Crown Assets Definition
Crown Assets refer to certain assets or resources that are owned by the government of a country, democracy, or any ruling monarch of that particular country, having full rights over such assets that cannot be claimed by the public if otherwise sold.
Types of Crown Assets
Given below is how crown assets can be categorized.
- Government-Owned Physical Assets: This may refer to such physical assets that are directly owned by the government such as land, buildings, equipment, machinery, etc
- Government Administered Assets: This refers to assets that are properties that are constituted as public goods such as public parks, libraries, roads, sewers, and water lines, etc.
Given below are some of the examples of assetsExamples Of AssetsExamples of assets include all current, capital and intangible assets owned by a company and used for accounting purpose. Some of these are cash, accounts receivable, building, plant and equipment, goodwill and patents. that are owned by the government.
- Public Parks
- National Defence and Equipment
- Sewer Systems
- Consulate Buildings
- State Owned Enterprises
Advantages of Crown Assets
Given below are some of the ways in which crown assets are beneficial to the country.
- Strengthens the Economy – Any asset or resource which is a property of the government and is used for productive purposes and towards societal benefits such as roads, libraries, sewer systems, etc. will no doubt develop and strengthen the country as a whole
- Enhances the Net Worth – Net worth for any entity, be it an individual, corporation, or even the government, is arrived at by deducting the total liabilities from the total assets that are owned. Hence building up and accumulating such assets enhances the net worth of the government. They act as strong financial resources for the government that will provide benefits in the future.
- Helps During Distress – Whenever there are calamities or any certain crisis, the government can very well sell such assets, which will generate amount to pay off the debt and help the economy rise. The usage of public goods during times of calamities will help the general public of the country. This way, they stand as a strong backing for the government and can be well-made use of in such situation and the federal or government can be pretty well assured that they have enough backing that they can take care of the same.
- Public Benefit – Public goods such as libraries, roads, sewer systems, etc. can be well used for the benefit of the public and for the greater good of the society itself. They contribute to the development and enhancement of the standard of living and the betterment of people in any country. All of this stands as criteria to judge how developed a country or economy is.
- Surplus Asset Disposal – Any government asset that is treated or considered as surplus can be disposed of to generate an amount that can be used for productive or betterment purposes. They are usually disposed of through mechanisms such as auctions and the proceeds from such bids that are received will be used to beneficial activities for the masses at large.
- Facilitates Divestments – When a government gets to know that a certain unit can be well managed in private hands, it can do so by divesting the same so that the unit can now be more efficiently managed in the hands of a private entity. Such kind of actions stands to generate amount to the government and also at the same time can hand over control and power to more efficient parties. This way, it can reduce the burden of having to run and manage the unit or entity all by itself.
- Enhances Rating and Investments – A government with significant assets may be pretty well rated positively by a credit rating agency, and such acts may induce further foreign fund inflow into any economy. The positive rating enhances the confidence of foreign portfolio investors, and they will be assured of the financial soundness of the particular country that it wants to engage in doing business.
Disadvantages of Crown Assets
Given below are some of the disadvantages that can be attributed to crown assets
- Sale of Assets Reduces Net Worth – A government may act on reason to undertake the sale of such assets for certain purposes. However, the sale of assets brings down the total worth of the government. The government’s holding and resources will now be reduced to a smaller number before the sale, and such acts may stand as an indication to other countries of the world that the finances of the particular country are in trouble
- Misuse – There may be rampant corruption and misuse of such public assets by the politicians to serve their personal needs and greed and may indulge in corrupt practices. Such acts lower the soundness of the country and reduce foreign confidence.
Limitations of Crown Assets
Crown assets, no doubt, tend to benefit the country. However, there are certain assets that the government, though owned by them, cannot undertake a sale in times of distressSale In Times Of DistressDistressed sale refers to the immediate sale of stocks, real estate, or other assets for a price lower than its intrinsic value or at a financial loss because of an economic threat, medical emergency, debt payment, or any other reason. such as roads.
Crown assets or the assets owned by the government tend to be an important factor contributing to enhancing the soundness, wellness of the country, thereby also building confidence among foreign investors to pump in money to any particular country. They tend to act as a strong backing force in times of distress and crisis. The government is well to do to use them efficiently and thus stand to manage the finances and resources of the country.
However, if the country tends to indulge too much into leverage and borrowing, there are high chances that the government may have to undertake a massive sale off of the various assets. Such measures stand to reduce the net worth of the country and also happen to hamper confidence.
It stands as a red signal to the world. However, if the economy is prudent enough and efficiently uses such crown assets for the greater good of the public and betterment of the society, these crown assets will no doubt contribute to the development of the nation as a whole.
This article has been a guide to Crown Asset. Here we discuss how crown assets can be categorized along with the examples of assets that are owned by the government. You can learn more from the following articles –