Recently, the government has released the National Monetisation Pipeline (NMP), a document listing the various public assets that will be leased out to private companies over the next four years.
The government believes that monetising under utilised public assets will bring in almost Rs. 6 lakh crore to the government and help build new infrastructure to boost the economy. The critics have accused the government of selling off valuable national assets to “crony capitalists”. In this context, it becomes necessary to evaluate the programme with its long term impacts on overall economic growth.
Advantages of National monetization plan
- Generate Resource Augmentation: NMP will help the government get access to capital via interested private parties. These investors will maintain and operate the monetised assets, generating cash flows, but also create technical and human resource capacity in the infrastructure sector.
- Government Maintains the Ownership of Asset: The existing brownfield, de-risked assets, which are part of the four-year monetisation pipeline, will help create execution capacities for new greenfield assets. The government is monetising the rights to operate and maintain the assets, not their ownership.
- Fair Value Share: Contracts will be designed in a way that the government receives fair present value from the monetisation, while private parties get enough operational flexibility and regulatory visibility. ? Moreover, given that the contract terms can be 25 years or even higher, the bidding interest shows investors are confident of long-term regulatory stability and certainty.
Challenges
Realising Adequate Value: The First and foremost criticism is whether adequate value from the assets will be realised or not. This depends on the quality of the bidding process and whether enough private players are attracted to bid.
Ensuring Sufficient Participation From Bidders: The only way of ensuring that asset monetisation doesn’t lead to cronyism is to make the bidding conditions such that the people eligible to bid are not a small, predetermined set.
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