Centre to monetize $81 bn infrastructure to boost govt’s finances

New Delhi: The union government is planning to monetize infrastructural assets owned by states worth $81 billion (Rs 6 trillion) to help boost the the government’s finances. This will include  sale of road and railway assets, airports, power transmission lines and gas pipelines Bloomberg said in a report.

On Monday, union finance minister Nirmala Sitharaman formally unveiled the National Monetization Pipeline (NMP) and asserted that “it is important that India recognizes that the time has come for making the most out of our assets.”

It is done via monetization of brownfield assets by bringing in private participation, Sitharaman added. “The entire exercise “will generate greater value and unlock resources for economy,” she added.

What does NMP entail?

Apart from providing visibility to investors, the NMP will also serve as a medium-term roadmap for the asset monetization initiative of the union government, a press release here said on Sunday. It also added the Union Budget 2021-22 laid a lot of emphasis on Asset Monetisation as a means to raise innovative and alternative financing for infrastructure, and included a number of key announcements.

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.

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

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

“The government does own very valuable assets and this should see investor interest,” Sonal Varma, economist at Nomura Holdings Inc. in Singapore, was quoted as saying to Bloomberg. “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 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.