Context:

The government will raise ₹88,000 crore this year by leasing infrastructure assets of central government ministries and state-run companies under a ₹6 trillion National Monetisation Pipeline (NMP) it unveiled recently.

Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy, Industrial Development, Government Policies and Initiatives)

Dimensions of the Article:

  1. About the National Monetisation Pipeline (NMP) scheme
  2. Key Challenges in the NMP scheme
  3. Union Budget 2021-22 laying the foundation for NMP scheme

About the National Monetisation Pipeline (NMP) scheme

  • With the National Monetisation Pipeline (NMP) launched by the government, it aims to raise $81 billion by leasing out state-owned infrastructure assets over the next four years (2021-25). The funds will then be used to build new infrastructure assets, helping boost economic growth in Asia’s third-largest economy.
  • NMP is envisaged to serve as a medium-term roadmap for identifying potential monetisation-ready projects, across various infrastructure sectors.
  • The framework for monetisation of core asset monetisation has three key imperatives:
    1. Monetisation of rights not ownership (this means the assets will have to be handed back at the end of transaction life,
    2. brownfield de-risked assets and stable revenue streams, and
    3. structured partnerships under defined contractual frameworks with strike KPIs and performance standards.
  • Annual targets under the four-year pipeline have been set at ₹1.62 trillion for FY23, ₹1.79 trillion for FY24 and ₹1.67 trillion in the following year.
  • The top five sectors by value under the government’s asset monetization programme are roads (27%), railways (25%), power (15%), oil and gas pipelines (8%) and telecom (6%).
  • NMP report has been organised in two volumes which were released today in the presence of Vice Chairman (Niti Aayog), CEO (Niti Aayog), and secretaries of infrastructure line ministries.
  • NMP will create employment opportunities, thereby enabling high economic growth and seamlessly integrating the rural and semi-urban areas for overall public welfare.

Key Challenges in the NMP scheme

  1. Lack of identifiable revenue streams across various assets,
  2. Lack of level of capacity utilisation across gas and petroleum pipeline networks,
  3. Lack of a dispute resolution mechanism,
  4. Absence of regulated tariffs in power sector assets,
  5. Low interest among investors for national highways below four lanes.

-Source: Hindustan Times

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