Note4Students

From UPSC perspective, the following things are important :

Prelims level: Asset Monetization

Mains level: National Monetization Pipeline (NMP)

The Union Finance Minister has launched the National Monetization Pipeline for the brownfield infrastructure assets.

Asset Monetization involves the creation of new sources of revenue by unlocking of the value of hitherto unutilized or underutilized public assets.
Internationally, it is recognized that public assets are a significant resource for all economies.
Many public sector assets are sub-optimally utilized and could be appropriately monetized to create greater financial leverage and value for the companies and of the equity that the government has invested in them.
This helps in the accurate estimation of public assets which would help in the better financial management of government/public resources over time.

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.

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.

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.

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%).

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.

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