National Monetisation Plan: India Unveils Road Map For Up To Rs 6 Lakh Crore Worth Of Asset Sales

Finance Minister Nirmala Sitharaman is launching the national monetisation pipeline—a 4-year road map of how the government plans to sell infrastructure assets and raise funds.

This pipeline will only include brownfield assets owned by the government, Sitharaman said at the launch of the NMP. This will not include land assets of the government.

Sitharaman said that assets monetised under the NMP will be remain under the ownership of the central government. Besides, these assets will be mandatorily handed back to the Centre after a stipulated period of time.

The finance minister also announced incentives, in the form of interest-free loans, for states that also monetise their public assets.

Watch the full press conference and read further for more details on the monetisation pipeline.

The Indian government will look to monetise its infrastructure assets under NMP to raise funds.

Here's how many assets it has identified across sectors:

• Road Sector: Assets of 26,700 kilometres worth Rs 1.6 lakh crore.

• Power Transmission: Assets worth Rs 45,200 crore of 28,608 circuit km lines.

• Hydel and Solar: Assets worth Rs 38,832 crore of 6.0 gigawatt.

• Natural Gas: Assets worth Rs 24,462 crore of 8,154 km of pipelines.

• Petroleum: Assets worth Rs 22,503 crore of 3,930 km of pipelines.

• Warehousing: Railway assets worth Rs 1.52 lakh crore.

• Telecom: Assets worth Rs 35,100 crore.

• Coal and Mining: Assets worth Rs 28,747 crore.

• Shipping: Assets worth Rs 12,828 crore.

Finance Minister Nirmala Sitharman has said that the central government will also incentivise states to monetise their public assets. The incentives will be given by the Centre to states as 50-year interest-free loans.

• If the states divest a PSU and raise funds, the government will give them 100% of that amount as financial assistance.

• If they monetise the asset, then government will give them 33% of that amount.

• If states list a public company in the stock markets and raise funds, the government will be give them 50% of that amount.

• Upto Rs 5,000 crore of financial assistance is already budgeted as 50-year interest-free loan for the states for the current year.

Finance Minister Nirmala Sitharaman said that under the National Monetisation Pipeline ownership of the brownfield assets will remain with the Indian government.

• There will be a mandatory handback of the asset after a stipulated period of time.

• They are all de-risked assets.

• This will unlock resources for the economy, which is what we want.

Kant said that roads, railways and power will be the top 3 sectors by valued under the national monetisation plan.

• Pipeline of government assets covers about 14% of Centre's outlay under national infrastructure plan of roughly Rs 6 lakh crore.

• NMP covers over 20 asset classes and 12 line ministries.

Ownership of core-infra assets after monetisation will remain with the government, Amitabh Kant said.

• There are structured, contractual partnerships, performance standard.

• Brownfield projects are derisked therefore private investment comes in such projects.

• The monetisation plan will be coterminus with the National Infrastructure Plan over a four-year term.

NITI Aayog Chief Executive Amitabh Kant said that the National Monetisation Pipeline is to unlock value of government investment and public money in infrastrucutre.

• Followed a consultative approach on formulating National Monetisation Pipeline.

• Asset monetisation is about monetising existing asset base, using their proceeds for new infrastructure creation.

• The objective is to increase spending capital expenditure and building multiplier impact on growth, reviving credit flow.

Finance Minister Nirmala Sitharaman will launch the National Monetisation Pipeline today — a four-year road map for the central government's sale of infrastructure assets.

Sitharaman will unveil the pipeline at 5 p.m. in New Delhi, according to a statement by the Ministry of Finance. The government will also provide a medium-term road map for its asset monetisation initiatives.

According to Bloomberg, the plan could include sale of road and railway assets, airports, power transmission lines and gas pipelines.

Spending towards relief measures for the pandemic and weaker revenue has widened the fiscal deficit, pushing the government's finances.

The government is looking to raise around Rs 1.75 lakh crore ($23.5 billion) in the year through March 2022 to compensate for the drop in tax revenue in the light of the pandemic.

Earlier this month, Tuhin Kanta Pandey, secretary at the Department of Investment and Public Asset Management, had said India was working on a Rs 6-lakh-crore asset monetisation plan that would include pipelines of Power Grid Corp. to national highways.

That comes as the Modi government attempts to rein in its fiscal deficit to 6.8% of the GDP in the ongoing fiscal from 9.3% in the previous year. That, however, as several economist have pointed, may not be likely as the second wave of the pandemic disrupted business activity again.