There has been the creation of the National Monetisation Pipeline by the Indian government. It is estimated that the NMP may be able to monetise a total of Rs 6 lakh crores through Central Government core assets over four years, starting in FY 2022 and ending in FY 2025.
The strategy is consistent with the Prime Minister’s planned divestment policy, which states that the government would keep a presence in only a few designated areas while outsourcing the remainder to the private sector.
Salient Features Of NMP
- It intends to unleash worth in brownfield projects by involving the private sector, giving them income rights rather than ownership of the assets, and using the revenues earned to build infrastructure across the country.
- The NMP was introduced to establish a precise mechanism for monetisation and to present potential investors with a ready list of assets to pique their interest.
- The monetisation of operational public infrastructure assets has been designated an effective strategy for financing sustainable infrastructure in the Union Budget 2021-22.
- Only properties of national government agencies and Central Public Sector Enterprises (CPSEs) in the infrastructure sectors are currently covered.
- The government has emphasised that these brownfield facilities have been “de-risked” from execution hazards and should thus stimulate private investment.
- The remaining forthcoming industries include mining, aviation, telecom, ports, natural gas, petroleum product pipelines, warehouses, and stadiums, accounting for more than 66% of the total anticipated value of the assets to be monetised.
- Regarding yearly scheduling by value, 15% of assets with an estimated value of Rs 0.88 lakh crore are expected to be rolled out in the current fiscal year.
- The NMP will operate concurrently with the Rs 100 billion National Infrastructure Pipeline (NIP), launched in December 2019.
- The expected amount to be raised by monetisation is around 14% of the budgeted outlay for the Centre under NIP of Rs 43 lakh crore.
- NIP will allow for a more accurate forecast of infrastructure projects that will create employment, improve living conditions, and give fair access to facilities for all, making growth more inclusive. NIP initiatives involve both economic and social infrastructure.
- Other infrastructural expansion initiatives include the Scheme of Financial Assistance to States for Capital Expenditure, industrial corridors, etc.
Associated Issues
- A lack of recognisable revenue streams in diverse assets.
- The delayed rate of privatisation of state-owned enterprises such as Air India and BPCL.
- Furthermore, the lacklustre bids in the newly announced PPP effort in railways show that gaining private investors’ interest is complex.
Asset-Specific Difficulties
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- In gas and petroleum pipeline infrastructures, capacity is underutilised.
- Tariffs in the power industry are regulated.
- Investors are not interested in national highways with fewer than four lanes.
- The Konkan Railway, for example, has several stakeholders, including state governments, that possess a part in the company.
Final Thoughts
While the government has attempted to address numerous difficulties arising from infrastructure development in the NMP model, implementing the plan remains critical to its success.
Dispute Resolution System
An effective dispute-resolution mechanism is also required.
Multi-Stakeholder Strategy
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- The infrastructure expansion plan’s effectiveness depends on other stakeholders’ participation.
- State governments and their public-sector companies, as well as the private sector, are among them.
- For this purpose, the Fifteenth Finance Commission has proposed the formation of a High-Powered Intergovernmental Group that will examine the financial responsibility laws of the Centre and the States.
