National Monetisation Pipeline: The government’s ₹6,00,000 crore ‘National Monetisation Pipeline’ (MNP) project was released on 23 August’21. Under the NMP, the government has identified 13 sectors — including airports, railways, roads, shipping, gas pipeline among others which will be monetised.
NIP envisages infrastructure investment of Rs. 111 lakh crores over five-year period from FY 2020 to FY 2025. One of the major pre-requisites for this, however, is the availability of capital. Under NIP, traditional sources are expected to finance 83–85% of the envisaged capital expenditure.
This includes ~18-20% financing through Centre’s budgetary resources and 24-26% through the States’ budgetary resources. Another ~40% is proposed to be raised through extra budgetary resources/ private sector investment (in form of debt from bond markets/ banks/ non-banking financial companies, by way of equity from private developers/ internal accruals of PSUs and external aid from multilateral/ bilateral agencies).
About 15-17% of the outlay is to be met through innovative and alternative initiatives viz. asset monetisation, funding through a new Development Finance Institution (DFI) etc. Of which asset monetisation has been suggested as a tool to monetise operational assets at both Central and State levels.
The strategic objective of Asset Monetisation programme is to unlock the value of investments in public sector assets by tapping private sector capital and efficiencies. Which can thereafter be leveraged for augmentation/ greenfield infrastructure creation. Asset Monetisation entails a limited period license/ lease of an asset, owned by the government or a public authority, to a private sector entity for an upfront or periodic consideration.
The aggregate asset pipeline over FY22-25 under NMP is indicatively valued at Rs 6.0 lakh crore. The top 5 sectors (by estimated value) capture ~83% of the aggregate pipeline value. These top 5 sectors include: Roads (27%) followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%). Roads and Railways together contribute ~52% of the total NMP value.
In terms of annual phasing by value, 15% of assets with an indicative value of Rs 0.88 lakh crore are envisaged to be rolled out in the current financial year i.e. FY 21-22.
Implementation
Report by NITI aayog on NMP is a 200 page report. Implementation part is one page ( Pg 96 of Volume 2). This is the most important part of this plan where one needs effective planning and management to make this plan a success.
” The programme is envisaged to be supported through necessary policy and regulatory interventions by the Government in order to ensure an efficient and effective process of asset monetisation. These will include streamlining operational modalities, encouraging investor participation and facilitating commercial efficiency, among others. Union Budget 2021-22 has been a witness to commitment of the Government in this regard. “
This is one area where we hope a more detailed plan is released.
1. https://www.niti.gov.in/national-monetisation-pipeline
2. https://www.thehindu.com/business/Economy/national-monetisation-pipeline-heres-the-breakup-of-the-govts-big-privatisation-push/article36075874.ece
3. https://indianexpress.com/article/explained/explained-what-is-the-governments-plan-with-the-national-monetisation-pipleline-7468258/
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