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.
GS-III: Indian Economy (Growth and Development of Indian Economy, Industrial Development, Government Policies and Initiatives)
Dimensions of the Article:
- About the National Monetisation Pipeline (NMP) scheme
- Key Challenges in the NMP scheme
- 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:
- Monetisation of rights not ownership (this means the assets will have to be handed back at the end of transaction life,
- brownfield de-risked assets and stable revenue streams, and
- 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
- Lack of identifiable revenue streams across various assets,
- Lack of level of capacity utilisation across gas and petroleum pipeline networks,
- Lack of a dispute resolution mechanism,
- Absence of regulated tariffs in power sector assets,
- Low interest among investors for national highways below four lanes.
-Source: Hindustan Times