National Monetisation Pipeline (NMP)

The Union Budget 2021-22 included a mandate for “Asset Monetisation,” which led to the development of the pipeline by NITI Aayog. This development was done in consultation with the infrastructure line ministries (Roads, Transport and Highways, Railways, Power, Pipeline and Natural Gas, Civil Aviation, Shipping Ports and Waterways, Telecommunications, Food and Public Distribution, Mining, Coal, and Housing and Urban Affairs).According to the projections made by the NMP, the aggregate monetisation potential of the main assets held by the Central Government will amount to 6000 trillion rupees over the course of a period of four years, beginning with the fiscal year 2022 and ending with the fiscal year 2025.

The Union Budget 2021-22 identifies the monetization of operational public infrastructure assets as a significant approach for the achievement of sustainable infrastructure finance. In order to do this, funds were allotted in the budget for the creation of a “National Monetisation Pipeline (NMP)” which would consist of potential brownfield infrastructure assets.

 Following discussions with the appropriate infrastructure line ministries, the NITI Aayog organisation developed the report on NMP as a result of those discussions.

In addition to giving the private sector insight on potential assets, the NMP wants to provide public asset owners with a strategy for the program’s medium term. 

This will be one of the goals of the NMP. In order to better accommodate your needs, the report on NMP has been divided into two volumes.

 The first section of the book is structured like a guidebook, and it provides an overview of the several conceptual approaches and practical models that can be used for asset monetisation. 

In Volume II, you’ll find the actual road map for monetisation, along with the pipeline of critical infrastructure assets that are under the jurisdiction of the Central Government.

NMP policy

The National Monetisation Pipeline (NMP), which was established in August 2021, 

is a programme that aims to increase the value of investments made in brownfield assets owned by the public sector by drawing on institutional and long-term funding sources.

Even while the concept of forming “structured public-private partnerships” in order to extract value from underutilised public assets makes perfect sense, 

There are still a number of underlying problems that need to be addressed.

Over the course of a period of four years, the National Monetisation Pipeline (NMP) intends to realise an aggregate monetisation potential of 6-lakh crore through the leasing of core assets of the 

Central government in industries including roads, railways, power, oil and gas pipelines, telecom, and civil aviation, amongst others (FY 2022-25).

The Importance of the NMP:

• Grow the Economy: 

This project is the first of its type and will help to boost the economy, develop greater job opportunities, and drive the competitiveness of the Indian economy.

• Utilising Public Assets That Are Underutilised 

The NMP promotes the idea of releasing dormant capital that is now being held in non-strategic underperforming government owned assets.

• In addition to this, it foresees reinvesting the cash obtained in the form of new infrastructure projects and the enhancement of assets, such as the building of greenfield infrastructure.
• Coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity are the eight essential industrial sub sectors that contribute to nearly 40 percent of the Index of Industrial Production’s total weight. These subsectors all play a role in maintaining the nation’s infrastructure (IIP).

Government monetisation

Since the launch of the National Monetisation Pipeline in August 2021, the government has exceeded its target of Rs 88,000 crore for the previous fiscal year in just seven months, bringing in a total of Rs 96,000 crore through the sale of assets in the fiscal year 2021-22. 

This figure could reach Rs 1,000,000 crore as more data becomes available.

While the roads and highways sector earned revenue of 23,000 billion rupees, the power industry brought in 9,500 billion rupees, the mining of coal yielded 40,000 billion rupees, and the mining of minerals brought in 18,700 billion rupees.

The Canadian Pension Plan Investment Board, the Ontario Teachers’ Pension Plan, Capital Group, and Utilico Emerging Markets Trust are among the most important investors.In the road sector, asset monetisation transactions are expected to be completed in 2021-22. These transactions will comprise bidding out of three toll operate transfer (TOT) bundles and managing 390 kilometres of road using the InvIT mode. The monetisation of power sector assets included transmission assets owned by PowerGrid and an operational hydroelectric project owned by NHPC. On Tuesday, the Minister of Finance, Nirmala Sitharaman, participated in a sector-by-sector review of the asset monetisation plan with the Chief Executive Officer of the NITI Aayog, Amitabh Kant, and top officials from the concerned infrastructure ministries. They also discussed goals and strategies for the upcoming fiscal year. The government has determined that it wants to raise a total of Rs 6 lakh crore through the sale of assets within the next four years (FY 2022-25), with the target for FY’23 being set at Rs 1.67 lakh crore.

Pipeline monetisation

The directive for “Asset Monetisation” that was included in the Union Budget 2021-22 led to the establishment of the pipeline by NITI Aayog in collaboration with the infrastructure line ministries. According to the projections made by the NMP, the aggregate monetisation potential of the main assets held by the Central Government will amount to 6,000,000,000,000,000  rupees over the course of a period of four years, 

beginning with the fiscal year 2022 and ending with the fiscal year 2025. The objective of asset monetisation is to attract investment from the private sector in order to create new infrastructure. This objective is founded on the idea of “Creation through Monetisation.” This is important in order to create employment possibilities, which in turn enables high economic growth and the seamless integration of rural and semi-urban areas for the overall welfare of the population.

Conclusion

The government of India has recently introduced a National Manufacturing Policy with the goals of increasing the percentage of GDP contributed by manufacturing to 25 percent in the next ten years and the creation of 100 million new jobs. The National Investment and Manufacturing Zones (NIMZ), also known simply as “industrial zones,” are a crucial component of the overall manufacturing policy.

The Central Government will be responsible for developing the enabling policy framework, providing incentives for the development of infrastructure on a Public-Private Partnership (PPP) basis through appropriate financing instruments, and encouraging State Governments to adopt the instrumentalities provided in the policy.