Explained: What is govt’s National Monetisation Pipeline?
When your purse is empty, you put the family silver on sale. While the Narendra Modi government is not exactly selling its silver, it nonetheless seeks to make money on it—asmuch as Rs 6 trillion, in the next four years.
On Monday, Finance Minister Nirmala Sitharaman and Niti Aayog chief Amitabh Kant unveiled an ambitious Rs 6 trillion plan to monetize government assets in important sectors like power, roads and railways.
So, what is the National Monetisation Pipeline plan all about?
As its name suggests, the National Monetisation Pipeline (NMP) will seek to unlock the monetary value of the prime infrastructure assets that the government owns. These will typically be public-sector brownfield projects for which the government will either bring on board private companies or transfer operational control to them.
So, is the government actually selling off or divesting its assets?
Not really. Ownership will remain with the government or a government-controlled company or entity that owns the project or asset. So, at least technically, the government is not selling the assets or divesting in them.
In fact, the finance minister said that there will be a “mandatory handback” of the asset once the contract is over.
Which sectors is the government targeting for the NMP?
Apart from the three mentioned above—roads, railways and power—othersectors in which the government is looking to monetise assets include telecom, mining, aviation, ports, natural gas and petroleum pipelines, stadiums and warehouses.
While about two thirds of the Rs 6 trillion is likely to come from the top three sectors, the others will contribute the remaining, the government hopes.
How much does the government expect to get from each of these sectors?
The government hopes that roads and highways alone could generate as much as Rs 1.6 trillion, or more than a fourth of the total targeted amount.Railways could deliver Rs 1.5 trillion.
Power transmission and generation are expected to generate Rs 45,000 crore and Rs 40,000 crore, respectively, while telecom could fetch Rs 35,000 crore.
Warehousing, mining and aviation could each net between Rs 20,000 crore and Rs 27,000 crore, the government hopes.
How will the government use the money it raises via this monetisation scheme?
The government will use the money to create newer infrastructure projects in the country. It is already implementing an ambitious Rs 100 trillion infrastructure spending plan over the next four years.
Will any land transfer be a part of this scheme?
Not really. The government says the NMP is about brownfield projects and no land is involved in the process.
“This entire (NMP) is talking about brownfield projects where investments have already been made, where there is a completed asset which is either languishing or it is not fully monetised or is under-utilised,” Sitharaman said.
“So, by bringing in private participation in this, you will be able to monetise it better and ensure further investment in infrastructure building,” she added.
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