Asset Monetisation: The Missing Model
Business Today|May 16, 2021
Centre Hopes To Monetise Public Sector Assets Such As Land, Roads And Railways To Finance An Infrastructure Push. But Where Is The Model To Achieve The ₹2.5-lakh-crore Target?
Ashutosh Kumar

AT a time when government finances have been hit due to Covid-19, Finance Minister Nirmala Sitharaman introduced a new mechanism of revenue mobilisation in Budget 2021— asset monetisation. It aims to unlock value from public assets and tap the private sector to fund infrastructure projects.

“Monetising operating public infrastructure assets is an important financing option for new infrastructure construction,” Sitharaman said in her Budget speech. A National Monetisation Pipeline of potential brownfield infrastructure assets was announced, along with a dashboard to track the progress of identified projects. Operations and maintenance of dedicated freight corridor projects of Indian Railways, highway projects of the National Highways Authority of India (NHAI), airports in Tier-II and III cities, oil and gas pipelines of Gas Authority of India Ltd (GAIL), Hindustan Petroleum Corporation Ltd (HPCL) and Indian Oil Corporation (IOC), under-utilised land and other assets of central public sector enterprises (CPSEs), were zeroed in on for monetisation.

Within weeks, Prime Minister Narendra Modi announced investment opportunities worth ₹ 2.5 lakh crore in the asset monetisation pipeline through sale of 100 assets of CPSEs. “Monetise and modernise,” Modi said during an interaction with the private sector on February 24. “The government does not have any business to be in business.”

The Problem

However, months after the announcements, the asset monetisation plan appears to be going nowhere. Arguably, with such a wide variety of sectors, there cannot be a one-size-fits-all concept. But, even though the Department of Investment and Public Asset Management (Dipam) had already set the ball rolling on asset monetisation in March 2019 as per the Cabinet directive, government departments are still groping in the dark about which assets to be put on the block.

In its meeting on February 28, 2019, the Cabinet asked NITI Aayog to identify assets and a revenue model for monetisation. But, two years down the line, the investment structure still remains elusive, and “consultations with the respective ministries on possible investment structures are being undertaken,” according to NITI Aayog’s annual report for 2021/22. In fact, the lack of “investment structure” has left some key ministries, including the railways and highways, and departments and CPSEs holding large chunks of lands, in a fix. In spite of deliberations, there has been no sector-specific model.

In its report, the think-tank said, “A pipeline of core assets, comprising over 100, falling in 31 broad asset classes, mapped to 10 ministries/CPSEs and tentatively valued at ₹5 lakh crore, has been developed. NITI Aayog has sought information from ministries to create a four-year monetisation pipeline (FY21-24). Some of the potential assets that have been identified include toll road bundles, ports, cruise terminals, telecom infrastructure, oil and gas pipelines, transmission towers, railway stations, sports stadium, operational metro sections, warehouses, and commercial complexes.”

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