India’s govt to monetize ₹6T state-owned assets in next 4 years

NEW DELHI, Aug 27, 2021, Mint. The Indian government plans to monetise ₹6 lakh crore worth of state-owned assets over the next four years under its asset monetisation pipeline, announced Finance Minister Nirmala Sitharaman on Monday. The privatisation plans previously announced in the 2021/2022 budget to boost public finances, Mint reported.

Moreover, through the National Monetisatoion pipeline (NMP), the Centre aims to sell off gas pipelines, roads, railway assets and warehousing facilities among a host of other assets, NITI Aayog’s Chief Executive Amitabh Kant said.

Here are 10 things to know about govt’s asset monetisation plan:

1) The infrastructure line ministries included under the pipeline—Roads, Transport and Highways, Railways, Power, Pipeline and Natural Gas, Civil Aviation, Shipping Ports and Waterways, Telecommunications, Food and Public Distribution, Mining, Coal and Housing and Urban Affairs—along with Secretary (Department of Economic Affairs) and Secretary (Department of Investment and Public Asset Management).

2) Asset monetisation does not involve selling of land and it is about monetising brownfield assets.

3) “Ownership of assets will remain with the government and there will be a mandatory hand-back,” said Finance Minister Nirmala Sitharaman.

4) The estimated value corresponds to 14 per cent of the proposed outlay for Centre under the National Infrastructure Pipeline ( ₹43 lakh crore).

5) Sitharaman, while launching the pipeline, said, “Asset monetisation, based on the philosophy of Creation through Monetisation, is aimed at tapping private sector investment for new infrastructure creation.”

6) She also added, “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.”

7) The top 5 sectors (by estimated value) capture ~83% of the aggregate pipeline value. These top 5 sectors include: Roads (27%) followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%).

8) In terms of annual phasing by value, 15% of assets with an indicative value of ₹0.88 lakh crore are envisaged to be rolled out in the current financial year (FY 2021-22). However, the aggregate, as well as year on year value under NMP, is only an indicative value with the actual realization for public assets depending on the timing, transaction structuring, investor interest etc.

9) 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 Infrastructure Investment Trusts (InvIT) among others.

10) Union Budget 2021-22 had identified monetisation of operating public infrastructure assets as a key means for sustainable infrastructure financing.

Tags: India