Asset Monetisation: The Big Push

The Modi government hopes to raise Rs 6 lakh crore over the next four years by ‘monetising’ public sector assets—leasing them out to the private sector for long-term operations. Can it deliver on this game-changing idea?

- M.G. Arun And Shwweta Punj

When Prime Minister Narendra Modi assumed power in 2014, one of his big promises was to deliver “minimum government, maximum governance”. On these lines, his government was expected to cede control of some public assets to the private sector, either through outright sale or by bringing private sector firms into their operation/ management to make them more productive. However, his government achieved little on this count in its first term, cornered as it was by the opposition’s “suit-boot ki sarkar” jibe.

In its Union budget in February this year, the Modi government made high-decibel pronouncements in two areas involving the private sector—disinvestment and asset monetisation. The initial results of its disinvestment push have been mixed. The sale of Air India has received interest from a few private suitors, with the bidding process slated to be completed within this fiscal year, while LIC (Life Insurance Corporation) is gearing up for a public listing of shares this year. However, the sale of PSUs (public sector units) such as BPCL (Bharat Petroleum Corporation Limited), Container Corporation of India and IDBI Bank remain in limbo. It is at this juncture that the government decided to embark on its next big drive—asset monetisation. Under this, public assets are to be leased to private firms for an upfront fee. This, the government believes, is likely an easier target to hit. It also sidesteps the opposition to privatisation that has scuppered previous attempts to generate revenue from public assets.