Govt may link budget aid with asset monetization

The plan is being prepared by the ministry’s Department of Expenditure. This comes as transactions totalling ₹33,100 crore have been completed so far this fiscal under the NMP, with an eventual total of ₹1.24 trillion expected to be achieved by March-end, falling well short of the target. The new approach is being considered given that some ministries have turned laggards in leveraging asset monetization as a key policy step to fund their investment needs. Currently, proposals totalling ₹1.36 trillion are under various stages of implementation. Transactions worth ₹96,000 crore under the NMP were completed last fiscal, exceeding the target of ₹88,000 crore. The NMP has been designed for a dozen infrastructure line ministries and are spread across 20 asset classes. The announcement was made in the FY22 budget with Niti Aayog given the mandate to develop it.

“Performance in asset monetization will be one of the factors taken into account in determining budgetary support to infrastructure ministries,” a senior finance ministry official said in an email response to queries. Queries emailed to a spokesperson for Niti Aayog on Thursday remained unanswered till press time.

The plan assumes importance given that the NMP announced in August 2021 expects to raise ₹6 trillion by FY25 from leasing out public assets in sectors such as roads, airports, railways, mining, telecom and housing to the private sector. “By the current performance, the annual transaction under NMP for the current financial year will be lower than the target,” one of the two officials cited above said requesting anonymity. The NMP’s target of ₹6 trillion is expected to help contribute towards the National Infrastructure Pipeline (NIP) that has a projected infrastructure investment of around ₹111 trillion by 2025.

“Asset monetization is critical to attract the required quantum of capital into infrastructure sector. However, monetization needs to be viewed not just as a funding mechanism, but as an overall strategy for bringing about a paradigm shift in infrastructure augmentation, service delivery and maintenance. Resource and capital efficiencies of private sector along with the ability to dynamically adapt to the evolving global and economic reality, necessitates looking at Asset Monetization as the key to value creation in Infrastructure,” said Volume-II of NMP released by the Niti Aayog. The FY24 budget is expected to have a strong focus on infrastructure creation with India likely to double down on capital spending by allocating as much as ₹10 trillion as reported by Mint. The higher allocations are likely for key infrastructure ministries such as road transport, shipping, civil aviation and railways with clear focus on capital expenditure. Also, the budget is expected to peg Indian Railways’ FY24 operating ratio below 95%.

The FY22 budget identified asset monetization as one of the three pillars for enhanced and sustainable infrastructure financing in the country.

“The top 5 sectors (by estimated value) capture ~83% of the aggregate pipeline value. These top 5 sectors include: Roads (27%) followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%). Roads and Railways together contribute ~52% of the total NMP value,” said the volume-II of NMP.