On August 23, Federal Minister of Finance and Enterprise Affairs Nirmala Sitharaman launched an asset monetization pipeline for central ministries and public sector entities: the “National Monetization Pipeline (NMP Volumes 1 and 2)”.
The pipeline was developed by NITI Aayog under the authorization of “asset monetization” under the alliance budget for 2021-22, after consultation with the infrastructure department. NMP estimates that during the four-year period from fiscal year 2022 to fiscal year 2025, through the core assets of the central government, the total monetization potential will reach 6 trillion rupees.
Volumes 1 and 2 of the NMP report were published on August 23. Rajiv Kumar, the vice chairman of NITI Aayog, attended the meeting; Amitabh Kant, the CEO of NITI Aayog, and the secretary of the pipeline infrastructure department-roads, transportation and roads, railways, Electricity, pipelines and natural gas, civil aviation, shipping ports and waterways, telecommunications, food and public distribution, mining, coal and housing and urban affairs-as well as secretaries (Ministry of Economic Affairs) and secretaries (Ministry of Investment and Public Asset Management).
The Minister of Finance of India said: “The formation of the asset monetization plan is due to the vision of our Prime Minister. He has always believed that ordinary Indian citizens can generally obtain high-quality and affordable infrastructure. Asset monetization is based on the creation of monetization. The idea is to use private sector investment to create new infrastructure. This is necessary to create employment opportunities, thereby achieving rapid economic growth and seamless integration of rural and semi-urban areas to achieve overall public welfare.”
Sitharaman further cited the reforms and initiatives taken by the current government to accelerate infrastructure development and stimulate private sector investment. This includes the recent “State Capital Expenditure Financial Assistance Program,” which encourages state governments to reclaim state-owned assets for fast tracking of greenfield infrastructure.
“The strategic goal of the plan is to release the investment value of public sector assets in brownfields through the use of institutional and long-term patient capital, which can then be used for further public investment,” NITI Aayog vice chairman said at the launching ceremony. He emphasized In this way of unlocking, it is envisaged through a structured contractual partnership, rather than privatization or asset collapse.
The asset monetization plan is necessary to create jobs, so that high #Economy Development and seamless integration of rural and semi-urban areas to achieve overall public welfare: FM @sitharaman
learn more: https://t.co/QWZjxeeIKN pic.twitter.com/WWv3i1qlMW
-NITI Aayog (@NITIAayog) August 23, 2021
The NMP is expected to serve as a mid-term roadmap to identify potential monetization projects in various infrastructure sectors. CEO NITI Aayog said: “NMP aims to create a systematic and transparent mechanism for public authorities to monitor the performance of the program and plan future activities for investors. Taking into account the resource efficiency of the private sector and its dynamic adaptation With the ability to change global and economic realities, asset monetization not only needs to be seen as a financing mechanism, but also as an overall paradigm shift in the operation, expansion, and maintenance of infrastructure.”
#Budget2021 Pointed out that monetization will be a financing mechanism and will serve as a medium-term roadmap. Publish this announcement, #NMP A high level of consultation was conducted during the multiple rounds of discussions initiated by FM @sitharaman: Chief Executive Officer @amitabhk87 pic.twitter.com/yRnbaYTV9Q
-NITI Aayog (@NITIAayog) August 23, 2021
“New models such as infrastructure investment trusts and real estate investment trusts will enable financial and strategic investors as well as ordinary people to participate in this asset class, thereby opening up new investment channels. Therefore, I think the NMP document is to make India’s infrastructure truly A key step to becoming a world-class,” he said.
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NMP is the result of insights, feedback and experience integrated through multi-stakeholder consultations conducted by NITI Aayog, the Ministry of Finance, and functional ministries. NITI Aayog had several rounds of discussions with stakeholders. The pipeline has been deliberated in detail at an inter-ministerial meeting chaired by the Cabinet Secretary. Therefore, this is entirely a government initiative.
The secretaries of all infrastructure ministries expressed their determination to cooperate with NITI Aayog and the Ministry of Finance to achieve their respective goals set under the NMP.
As part of the multi-layered institutional mechanism to fully implement and supervise the asset monetization plan, an authorized asset monetization secretary core group (CGAM) chaired by the Cabinet Secretary has been established. The government is committed to making asset monetization plans a value-added proposal for the public sector and private investors/developers by improving the quality of infrastructure and operations and maintenance. This aims to realize the broader and longer-term vision of “enhancing the inclusiveness and power of ordinary citizens through first-class infrastructure.”
