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Asset monetisation needs greater government push to realise potential

The government could create a central body that could monitor the progress of monetisation of assets across industries, while also assisting ministries in identifying and addressing hurdles in undertaking the process Pranav Sayta & Shalini Mathur

January 24, 2023 / 07:09 PM IST
Monetisation of assets through NMP is indeed a welcome move that can help achieve multiple objectives. (Representative image)

Monetisation of assets through NMP is indeed a welcome move that can help achieve multiple objectives. (Representative image)

Amidst a tumultuous global economic scenario where economies have been grappling with the after-effects of the pandemic, the geopolitical situation and high inflation and monetary policy pressures, India provides a relatively bright and stable spot for investors. A near 7 percent growth in such times is no small achievement. Going forward too, India has the potential to achieve a $10 trillion GDP size by 2035-36 (market exchange terms) and to be a $25-30 trillion economy by the end of its Amrit Kaal (2047-48). To achieve this potential growth, India will need to strengthen its growth enablers. Investments in infrastructure are a clear priority in this context.

Recognising the above, the last three budgets have seen a consistent focus on stepping up investments in infrastructure. Additionally, in Budget 2021, the government announced its vision and strategy for the monetisation of government assets with the objective to spur private investment in infrastructure creation. Asset monetisation, while retaining the ownership of underlying assets with the government, helps achieve two objectives. Firstly, it helps reduce public expenditure, which would otherwise have been undertaken in maintaining an asset. Secondly, it allows the private sector to bring in efficiencies in operations and management of infrastructure.

The National Monetisation Pipeline (NMP) aims at an aggregate monetisation potential of Rs 6 trillion through core assets of the Union government, over a four-year period, from FY2022 to FY2025.  The plan is to unlock the value of investments in brownfield public sector assets by tapping institutional and long-term capital through structured contractual partnerships as against privatisation or slump sale of assets.  The top five sectors, by estimated value, which captured nearly 83 percent of the aggregate pipeline value are roads (27 percent) followed by railways (25 percent), power (15 percent), oil & gas pipelines (8 percent) and telecom (6 percent).

Makes Fiscal Sense