India Said to Plan $81 Billion of Infrastructure Asset Sales

(Bloomberg) -- India plans to raise 6 trillion rupees ($81 billion) from selling state-owned infrastructure assets over next four years to help bolster the government’s finances and plug its budget deficit, according to people familiar with the matter.

The plan will include sale of road and railway assets, airports, power transmission lines and gas pipelines, said the people who asked not to be identified as they aren’t authorized to share the details. Finance Minister Nirmala Sitharaman is scheduled to make the road-map public at 5 p.m. Monday.

The planned sales are in line with Prime Minister Narendra Modi’s strategic divestment policy, under which the state will retain presence in only a few identified sectors with the rest privatized. The government has budgeted as much as 1.75 trillion rupees from such sales in the year through March 2022 to make up for the pandemic-linked drop in tax revenue.

While broader divestment proposals this year include an initial public offering by Life Insurance Corp. of India as well as stake sales in companies such as Bharat Petroleum Corp. and Air India Ltd., Sitharaman is expected to announce Monday plans only for monetizing infrastructure assets held by 11 ministries.

Revenue from monetizing roads is pegged at 1.6 trillion rupees, while that from railways is seen at 1.5 trillion rupees, the people said. Power sector assets may fetch 1 trillion rupees, gas pipelines 590 billion rupees and telecommunication assets 400 billion rupees, they said.

A finance ministry spokesperson could not be immediately reached for comment. 

Public warehouses, civil aviation and port infrastructure, sports stadiums and mining assets are expected to bring in another almost 1 trillion rupees, the people said.  

“The government does own very valuable assets and this should see investor interest,” said Sonal Varma, economist at Nomura Holdings Inc. in Singapore. “This will be like an asset exchange, where the government sells its infrastructure assets and uses the revenue earned to invest in other infrastructure priorities that it has set.”

The monetization plan, announced by Sitharaman in her annual budget speech, will serve as a medium-term road map for the government’s asset sale initiative, state-run think tank NITI Aayog said in a statement Sunday.

The income from the asset sales is key to narrowing the nation’s budget deficit, which Sitharaman expects to be 6.8% of the gross domestic product in the financial year that began April 1, from 9.3% in the previous year. Several economists expect the country will miss that target due to economic disruptions caused by a second wave of the Covid-19 pandemic.

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