Set your own targets, govt tells ministries after railway’s asset monetisation fails

Cabinet Secretary TV Somanathan

With Indian Railways failing to meet the asset monetisation target set for the three years from 2022 to 2025, the government has decided to overhaul its approach for the next phase.

NITI Aayog, which coordinates for the National Monetisation Pipeline (NMP), is revamping its approach for the second National Monetisation Pipeline spanning 2025–30 with a fresh target of Rs 10 lakh crore by directing ministries, including those of the railways, road transport and highways, and housing and urban affairs, to set their own targets for asset monetisation.

This decentralised approach was adopted after concerns were raised by ministries over the earlier top-down model. The new system will give ministries ownership in projecting monetisation values and timelines, making them more realisable and improving accountability, multiple government officials across ministries told Moneycontrol.

Finance Minister Nirmala Sitharaman had announced the second pipeline in Budget 2025, with the stated aim of unlocking value from public assets and channelling proceeds into infrastructure development.

The move comes after Indian Railways fell significantly short of its Rs 1.52 lakh crore target under the NMP for 2021–25, raising just Rs 28,717 crore —a shortfall of over Rs 1.23 lakh crore.

“These are targets that were thrown at them earlier... So now it will be more realistically possible. This is a change in the next asset monetisation cycle—the government is asking the ministries themselves to project (the achievable numbers),” a government official told Moneycontrol, referring to the revised strategy.

“NITI Aayog has now asked the ministries themselves to come with targets not just for FY26 but for the entire 2025–30 period,” the official said. “This time, the targets will be more accurate because ministries are involved in setting them from the outset.”

The revised targets from each ministry are expected to be presented at an upcoming meeting chaired by the cabinet secretary and attended by officials from NITI Aayog and other key departments.

Ministries' concerns

A couple of senior government officials from the roads ministry and Indian Railways were also critical of how proceeds from the first five-year asset monetisation plans were being used and budgeted.

At the April 2025 meeting of the Core Group of Secretaries on Asset Monetisation (CGAM), both the Ministry of Railways and the Ministry of Road Transport and Highways (MoRTH) flagged issues related to the target-setting process and the methodology used for asset selection.

“There is growing discomfort within ministries on how asset monetisation targets are set and assets are chosen for monetisation,” a third official said.

"Where within the budget have proceeds from monetisation been accounted for, and how have these proceeds been spent? The NMP document does speak about these proceeds being used to finance further infrastructure. However, there are no specific guidelines/rules on how these proceeds could be used,” the third official told Moneycontrol on condition of anonymity.

In 2022, the government had set up a multi-layer institutional mechanism for the overall implementation and monitoring of the asset monetisation programme, constituting the empowered CGAM under the chairmanship of the cabinet secretary. The CGAM includes the secretaries of the departments of economic affairs, revenue, expenditure, investment and public asset management, public enterprise, corporate affairs, legal affairs, and housing and urban affairs.

Focus on core assets

Sources added that while land monetisation—especially from surplus land held by public sector undertakings—remains a potential revenue stream, the funds raised through this route will be kept outside the total Rs 10-lakh-crore target. The government is looking to separately fast-track this segment, given limited success in the past.

Notably, the asset monetisation target set for the Ministry of Housing and Urban Affairs (MoHUA) was just Rs 5,000 crore under the previous plan, a figure seen as disproportionately low by other ministries considering the ministry’s vast land holdings in prime urban areas.

Railways seeks course correction

Station redevelopment and passenger train privatisation formed the core of the Indian Railways’ monetisation plans in the last cycle. However, senior railway ministry officials said the plans were drawn up without thorough internal consultation or a workable public-private partnership (PPP) structure.

“Monetisation of commercial spaces is a key asset for Indian Railways, which was overlooked as part of the first NMP cycle,” a senior railway official said. “We have now requested the CGAM to facilitate leasing of surplus plots and commercial space at major railway stations such as Mumbai, Delhi and Chennai.”

He added that the ministry has also proposed lowering the government’s stake in select public sector railway entities to boost monetisation revenues.

Highways ministry pushes for ToT reform

As part of the course correction, MoRTH has asked the CGAM to consider changes in the toll-operate-transfer (ToT) model, which had been the most successful mode of monetisation for the National Highways Authority of India (NHAI).

“After a pause of two years, the ministry has proposed that more road projects be awarded under the ToT model,” a senior official said. “New bundles will include smaller highway projects of up to Rs 1,500 crore to attract more private players and increase proceeds,” a ministry official said.