The government’s ambitious plan to monetise fully completed and operational infrastructure to raise funds for financing future projects, National Monetisation Pipeline (NMP), did not find any mention in the Union Budget for 2023-24, leaving sector experts and industry players bewildered.
Ahead of the Budget, experts had said that the government may miss FY23's target of raising Rs 1.6 lakh crore by a huge margin but were hopeful of an update from the Finance Minister on February 1.
“NMP, the National Monetisation Pipeline, was about offering fully completed and operational infrastructure assets on a PPP basis but was not mentioned,” said Shailesh Pathak, Director, Indian School of Public Policy, saying that it was a notable omission in the budget.
On Jan 31, the Economic Survey of 2022-23 did mention NMP to reiterate the government’s target to raise Rs 1.6 lakh crore during the current fiscal. But it came with a disclaimer that this is only an indicative figure and the actual number may differ due to various factors.
“While the government is pushing for asset monetisation, India has shown that it is very difficult to do privatisation/disinvestment/monetisation. Something or the other in terms of blockages and obstacles comes up. Even CONCOR’s (Container Corporation of India) divestment is still pending,” said Vinayak Chatterjee, founder and managing trustee, The Infravision Foundation. He is also chairman of the Confederation of Indian Industry's (CII) Mission on Infrastructure, Trade, and Investment.
The Budget of 2021-22 had identified monetisation of operating public infrastructure assets as a key means for sustainable infrastructure financing. The Centre had met its NMP target in its first year in 2021-22.
Prime Minister Narendra Modi has referred to NMP as key to ‘monetise and modernize’. The plan was aimed at monetising operational assets by luring private sector investment in these projects once the execution risk of projects is reduced. The funds thus raised would be pumped back into infrastructure and other key projects. The Economic Survey said the asset monetisation plans could potentially be the “the biggest fiscal stimulus to the economy."
But industry experts believe that the government has struggled to ramp up the execution of the monetisation plan and get the private sector enthused about it. Engineering major Larsen & Toubro Ltd has said earlier that while this plan will boost liquidity in the sector, the company was not keen to bid for projects under this plan.
“The government should look to change the rules of the game. In the current way the things are structured, it is very complex, even for bureaucrats. There is also a subtle resistance from ministries, they don't like their assets being monetised,” Chatterjee said in an interview to Moneycontrol.
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