Context: Recently, the government of India has launched the National Monetisation Pipeline (NMP). The NMP estimates aggregate monetisation potential of Rs 6 lakh crores through core assets of the Central Government, over a four-year period, from FY 2022 to FY 2025.

• This monetisation will create further value for infrastructure creation in the country 
• It will explore innovative ways of private participation without transfer of government ownership.

National Monetization Pipeline (NMP)

• The NMP comprises a four-year pipeline of the Central Government’s brownfield infrastructure assets.
• It will serve as a medium-term roadmap for the Asset Monetization initiative of the government, apart from providing visibility for the investors.
• Incidentally, the 2021-22 Union Budget, laid a lot of emphasis on Asset Monetization as a means to raise innovative and alternative financing for infrastructure.
• It has to be noted that the government views asset monetization as a strategy for the augmentation and maintenance of infrastructure, and not just a funding mechanism.

What is the plan?

• NMP is envisaged to serve as a medium-term roadmap for identifying potential monetization-ready projects, across various infrastructure sectors.
• It estimates aggregate monetization potential of Rs 6.0 lakh crores through core assets of the Central Government, over a four-year period, from FY 2022 to FY 2025.

Objectives of the program

• NMP aims for universal access to high-quality and affordable infrastructure to the common citizen of India.
• Asset monetization, based on the philosophy of Creation through Monetization, is aimed at tapping private sector investment for new infrastructure creation.
• This is necessary for creating employment opportunities, thereby enabling high economic growth and seamlessly integrating the rural and semi-urban areas for overall public welfare.
• The strategic objective of the programme is to unlock the value of investments in brownfield public sector assets by tapping institutional and long-term patient capital.

The framework for core asset monetization has three key imperatives

• The pipeline has been prepared based on inputs and consultations from respective line ministries and departments, along with the assessment of total asset base available therein.
• Monetization through disinvestment and monetization of non-core assets have not been included in the NMP.
• Further, currently, only assets of central government line ministries and CPSEs in infrastructure sectors have been included.
• Process of coordination and collation of asset pipeline from states is currently ongoing and the same is envisaged to be included in due course.

Estimated Potential

• The aggregate asset pipeline under NMP over the four-year period, FY 2022-2025, is indicatively valued at Rs 6.0 lakh crore.
• The estimated value corresponds to ~14% of the proposed outlay for Centre under NIP (Rs 43 lakh crore). This includes more than 12-line ministries and more than 20 asset classes.
• The sectors included are roads, ports, airports, railways, warehousing, gas & product pipeline, power generation and transmission, mining, telecom, stadium, hospitality and housing.
• The top 5 sectors (by estimated value) 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

• As an overall strategy, significant share of the asset base will remain with the government.
• The programme is envisaged to be supported through necessary policy and regulatory interventions by the Government in order to ensure an efficient and effective process of asset monetisation.
• These will include streamlining operational modalities, encouraging investor participation and facilitating commercial efficiency, among others.
• Real time monitoring will be undertaken through the a separate dashboard.

Conclusion

• Monetisation of assets is not new. But the government has finally organised it in baskets, set targets, identified impediments, and put in place a framework. 
• While unlocking assets worth Rs 6 lakh crore is an ambitious plan, resolving the impediments is expected to bring investors.

By: Shubham Tiwari