The Centre hopes push to asset monetization will help to cut down the borrowing and thus borrowing cost, Finance Ministry said in a report on Saturday.

The Centre is incurring around 20 paise out of Re 1, it spent, for interest on borrowings.

“Vigorous pursuit of asset monetisation at all levels of government will help lower debt stock and hence debt servicing costs. That would cause risk premium to drop and credit rating of India to improve,” Monthly Economic Review (MER) prepared by Economic Affairs Department of Finance Ministry said. Asset Monetisation was launched in 2021.

National Monetisation Pipeline

Indicative value of assets envisaged to be monetized under NMP (National Monetisation Pipeline) during FY22- 23 is over ₹1.62 lakh crore, which is nearly 67.5 per cent higher than ₹97,000 crore that was monetised in fiscal FY22. Various transactions proposed to be undertaken during FY22-23 include highway TOT bundles and InvIT future rounds, redevelopment of sports stadia, operational power generation & transmission assets, lease of airports through PPP, PPP projects at various port Trusts, development of silos and warehouses, monetisation of tower assets and mining assets.

The aggregate asset pipeline under NMP over the four-year period, FY 2022-2025, is indicatively valued at ₹6 nlakh crore. This indicative value refers to value expected to be realised by the asset owners through the monetisation process, either in form of accruals or by way of private sector investment. The sectors identified under the NMP include roads, ports, airports, railways, warehousing, gas & product pipelines, power generation and transmission, mining, telecom, stadium and urban real estate.

Talking about overall growth scenario, MER said a virtuous circle would set in as the quality of public expenditure increases in its wake and the private sector enjoys a lower cost of capital. “The current financial year thus has the potential to lay a strong foundation for sustained economic growth, improved resilience and enhanced competitiveness of ‘Made in India’ during the Amrit Kaal,” it said.

Inflation watch

The report noted slowing growth and high inflation in most of the major economies of the world, still it believes India’s growth has been robust and inflation in control. “A rapid coverage of vaccination and well-calibrated short-term policy measures have skilfully navigated the economy through turbulent times, preparing a strong foundation to build a prosperous nation in the years ahead,” it said.

The report acknowledged that downside risks to growth will persist insofar as India is integrated with the rest of the world. Nor is there room for complacency on the inflation front as lower crops-sowing for the Kharif season calls for deft management of stocks of agricultural commodities and market prices without unduly jeopardising farm exports. “For all the hawkish central bank rhetoric, the balance sheet of the Federal Reserve has yet to begin contracting. It is expanding more slowly. When it actually starts shrinking, it may herald a new phase of risk aversion in capital markets, impeding global capital flows,” it said.

The report cautioned that in winter months, heightened international focus on energy security in advanced nations could elevate geopolitical tensions, testing India’s astute handling of its energy needs so far. “In these uncertain times, it may not be possible to remain satisfied and sit back for long periods. Eternal macroeconomic vigilance is the price for stability and sustained growth,” it advised.

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