Second Phase of Asset Monetisation Project
Context:
The NITI AAYOG has commenced a significant exercise to identify infrastructure projects for the second phase of its ambitious asset monetisation initiative, as announced in the FY26 Budget.
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- According to official sources, the government will soon appoint a consultant to develop a sector-wise roadmap for the National Infrastructure Pipeline (NIP) 2.0.
- This phase, termed the National Monetisation Pipeline (NMP) 2.0, aims to mobilise ₹10 lakh crore from brownfield operational assets across various sectors between FY26 and FY30.
- The sectors include highways, railways, power, petroleum and natural gas, civil aviation, ports, warehousing and storage, urban infrastructure (including housing and transport), coal and mines, and telecom. The respective ministries will play a crucial role in setting sectoral targets and implementing the plan.
- The last date for submitting bids for the consultancy is April 5, and the selected technical consultant will be hired for five months.
- Under NMP 2.0, the monetisation of highway assets is expected to accelerate significantly, with a target of generating ₹3.5 lakh crore over the next five years—more than double the estimated revenue from the first phase of NMP.
National Infrastructure Pipeline (NIP)
The NIP is a comprehensive initiative to develop social and economic infrastructure projects across India over a five-year period. It aims to improve the quality of life, attract investments, and support India’s goal of becoming a $5 trillion economy by 2025. Initially, NIP targeted investments of ₹102 lakh crore, which has since increased to ₹111 lakh crore and further to around ₹160 trillion, covering sectors like roads, railways, renewable energy, and affordable housing. The Centre, States, and private sector share the capital expenditure in a 39:39:22 ratio. The NIP includes both greenfield and brownfield projects.
National Monetisation Pipeline (NMP)
The NMP is designed to unlock the economic potential of underutilised brownfield government assets by engaging the private sector. It aims to raise ₹6 lakh crore from FY22 to FY25 and has been expanded to target ₹10 lakh crore for FY26 to FY30. Includes sectors such as highways, railways, power, petroleum and natural gas, civil aviation, ports, warehousing, urban infrastructure, coal and mines, and telecom. Focuses on leasing revenue rights rather than selling ownership, ensuring assets return to the government after the transaction period.
Key Aspects of the Initiative
- Role of DIPAM: The Department of Investment and Public Asset Management (DIPAM) plays a pivotal role in the asset monetisation process.
- DIPAM is responsible for identifying and managing public assets, ensuring their efficient monetisation, and facilitating private sector participation.
- It acts as the nodal agency for implementing the government’s disinvestment and monetisation strategies, ensuring transparency and maximising value realisation.
- Asset Monetisation Plan: The Asset Monetisation Plan aims to unlock the value of underutilised or idle public assets by leasing or selling them to private entities.
- This strategy helps generate funds for new infrastructure projects without increasing the fiscal burden.
- The NMP 2.0 focuses on brownfield assets, which are already operational, to attract private investment and accelerate infrastructure development.
- Example in India: A notable example of asset monetisation in India is the Toll-Operate-Transfer (TOT) model implemented by the National Highways Authority of India (NHAI).
- Under this model, operational highways are leased to private players for a fixed period in exchange for an upfront payment.
- The first bundle of TOT projects, involving nine highways, fetched ₹9,681 crore in 2018.
- Practices from Different Countries: Asset monetisation is a globally recognised strategy.
- For instance, Australia’s “Asset Recycling Initiative” encouraged state governments to privatise assets and reinvest the proceeds into new infrastructure projects.
- Similarly, Canada has leveraged public-private partnerships (PPPs) to monetise assets like airports and highways, ensuring efficient management and revenue generation.
- Capital Receipts vs. Revenue Receipts: Proceeds from asset monetisation are classified as capital receipts since they involve the sale or lease of government-owned assets.
- These receipts are non-recurring and are used to finance capital expenditures, unlike revenue receipts, which are recurring in nature and include taxes and other regular income.
- NITI Aayog’s Previous Involvement: NITI Aayog has been actively involved in identifying and recommending assets for monetisation in the past.
- The Economic Survey 2020-21 highlighted NITI Aayog’s role in preparing a comprehensive list of non-core assets for disinvestment and monetisation.
- The organisation has also provided strategic inputs for the first phase of NMP, ensuring alignment with national infrastructure goals.
