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New Delhi: Finance Minister Nirmala Sitharaman on Monday announced a Rs 6 lakh crore ($81 billion) National Monetisation Pipeline (NMP) that will look to unlock value in infrastructure assets across sectors ranging from power to road and railways.
She also said the asset monetisation does not involve selling of land and it is about monetising brownfield assets.
The aggregate asset pipeline under NMP over the four-year period is indicatively valued at Rs 6 lakh crore.
According to Reuters, Amitabh Kant, chief executive of government think tank NITI Aayog, said the government aims to hand already built assets such as gas pipelines, roads, railway stations and warehousing facilities among others to the private sector to operate on a long-term lease.
“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 which can thereafter be leveraged for further public investments.”
The government plans to garner Rs 1.6 lakh crore from the road sector, Rs 1.52 lakh crore from railway assets, Rs 45,200 crore from power transmission lines, Rs 39,832 crore from natural gas assets and Rs 35,100 crore from telecommunications projects.
“This is big and bold,” said Vinayak Chatterjee, non-executive chairman of Feedback Infra Group, a private infrastructure services company told the news agency. He said the programme’s scale and coverage is much wider than his expectation but will need an overhaul of the private-public partnership system.
The asset monetisation model has had a mixed track record with investors so far.
In the road sector government has already garnered Rs 17,000 crore, but India‘s plan to allow private players to operate some trains did not generate as much interest as expected due to regulations and contract enforcement requirements.
The government aims to monetise assets worth Rs 88,000 crore in the current fiscal year that began in April, and a transparent mechanism would achieve “a fair value”, Kant said.
Sitharaman said the programme would give an impetus to economic growth.
Earlier this year, Prime Minister Narendra Modi’s administration announced a privatisation plan which would leave government ownership only in a few critical sectors.
Although coronavirus lockdowns and the subsequent downturn have slowed the privatisation process, the government still hopes to raise Rs 1.75 lakh crore from such sales in the current fiscal year to March 2022.
In the current fiscal year, the government expects to list state-run Life Insurance Corporation of India, and privatise state-run oil refiner Bharat Petroleum Corporation Limited and state carrier Air India Limited.
Proceeds from privatisation are crucial for India, which witnessed a record fiscal deficit of 9.3% in the last fiscal year to March 2021, when the economy contracted by 7.3%.
By the end of the current 2021-22 fiscal year, the government aims to cut the fiscal deficit to 6.8% and revive economic growth to 10.5%.
(With inputs from PTI and Reuters)