FM pushes for speedy asset monetisation

Finance minister Nirmala Sitharaman on Tuesday chaired a “workshop” with top bureaucrats of various infrastructure ministries and states, and stressed the importance of asset monetisation as a “critical financing option for enhancing infrastructural spending”. The workshop, organised by the Niti Aayog, came days after Prime Minister Narendra Modi set an ambitious asset monetisation target of Rs 2.5 lakh crore for the next three years.

The latest workshop is expected to expedite the process. Given the faltering tax collection in the wake of the Covid-19 pandemic, the government has been pinning hopes on gathering non-tax revenues to be able to boost spending, especially in infrastructure, and bring the Covid-ravaged economy back on its feet fast. It has already identified about 7,000 projects National Infrastructure Pipeline, envisaging a massive investment requirement of Rs 111 lakh crore over FY20-FY25.

“The workshop elaborated on the strategic context of core and non-core asset monetisation, along with detailed discussions on the need for and modality of such monetisation by public sector entities, and the experiences of public and private sector entities in the space,” according to an official statement. Niti Aayog chief executive Amitabh Kant highlighted the need for closer partnership between central and state agencies for “leveraging the enormous resource efficiencies of the private sector and for recycling public funds for new infrastructure creation”. Top officials of various state-run entities also attended the workshop.

Late last month, Modi strongly pitched for a transparent and continuous process to privatise government assets – companies, their physical assets and other state-owned infrastructure –, in the most unequivocal assertion of a much-awaited policy shift by any head of government since Independence. “The government is moving ahead with a resolution to monetise and modernise. When the government monetises, the space is filled by the private sector. Private sector brings with itself global best practices, (which leads to) modernisation and aids the relevant sector to expand at a faster pace and create more jobs,” he had said.

Already, the Centre has zeroed in on a clutch of assets, including pipelines of Indian Oil and GAIL and select assets of Indian Railways, Delhi and Kolkata Metro rail systems and the Dedicated Rail Freight Corridor. Earlier, Niti Aayog had identified two lists of core assets, including 12 lots of highway bundles of 6,000 km to raise up to Rs 60,000 crore. Power Grid will offer transmission lines worth a total of Rs 20,000 crore in phases.

Even private sector participation in the running of about 150 passenger trains and redevelopment of 50 railway stations also featured in the government’s agenda. In the Budget for FY22, Sitharaman announced that National Highways Authority of India and Power Grid Corporation each have sponsored one InvIT to draw investors. Five operational roads, with an estimated value of Rs 5,000 crore are being transferred to the NHAI InvIT.

Similarly, transmission assets worth Rs 7,000 crore will be transferred to the PGCIL InvIT, she said. The next lot of airports will be monetised for operations and management concession. The government has budgetted capital expenditure at Rs 5.45 lakh crore for FY22, which is 26.2% higher than the RE of FY21 and 34.5% larger than the BE level for this fiscal.