Unlocking value. Not selling assets, unlocking value: FM

“Monetisation of core infrastructure assets does not mean selling the assets,” said Finance Minister Nirmala Sitharaman, launching the National Monetisation Pipeline (NMP) — the asset monetisation mechanism of Central public sector entities — on Monday

With the NMP, the government aims to generate ₹6-lakh crore between 2021-22 and 2024-25, to be used for creating new assets. For the current fiscal, the target is ₹88,000 crore.

The NMP was announced in this year’s Budget.

“Ownership of assets will remain with the government and there will be a mandatory hand-back. Asset monetisation will unlock resources and lead to value unlocking,” she added. Sitharaman explained that the new mechanism is based on the philosophy of creation through monetisation and is aimed at tapping private sector investment for new infrastructure creation.

The NMP will be co-terminus with the balance period under the National Infrastructure Pipeline (NIP). The estimated value of ₹6-lakh crore corresponds to 14 per cent of the proposed outlay for the Centre under the NIP (₹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 and product pipeline, power generation and transmission, mining, telecom, stadium, hospitality and housing.

“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,” said Sitharaman adding the NMP has all the central assets.

Three-pronged scheme

She said States will also be encouraged to monetise their assets. There is a three-point scheme for that — If a State government is fully divesting its public sector enterprises with control, an equal amount of what it gets will be provided by the Centre; if a State PSU has been listed, then an amount equal to half the realised value will be provided; and in case of any other asset, 33 per cent of the value will be provided by the Centre.

The Minister said ₹10,000 crore has been provided in the Budget for NMP.

Rajiv Kumar, Deputy Chairman of NITI Aayog, said that 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, which can thereafter be leveraged for further public investments.

Amitabh Kant, Chief Executive Officer of NITI Aayog, said that each Ministry will have an annual target. Kant hoped that as there is huge liquidity, well structured assets will get better realisation. InvITs (Infrastructure Investment Trust) have given good result as have various new models in the road sector.

As part of a multi-layer institutional mechanism for overall implementation and monitoring of the new mechanism, an Empowered Core Group of Secretaries on Asset Monetization (CGAM) under the chairmanship of the Cabinet Secretary has been constituted. The assets and transactions identified under the NMP are expected to be rolled out through a range of instruments. These include direct contractual instruments such as public private partnership concessions and capital market instruments such as InvITs. The choice of instrument will be determined by the sector, the nature of asset, the timing of the transaction (including market considerations), the target investor profile and the level of operational/investment control envisaged to be retained by the asset owner, etc.

Opposition unhappy

Opposition parties, not convinced with the NMP, said the government is eyeing the country’s public wealth.

“Modi should stop selling the wealth of the country. He is filling the exchequer by selling public properties. This government does not believe in constructing anything, but is proving destructive for the country,” the Congress said in a statement. CPI(M) general secretary Sitaram Yechury said the Finance Minister has detailed the plan for the loot of national assets and people’s wealth.

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