would do well to dispose of those facilities and use the lands thus freed to more gainful purposes. So, it would be worthwhile also to conduct a survey to identify these costly white elephants, mark those as disposable assets and include them in the draft disposal policy.

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