National Monetisation Pipeline (NMP)

The National Monetisation Pipeline (NMP) estimates an aggregate monetization potential of Rs 6 lakh crores through core assets of the Central Government, over a period of four years from FY 2022 to FY 2025

The National Monetisation Pipeline is announced to provide a clear framework for monetisation and give potential investors a ready list of assets to generate investor interest.

Union Budget 2021-22 has identified the monetisation of operating public infrastructure assets as a key means for sustainable infrastructure financing.

As of now, only assets of central government ministries and Central Public sector enterprises (CPSEs) in infrastructure sectors have been included.

What is Monetization ?

In a monetisation transaction, the government is basically transferring revenue rights to private parties for a specified transaction period in return for upfront money, a revenue share, and commitment of investments in the assets.

Why is it important?

Government finances are stretched, especially post the massive economic jolt dealt by Covid. Public welfare measures require funding, more so at the current juncture when the onus is on the government to prop up economic activity.

With the fiscal deficit already stretched to its limits, the government needs to come up with alternative ways to shore up its budget.

Whenever the government moots divestment of state-owned entities, it faces allegations of pawning off family silver.

NMP helps realise value from idle assets, without the Centre transferring ownership of public sector assets to private parties for good.

The Centre has reiterated that the primary ownership of assets under NMP will continue to be with the government. Funds from NMP will be used for infrastructure creation under the National Infrastructure Pipeline.

Private entities will use the asset for a said tenure, at the end of which they will be handed back to the public authority.

It remains to be seen how close the government can actually get to its aim of ₹6-lakh crore though, as that may require faultless execution.

Recent Developments

The government has completed transactions worth Rs 1 lakh crore under the National Monetisation Pipeline (NMP) in 2021-22, surpassing the ambitious programme’s first-year target of Rs 88,000 crore.