Programs in News: Asset Monetization (NMP) - Government beats FY22 target with Rs 96,000 crore and Infrastructure pipeline (NIP) expanded to cover 9,335 projects. Learn about National Monetization Pipeline (NMP) and National Infrastructure Pipeline (NIP).
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Recently in News (April 2022)
Asset Monetization: Government beats FY22 target with Rs 96,000 crore
- The government garnered ₹96,000 crore under the National Monetization Pipeline in FY22, surpassing the target of ₹88,000 crore.
- The roads and highways sector monetized assets worth ₹23,000 crore, power sector garnered ₹9,500 crore, coal mining generated ₹40,000 crore and mining of minerals fetched ₹18,700 crore
- The government has set a target of ₹6 lakh crore through asset monetization in FY22-25 with FY23 target pegged at ₹1.67 lakh crore.
NMP aims to provide a medium term roadmap of the programme for public asset owners; along with visibility on potential assets to private sector.
The pipeline has been developed by NITI Aayog, in consultation with infrastructure line ministries, based on the mandate for ‘Asset Monetization’ under Union Budget 2021-22.
- The aggregate asset pipeline under NMP over the four-year period, FY 2022-2025, is indicatively valued at Rs 6.0 lakh crore.
- The estimated value corresponds to ~14% of the proposed outlay for Centre under NIP (Rs 43 lakh crore).
- This includes more than 12 line ministries and more than 20 asset classes.
- The sectors included are roads, ports, airports, railways, warehousing, gas & product pipeline, power generation and transmission, mining, telecom, stadium, hospitality and housing.
- 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%).
- In terms of annual phasing by value, 15% of assets with an indicative value of Rs 0.88 lakh crore are envisaged to be rolled out in the current financial year (FY 2021-22)
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Sector wise Monetization Pipeline over FY 2022-25 (Rs crore) |
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Sector wise Monetization Pipeline over FY 2022-25 (Rs crore) |
What is monetization?
- In a monetization transaction, the government is basically transferring revenue rights to private parties for a specified transaction period in return for upfront money, a revenue share, and commitment of investments in the assets.
- Real estate investment trusts (REITs) and infrastructure investment trusts (InvITs), for instance, are the key structures used to monetize assets in the roads and power sectors.
- While these are a structured financing vehicle, other monetization models on PPP (Public Private Partnership) basis include: Operate Maintain Transfer (OMT), Toll Operate Transfer (TOT), and Operations, Maintenance & Development (OMD).
- OMT and TOT have been used in highways sector while OMD is being deployed in case of airports.
The Framework:
- Currently, only assets of central government line ministries and CPSEs in infrastructure sectors have been included.
- Monetization through disinvestment and monetization of non-core assets have not been included in the NMP.
- The framework for monetization of core asset monetization has three key imperatives:
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National Infrastructure Pipeline (NIP)
In News (March 2022): Infrastructure pipeline expanded to cover 9,335 projects
- The National Infrastructure Pipeline (NIP), which was launched with 6,835 projects, has been expanded to 9,335 projects with total envisaged investments of almost `108 trillion between FY20 and FY25, the finance ministry told Parliament
- Tamil Nadu accounts for the highest number of projects with estimated capital outlay of Rs 8.44 trillion, followed by Andhra Pradesh (Rs 8.04 trillion), Maharashtra (Rs 7.69 trillion), Uttar Pradesh (Rs 5.26 trillion), Karnataka (Rs 3.96 trillion) and West Bengal (Rs 3.65 trillion).
- Just four infrastructure sectors make up 71% of the projected infrastructure investments under the NIP: roads (23%), energy (21%), water and sanitation (15%) and railways (12%).
- A task force under then economic affairs secretary Atanu Chakraborty had submitted its final report on the NIP to finance minister Nirmala Sitharaman in April 2020
Detail about NIP:
A National Infrastructure Pipeline (NIP) of Rs 111 lakh crore for 6,835 investible projects in the infrastructure sector was launched in December, 2019, which to be implemented by 2025.
Task Force was constituted to draw up the National Infrastructure Pipeline (NIP) for each of the years from financial years 2019-20 to 2024-25.
- It has outlined plans to invest more than ₹111 lakh crore on infrastructure projects by 2024-25, with the Centre, States and the private sector to share the capital expenditure in a 39:39:22 formula.
- During the fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%), and Railways (13%) amount to around 70% of the projected capital expenditure in infrastructure in India.
- Around 217 projects worth Rs. 1.10 lakh crore under some key infrastructure Ministries have been completed.
- Out of the total expected capital expenditure of Rs 111 lakh Crore, projects worth Rs 44 lakh Crore (40%) are under implementation, projects worth Rs 33 lakh Crore (30%) are at a conceptual stage, projects worth Rs 22 lakh Crore (20%) are under development
Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman inaugurated the National Infrastructure Pipeline (NIP) Online Dashboard
- The online dashboard is envisaged as a one stop solution for all stakeholders looking for information on infrastructure projects in New India.
- The dashboard is being hosted on the India Investment Grid (IIG) (www.indiainvestmentgrid.gov.in).
- India Investment Grid (IIG) (www.indiainvestmentgrid.gov.in), is an interactive and dynamic online platform to showcase the best of investment opportunities in India to the global investor community.
- Lack of robust infrastructure is often recognized as the primary growth constraint for a developing nation.
- In India, the government is increasingly, looking to the private sector for forging partnerships via effective models for co-working between public and private sectors. The National Infrastructure Pipeline is a step in that direction.
- To achieve seamless working and productivity in other business sectors and India's ambitious goal to be a USD 5 trillion economy by 2025, strong infrastructure growth is essential.
- In particular, the success of India's manufacturing sector and the focus on "Make in India" are directly influenced by how strong the backbone of India's infrastructure is.
- There is a constant need for government intervention, solid funding and constant monitoring of projects.
- Growing urbanization, increasing working-age population, shift to a services-based economy and climate change are some of the factors that will require a further boost to India's infrastructure sector and amplify need for the National Infrastructure Pipeline.
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