NATIONAL MONETISATION PIPELINE

INTRODUCTION

The National Monetization Pipeline is an initiative by the government of India to lift the economy of the country without burdening government finances.

MEANING OF ASSET MONETIZATION

Public assets are recognized as an essential resource for all economies at the international level. Asset monetization refers to create new revenue sources from existing public assets. The monetization process unlocks the value of these less utilized or unutilized assets and generates higher financial leverages. It also increases the equity invested by the government.

It helps estimate public assets accurately, leading to the better financial management of government resources over time.

NATIONAL MONETIZATION PIPELINE (NMP)

NMP is a four-year pipeline of the brownfield infrastructure assets of the central government. It will act as a medium-term roadmap for the government’s initiative for assets monetization and provide visibility for the investors.

The Union Budget of 2021-2022 highlighted asset monetization to promote innovative and alternative investment for public infrastructure.

It has to be noted that the government’s aim behind this step is to develop and maintain the infrastructure and not just bringing funds.

The NMP plan will serve as a blueprint to identify the potential monetization-ready projects available among various infrastructure sectors. According to its calculations, the core assets of the central government withhold an aggregate monetization potential of Rs. 6.0 lakh crores.

OBEJCTIVES OF THE PLANĀ 

  • The plan aims to provide universal access to high-quality and affordable infrastructure to the country’s common people.
  • The very philosophy of the program is to create through monetization. Therefore, it will bring investment from the private sector to develop new infrastructures.
  • It will enable high economic growth and integrate rural and semi-urban areas for overall public welfare, ultimately creating employment opportunities.
  • The strategy is to unlock the value of investments in brownfield public sectors by drawing institutional and long-term patient capital.

 

FRAMEWORK

  • The framework has three core mandates:
  1. It is the monetization of the rights, not ownership.
  2. Assets are given for a limited period and need to be returned.
  3. Brownfield de-risked assets, stable revenue streams.
  4. The government will structure the partnership under a defined contractual framework along with strict KPI’s performance standards.
  • The pipeline was created after assessing the total asset base available and the consultation of respective line ministries and departments.
  • It does not include monetization of non-core assets or monetization through dis-investment.
  • It includes only assets of central government line ministries and CPSEs in infrastructure sectors.
  • The plan to coordinate and collate asset pipeline from states is also being considered.

 

ESTIMATION OF PROPOSAL

  • The total asset pipeline under NMP is indicatively valued at Rs 6.0 lakhs for the four years, i.e., FY 2022-2025.
  • The estimated value matches 14% of the proposed outlay for the Centre under NIP (Rs 43 lakh crore). It covers more than 12-line ministries and more than 20 asset classes.
  • The sectors included are roads, ports, airports, railways, transmission, mining, telecom, stadium, hospitality, warehousing, gas & product pipeline, power generation, and housing.
  • The estimated value of the top 5 sectors suggests it 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%).

 

IMPLEMENTATION & MONITORING MECHANISM

  • The significant share of the assets is to remain intact in the hands of the government.
  • To ensure effective and efficient process of the asset monetization, government will implement necessary policy and regulatory interventions.
  • The interventions will be ensured through reorganization of operational modalities, promoting participation of investors and enabling commercial efficiency.
  • A separate dashboard will be formed for real time monitoring.

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