National Monetization Pipeline (NMP) is a strategic initiative by the Government of India to unlock the value of public sector assets. The Centre has determined to perform an Asset Recycling Drive under the National Monetization Pipeline (NMP), aspiring to develop resources for new investments in infrastructure. The Centre's asset recycling drive is envisioned to yield around Rs 1.5 trillion in the fiscal year 2024-25. Transactions with around Rs 0.97 trillion of monetisation values were completed in 2021-22 and Rs 1.32 trillion in 2022-23.

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The National Monetisation Pipeline (NMP) envisages an aggregate monetisation potential of Rs 6-lakh crore through the leasing of core assets of the Central government in sectors such as roads, railways, power, oil and gas pipelines, telecom, civil aviation, etc, over four years (FY 2022-25). The Monetization through NMP only includes core assets, excluding monetization through disinvestment of non-core assets. Only assets of central government line ministries and CPSEs in infrastructure sectors have been included. The government is currently coordinating and collating asset pipelines from states to expand the scope of the NMP, incorporating assets at both the central and state levels in due course.

To streamline the process, the monetization of non-core assets, including land, real estate, and infrastructure, is transferred from the Department of Investment and Public Asset Management (DIPAM) to the Department of Public Enterprises (DPE) within the Ministry of Finance. This pipeline is intended to support investments under the National Infrastructure Pipeline (NIP) worth Rs 111 trillion in six years through FY25. The timeline for the NMP has been strategically set to be co-terminus with the remaining period under the National Infrastructure Pipeline (NIP).

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Need for National Monetisation Pipeline (NMP)

The aggregate asset pipeline under NMP over the four years, FY 2022-2025, is indicatively valued at Rs 6.0 lakh crore. The estimated value corresponds to 14% of the proposed outlay for the Centre under NIP (Rs 43 lakh crore).

The top 5 sectors (by estimated value) capture 83% of the aggregate pipeline value. These top 5 sectors include Roads (27%), followed by Railways (25%), Power (15%), oil & gas pipelines (8%) and Telecom (6%).

Regarding annual phasing by value, 15% of assets with an indicative value of Rs 0.88 lakh crore are envisaged to be rolled out in the current financial year (FY 2021-22). However, the aggregate and year-on-year-on-year under NMP are only indicative values with the actual realization of public assets, depending on the timing, transaction structuring, investor interest, etc.

• Expense Overruns: In some circumstances, the task fulfillment period is surpassed, leading to elevated task cost, so much so that the task itself becomes unviable at the time of its launch.
• Overcapitalization: The optimum input-output ratio is rarely observed in most government infrastructure projects, leading to their overcapitalization.
• Resource Optimization: Resource distribution and utilization inefficiency contribute to task hold and price escalations. The NMP strives to optimize resources by raising private sector efficiency and market-driven systems, providing a more suitable alignment of inputs and outputs.
• Coordination Challenges: Lack of inter-ministerial and inter-departmental coordination can lead to inefficiencies and uncertainties in task implementation. The NMP facilitates collaboration between the public and private sectors, enabling a more collaborative and streamlined method of infrastructure growth.
• Labour Reforms and Decision-Making: Unwillingness to enforce labour reforms, inadequate decision-making, and unproductive governance contribute to the loss of public infrastructure assets.

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Significance of National Monetisation Pipeline (NMP)

For the Asset Monetization initiative to progress in the right direction, the government must make a strong pipeline of attractively structured brownfield projects available. Further, the sustained flow of transactions and visibility across asset classes are key prerequisites for long-term investors. A robust assets pipeline enables investors to plan their fundraisings and investment timelines and helps asset owners track and scan the performance of assets. Within this context, the National Monetization Pipeline (NMP) was announced in the union budget 2021-22, and NITI Aayog has been entrusted with the mandate to develop the National Monetisation Pipeline.

• Foster Economy: It is the first-of-its-kind endeavour that will expand the economy, develop better job opportunities and improve the competitiveness of the Indian economy. NMP is connected with the PM Gati Shakti, a holistic and integrated system for infrastructure growth in India. 
• Utilising Underutilised Public Assets: The NMP advocates unlocking idle capital from non-strategic underperforming government-owned assets. It also envisages reinvesting the funds thus received into new infrastructure projects and augmenting assets such as greenfield infrastructure creation.

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Accomplishments and Anticipations:

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Challenges Associated with NMP

The government has released the National Monetisation Pipeline (NMP), a document listing the various public assets leased out to private companies over the next four years. The government believes that monetizing underutilized 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 valuable national assets to "crony capitalists".

The National Monetization Pipeline (NMP) faces several challenges, including attracting sufficient private investment, ensuring fair value realization, and addressing potential monopolies or price increases for end-users. Lack of identifiable revenue streams in specific sectors, like gas and petroleum pipelines, and limited investor interest in certain assets, like national highways below four lanes, also pose difficulties. Regulatory issues and the potential for government interference can further hinder the process. 

Problem of Taxpayers' Money 

Taxpayers have voiced worries about possible dual charges on public assets. After financing the creation of these assets, they now face an extra cost for using them through payments to private commodities pursuing their monetization.

• The challenge lies in guiding this perceived repetition of charges and securing an appropriate balance between public investment and private involvement in organizing and utilizing these assets.

The cycle of Creating and Monetising Assets 

The NMP is likely to create a vicious cycle of creating new assets and then monetizing them when they become liabilities for the Government later.

Asset-specific Challenges

Low capacity utilization in gas and petroleum pipeline networks, controlled tariffs in power sector assets, low interest among investors in national highways below four lanes and multiple stakeholders who own a stake in the commodity.

Monopolization: An influential analysis of the NMP is the possibility of monopolization resulting from the transfer of assets, which could lead to inflated prices.

• Unifying ownership may lead to monopolies, especially in the case of highways and railway lines. This matter centres around the potential of decreased competition and market dynamics, potentially resulting in more elevated costs for end-users.

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