Recently, the Centre has decided to conduct an Asset Recycling Drive under the National Monetization Pipeline (NMP), aiming to generate resources for new investments in infrastructure.
GS III: Infrastructure
Dimensions of the Article:
- National Monetisation Pipeline (NMP)
- Need and Significance of National Monetisation Pipeline (NMP)
- Challenges Associated with National Monetisation Pipeline (NMP)
National Monetisation Pipeline (NMP):
- The NMP outlines a comprehensive plan to leverage core assets of the Central government through leasing in various sectors, including roads, railways, power, oil and gas pipelines, telecom, and civil aviation.
- The primary objective is to unlock a total monetisation potential of Rs 6-lakh crore over a four-year period (FY 2022-25).
Scope and Inclusions:
- Monetisation focuses solely on core assets, excluding non-core assets disinvestment.
- Currently encompasses assets from central government line ministries and Central Public Sector Enterprises (CPSEs) in infrastructure sectors.
- The government is actively working on expanding the scope of the NMP by coordinating with states to include assets at both central and state levels.
- The process involves transferring the monetisation of non-core assets, including land, real estate, and infrastructure, from the Department of Investment and Public Asset Management (DIPAM) to the Department of Public Enterprises (DPE) within the Ministry of Finance.
- The NMP aligns strategically with the National Infrastructure Pipeline (NIP), which aims at investments totaling Rs 111 trillion in six years through FY25.
- The timeline for the NMP is synchronized with the remaining period under the NIP, ensuring cohesive infrastructure development.
Need and Significance of National Monetisation Pipeline (NMP):
Need for NMP:
- Overcapitalisation Challenges: Some projects experience time overruns and increased costs, making them financially unviable at launch.
- Inefficient Resource Utilization: Government infrastructure projects often lack optimal input-output ratios, leading to overcapitalisation.
- Resource Optimization Through NMP: Aims to introduce private sector efficiency and market-driven approaches for better resource alignment.
- Coordination Challenges: Inter-ministerial and inter-departmental coordination issues contribute to delays and inefficiencies.
- Private-Public Collaboration: Encourages collaboration between the public and private sectors for streamlined infrastructure development.
- Addressing Governance Issues: Targets issues like reluctance to implement labour reforms, poor decision-making, and ineffective governance.
Significance of NMP:
- Economic Boost and Employment: A groundbreaking initiative expected to boost the economy, generate employment, and enhance competitiveness.
- Integration with PM Gati Shakti: Aligned with PM Gati Shakti, fostering holistic and integrated infrastructure development in India.
- Synergy Between Initiatives: Mutual reinforcement between NMP and PM Gati Shakti contributes to overall economic growth.
- Unlocking Idle Capital: Advocates unlocking capital from underperforming government assets, promoting financial efficiency.
- Reinvestment in Infrastructure: Envisages reinvesting funds from monetisation into new projects and asset augmentation, including greenfield infrastructure.
Challenges Associated with National Monetisation Pipeline (NMP):
- Double Charges Concerns: Taxpayers express worry about facing additional costs for utilizing assets after funding their creation.
- Balancing Public and Private Involvement: Navigating perceived duplication of charges, a challenge in balancing public investment and private asset management.
- Vicious Cycle of Asset Monetization: Concerns about creating assets and subsequently monetizing them when they become government liabilities.
- Capacity Underutilization in Infrastructure: Challenges include low capacity utilization in gas and petroleum pipeline networks and regulated tariffs in the power sector.
- Investor Interest and Stakeholder Complexity: Low investor interest in national highways below four lanes and complexity arising from multiple stakeholders in entities.
- Monopolization Risks: Potential for monopolization, especially in highways and railway lines, raising concerns about reduced competition and increased costs.
-Source: The Hindu