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National Monetisation Pipeline
Context:
The upcoming second edition of the National Monetisation Pipeline (NMP), which spans from FY26 to FY30, is set to bring in an estimated ₹10 trillion by monetising government-owned assets.
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- The revenue generated will be reinvested into the National Infrastructure Pipeline (NIP) of ₹111 trillion.
- Roads, railways, and coal are expected to account for a significant portion of these proceeds, likely contributing 70% of the overall target.
- This is a notable increase compared to the first edition of the NMP (FY22-FY25), where these three sectors together made up 66% of the total revenue.
Performance and Learnings from First Pipeline
- The first NMP (FY22-FY25) targeted ₹26 trillion, with 90% of the goal achieved.
- Sectors like coal, ports, and mines exceeded expectations, while railways and telecom underperformed.
- Coal monetisation outperformed highways, with ₹2 trillion in proceeds expected over four years.
About the National Monetisation Pipeline
- The NMP is an initiative by the Government of India aimed at unlocking the value of public infrastructure assets.
- Launched by Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, in August 2021, the NMP estimates an aggregate monetisation potential of ₹6.0 lakh crores over a four-year period from FY 2022 to FY 2025.
- Core Assets: The NMP focuses on monetising core assets of Central ministries and public sector entities.
- Revenue Rights: The government transfers revenue rights, not ownership, to private parties for a specified transaction period.
- Brownfield Projects: The initiative targets brownfield projects, which are de-risked from execution risks, to encourage private investment.
- Top Sectors: Roads, railways, power, oil & gas pipelines, and telecommunications are the top sectors by estimated value.
- Economic Growth: The goal is to tap private sector investment for new infrastructure creation, creating employment opportunities and promoting high economic growth.
Key Projections for NMP 2.0
- Roads: The road sector is expected to contribute ₹23.5 trillion over the next five years, reaffirming its importance in the government’s monetisation strategy.
- Railways: Railways, which have seen underperformance in the first phase of the NMP, are projected to generate ₹1.7 trillion by FY30.
- Coal: The coal sector, which experienced a significant success in the first NMP, is set to target ₹1.5 trillion in the second edition, highlighting its growing role in the government’s revenue-generating strategy.
- Power: The power sector is projected to contribute approximately ₹1 trillion.
Challenges and Adjustments in NMP 2.0
- The telecom sector significantly underperformed, achieving only 4% of its ₹35,000 crore target.
- Due to this, telecom’s monetisation targets are expected to be trimmed down in NMP 2.0.
