The Economic Survey of 2022-23 tabled on January 31 reiterated the government’s target to raise Rs 1.6 lakh crore during the current fiscal under the National Monetisation Pipeline (NMP). However, there is a disclaimer that this is only an indicative figure and the actual number may differ due to various factors.
While the centre met its NMP target in its first year in 2021-22, it may miss the goal in FY23 by a significant margin, according to sector experts. Sectors like railways, telecom and petroleum may slip, they said.
NMP’s second year, ie FY23's target is projected at Rs 1.6 lakh crore (27 percent of the overall NMP target) under Core-Asset Monetisation. This is an indicative value while the actual realisation for public assets may differ depending on the timing, transaction structuring, investor interest, etc, the survey document stated on January 31.
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On August 23, 2021, the government announced the NMP with the aim to monetise existing infrastructure assets to raise funds to finance future projects. The ambitious plan sought to lure private sector investment in infrastructure that had low project execution risk to bridge the gap between the need and availability of capex-intensive infrastructure sector.
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The estimated aggregate monetisation potential under NMP is Rs 6 lakh crore through core assets of the Central Government, over a four-year period, from FY20-25.
“It is expected that private players would operate and maintain the assets. The NMP provides an opportunity for deleveraging balance sheets and providing fiscal space for investment in new infrastructure assets.” the survey said.
In 2021-22, against the monetisation target of Rs 0.9 lakh crore, the government raised Rs 0.97 lakh crore driven by roads, power, coal and mines sectors.
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All eyes would be on Finance Minister Nirmala Sitharaman on February 1 when she presents the Union Budget for 2023-24 for updates on NMP given that the funds received from this may play a critical role in infrastructure development in the country.
“Pursuant to the notification of the National Monetisation pipeline in 2020, monetisation of operating infrastructure assets is poised to pick up the additional pace with activities in new sectors, such as railways, airports, and at the state level with three to four states set to join the initiative. To enable effective management of the proceeds from asset monetisation and using them.
To further the cause, the government may consider setting up specific funds both at the national and state/regional level,” said Arindam Guha, Partner and Government and Public Services Leader, Delloite India, in a pre-budget expectation note.
Guha suggested that the mandate of these funds can be to: (a) provide a dedicated corpus for infrastructure investment, which is not diverted to other areas of government spending, (b) ensure a reasonable return on the corpus through effective deployment in new infrastructure projects and money market operations of short-term surplus resources, (c) use equity capital to raise loans, which can add to the corpus, and (d) mobilise extra-government/budgetary resources from private and not-for-profit sectors.
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