Context: Recently, DIPAM, which mainly handles the government's disinvestment program, signed an agreement with the World Bank for providing advisory services for asset monetisation.
About Asset Monetisation

• It is creating new sources of revenue by unlocking under utilized or unutilised public assets.
• The Department of Investment and Public Asset Management (DIPAM) is mandated with facilitating monetization of non-core assets of government CPSEs (central public sector enterprises) under strategic disinvestment.
• The government has set a target of raising Rs 2.10 lakh crore from disinvestment in the current financial year. Of this, Rs 1.20 lakh crore is to be raised through CPSE disinvestment.

Key Points

• The Department of Investment and Public Asset Management (DIPAM) is mandated with facilitating monetization of non-core assets of government CPSEs (central public sector enterprises) under strategic disinvestment.
• Objective: The project is aimed at analyzing public asset monetization in India and benchmarking its institutional and business models against international best practices as well as supporting development of operational guidelines and capacity building for their implementation.

Significance

• It is expected that this project would facilitate and accelerate the non-core asset monetization process.
• It would also help unlock the value of these unused/marginally used assets which have the potential to substantially augment financial resources for further investments and growth.
• The amount raised through the sale of non-core assets would form part of the disinvestment proceeds.

About DIPAM

• The Department of Disinvestment was one of the Departments under the Ministry of Finance. It was renamed as Department of Investment and Public Asset Management (DIPAM) from 14th April, 2016.

The mandate of the Department is as follows:

• All matters relating to the management of Central Government investments in equity including disinvestment of equity in Central Public Sector Undertakings.
• All matters relating to the sale of Central Government equity through offer for sale or private placement or any other mode in the erstwhile Central Public Sector Undertakings.

Disinvestment – Meaning

• Disinvestment is defined as the action of a government aimed at selling or liquidating its shareholding in a public sector enterprise in order to get the government out of the business of production and increase its presence and performance in the provision of public goods and basic public services such as infrastructure, education, health, etc.
• Funds from disinvestment would also help in reducing public debt and bring down the debt-to-GDP ratio while competitive public undertakings would be enabled to function effectively.

Disinvestment – Objectives
The main objectives of disinvestment in India are:

• To reduce the financial burden of the sick, loss-making PSU’s on the Government
• To improve public finances
• To introduce competition and market discipline
• To fund growth, social sector welfare
• To encourage a wider share of ownership
• To depoliticize non-essential services

Disinvestment – Investment

The importance of disinvestment lies in the utilization of its proceeds for:

• Financing the burgeoning fiscal deficit
• Financing large-scale infrastructure development
• For investing back in the economy to stimulate spending
• For retiring government debt, because almost 40-45% of the Centre’s revenue receipts are set aside for repayment of public debt/interest
• For social sector welfare programs in health, education, MGNREGA, etc