National Monetization Pipeline Policy


Finance Minister Nirmala Sitharaman announced on September 23, 2021 the government’s plan to use state asset monetization with the aim of raising 6 trillion rupees by 2024-25 to be used for their ambitious infrastructure development plan. According to her, the government expects to raise Rs this year. 88,000 crore through this.

In asset monetization, the government transfers the leased government assets to private parties for a period of time in exchange for a share of the income generated by the affected party.

The Treasury Secretary has made it clear that the government will not sell the assets under the asset monetization plan. It made it clear that ownership of the assets remains with the state and that the assets must be returned to the state after the set deadline.

In the National Infrastructure Pipeline, the National Monetization Pipeline will account for 14% of Rs 43.29 trillion, which will be contributed by the central government.

In the wealth monetization plan, 20 asset classes falling under 12 ministries and departments are monetized. The three highest value sectors under the plan are: Roads (Rs 1.6 trillion), Railways (Rs 1.5 trillion) and Energy (Rs 85,032 billion).

Land monetization is not provided for in the National Monetization Plan. However, the existing projects (brownfield projects) are covered in which investments have already been made, but the completed project is weak and does not make any progress or is not exhausted.

According to the finance minister, private sector involvement will help better monetize these assets. The resources gained through monetization would be used to invest in future government infrastructure projects. The government plans to encourage private and foreign investment to use or redevelop their own assets and assets owned by public sector units (PSUs). International organizations such as Blackstone, Blackrock and Macquarie have reportedly shown an interest in getting involved in the monetization process.

Such contractual partnerships to run the asset monetization pipeline will be monitored based on performance metrics and performance standards, the finance minister said.

Since the assets available for monetization are low-risk, their preservation and optimal use through private participation would lead to higher value creation and free up resources for the economy, said the finance minister. The models to be used for this can include: operation, maintenance and transfer / redevelopment, operation, maintenance and transfer, etc.

Opposition party leaders have labeled the wealth monetization plan a legal and organized plunder and a secret plan to transfer to select individuals the valuable public wealth that has been developed over the years.

You refer to this plan as “Jumla” like all other announcements by the Modi government like Make in India, demonetization and Atmanirbhar Bharat etc. In your opinion, the monetization of assets will lead to the emergence of private monopolies, which will lead to the exploitation of the common people and theirs Impoverishment.

Experts who support the government’s Asset Monetization Plan refer to it as an effective intervention. They believe this will allow the government to focus on developing major infrastructure projects and hand over responsibility for developing the rest to the private sector. According to them, some industrialists created wealth in the economy in the past. They did this to gain advantages for themselves that would help them maintain their wealth. This has led to the maintenance of the Crony Capitalist System since the 1980s.

Comparing the situation in the country in the earlier era with that of the present, they believe that the present is different from that of India in the 1980s or 2010, as there is a significant increase in the number of wealth creators in India in the present the last decade and that this number is much larger than the corresponding number in any previous decade. Also, India’s wealthy are much more diverse today than ever, suggesting that the economy is much more dynamic and competitive than it was in the past. The competitive dynamism of the Indian economy, in their opinion, is reflected in the existence of booming new sectors with first-generation entrepreneurs.

According to experts, in a country that receives large amounts of foreign capital, competition for market access is inevitable. The same applies to the provision of infrastructure systems.

Since most of the projects selected for monetization fall under the central government, experts say there is less political risk and therefore global investors can be expected to be interested.

Given the criticism of the opposition, especially the Indian National Congress, it should be remembered that this is not the first time that the country has resorted to asset monetization. During the reign of the UPA (United Progressive Alliance), attempts were made to monetize Air India’s assets. In a written response to Parliament in 2014, the UPA government had informed Parliament that it was considering the proposal to monetize Air India’s assets by listing Air India properties that the government intended to monetize.

Against the background of the government’s plan to monetize certain assets, it must be taken into account that the losses of most PSUs (Public Sector Units) have always been the subject of intense discussion. Against this background, the government’s decision must be recognized as pragmatic.

So this underlines that the criticism of the government’s monetization plan by Congress, Trinamool Congress and other opposition parties is politically motivated and not based on facts. The uproar over the purchase of Rafael planes inside and outside Parliament by Rahul Gandhi and almost the entire opposition testifies to the tactics of the opposition to corner the incumbent government. It’s another matter that Rahul Gandhi’s game plan was boomerang in this case and he had to apologize.

Rahul Gandhi has accused the incumbent government, particularly Prime Minister Narendra Modi, of helping a select group of industrialists so often that no one believes him anymore. We owe many achievements to the current government. The current asset monetization plan can hopefully help the economy overcome the shock of Covid-19. Various reports have predicted a healthy recovery in the Indian economy. The government’s asset monetization plan is expected to reinforce these efforts.


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The views expressed above are the author’s own.



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