FM announces plan to monetise assets, realise Rs 6 trillion till 2024-25

Finance Minister Nirmala Sitharaman on Monday announced a pipeline of assets the government is looking to monetise to collect about Rs 6 trillion to partly fund its ambitious infrastructure projects over four years ending 2024-25. About Rs 88,000 crore will be realised through asset monetisation in the current financial year.

Sitharaman, however, clarified that the ownership of all these assets would remain with the government, and there would be a mandatory hand-back of assets after a certain time period. “So, the government is not selling away these assets,” she said.

The National Monetisation Pipeline (NMP) will constitute 14 per cent of the Centre’s share of Rs 43.29 trillion in the National Infrastructure Pipeline (NIP). Global players such as Blackstone, Blackrock, and Macquarie have shown interest in participating in the monetisation process.

The plan covers 20 asset classes spread over 12 line ministries and departments. The top three sectors by value are roads (Rs 1.6 trillion), railways (1.5 trillion) and power (Rs 85,032 crore). The NMP does not include land, but lays the road map for monetising brownfield projects where investments have already been made, where a completed asset is languishing or which is not fully utilised, Sitharaman said.

“By bringing private participation, we will be able to monetise these assets better and resources obtained through monetisation would be used for putting further investment into infrastructure building,” she added.

Sitharaman said the asset monetisation programme is aimed at tapping private sector investment for new infrastructure creation, and is necessary for creating employment opportunities, enabling high economic growth, and seamlessly integrating the rural and semi-urban areas for the overall public welfare.

Contractual partnerships for the execution of the asset monetisation pipeline will be with key performance indicators and performance standards, she said.

“They are all de-risked assets, and the value from the consideration and private investment which will come into maintaining it and optimally utilising it will generate greater value and unlock resources for the economy,” she said.

The NMP will run parallel to the infrastructure creation road map of the government from the current financial year, Sitharaman said. The Centre’s share is about 39 per cent in the Rs 111-trillion NIP.

In the roads sector, about 26,700-km stretch would be monetised to mop up around Rs 1.6 trillion. The National Highway Authority of India (NHAI) and the Ministry of Road Transport and Highways will drive this through the toll, operate and transfer (TOT) and Infrastructure Investment Trusts (InvITs) models.

The plan includes monetising power transmission lines of 28,609 ckt km to garner Rs 45,200 crore. These will be driven by Power Grid Corporation. Monetisation of hydro and solar power generation assets of 6 Gw would help the government realise Rs 39,832 crore, and would be undertaken by National Thermal Power Corporation, National Hydroelectric Power Corporation, and NLC India. Natural gas pipeline of 8,154 km would be monetised by GAIL with an indicative value of Rs 24,462 crore.

The plan also includes petroleum product pipelines of 3,930 km to be monetised by Indian Oil Corporation, Hindustan Petroleum Corporation and the Ministry of Petroleum and Natural Gas. This would help in realising Rs 22,503 crore through public private partnerships (PPPs) and InvITs.

The government will also monetise warehousing assets of 210 lakh MT to realise Rs 28,900 crore. These assets are currently owned by Food Corporation of India and the Department of Food and Public Distribution.  

For railways, the plan is to monetise railway stations, passenger trains, good sheds, Konkan Railway, Hill Railways, dedicated freight corridor, and railway stadiums to get Rs 1.52 trillion. In the telecom sector, 2.86 lakh km fibre and 14,917 towers of BSNL and MTNL are planned to be monetised that will help in realising about Rs 35,100 crore.

In aviation, the plan is to sell 25 airports and reduce the Airport Authority of India's (AAI) stake in existing airports such as Delhi, Mumbai, Hyderabad, and Bangalore. This would garner proceeds of Rs 20,782 crore.  

In the shipping sector, 31 projects in nine major ports would be monetised to realise Rs 12,828 crore.

In the coal mining sector, 160 projects have been identified involving a value of Rs 28,747 crore. In sports, two national stadiums and two regional centres would be monetised to get a value of Rs 11,450 crore. In urban real estate, redevelopment of colonies and hospitality assets worth Rs 15,000 crore will be monetised.

“This will be like a PPP where the private sector runs the asset for a period of time but hands it back to the government subsequently. The assets and transactions identified under the NMP are expected to be rolled out through a range of instruments,” CARE Ratings said in a note post the announcement.

Sitharaman while announcing the plan said it's important that India recognises the time has come for making the most out of our assets. “The economy needs more resources, the economy wants that kind of liquidity and that kind of value unlocking with which we can move forward.”

Sitharaman further enumerated the reforms and initiatives undertaken by the Narendra Modi government towards accelerated infrastructure development and for incentivising private sector investments. This included the recent scheme to incentivise state governments to recycle their assets for fast-tracking greenfield infrastructure.

The announcement of the plan is timely, and will provide a much-needed boost to the economy by creating more resources and liquidity in the market, said Alok Saraf, partner at Grant Thornton Bharat.

“This is likely to support the launch of more investments in roads, power and other similar sectors and will lead to optimisation in the utilisation of assets owned by the government. This announcement comes at a point where the market is bullish and FDI inflow has grown over 40 per cent, hinting on India being a preferred investment destination amongst global investors. This asset monetisation model will not only lead to better financing structures and mechanisms, but participation of the private sector will also give push to digitisation and innovation,” Saraf said.

Handholding states

Nodal officers have been appointed by 26 states and Union Territories, and four states have created their pipeline of assets that can be monetised, NITI Aayog CEO Amitabh Kant said. Most states have shown willingness to monetise their assets, he said.

To nudge states to participate in the exercise, the Centre has already announced up to Rs 5,000 crore financial assistance, which is budgeted as interest-free loan if they divest and monetise their assets, or list state-owned entities on the exchanges, Sitharaman said.

“We are with the states, we want to work together with the states...central ministries now only need to gear up towards taking this initiative forward,” said Kant.