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    Finance minister Sitharaman unveils Rs 6 lakh crore National Monetisation Plan; experts say step in right direction

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    Finance minister Sitharaman unveils Rs 6 lakh crore National Monetisation Plan; experts say step in right direction

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    Finance minister Nirmala Sitharaman also said the asset monetisation does not involve selling of land and it is about monetising brownfield assets. Projects have been identified across sectors, with roads, railways and power being the top segments.

    Finance minister Nirmala Sitharaman announced a Rs 6 lakh crore National Monetisation Plan (NMP) for monetising infrastructure assets across sectors.
    She also said the asset monetisation does not involve selling of land and it is about monetising brownfield assets. Projects have been identified across sectors, with roads, railways and power being the top segments, she added.
    "NMP estimates aggregate monetisation potential of Rs 6 lakh crore through core assets of central government over the four-year period from FY 2022 to FY 2025," she said. "
    Ownership of assets will remain with the government and there will be a mandatory hand-back." Asset monetisation will unlock resources and lead to value unlocking, she said.
    In an interview to Shereen Bhan, Raghav Chandra, Former Chairman of NHAI said the National Monetisation Policy is a very large scale public-private partnerships (PPP) initiative of the government in a very well defined kind of way.
    "I view it as a very large scale public-private partnerships (PPP) initiative of the government in a very well defined kind of way. From a purely governance angle I would say that it is a positive step."
    Chandra said 25 or 30 years of lease period should be good enough for a private party to be able to commercialise, renovate, renew and rebuild on an existing asset to be able to get back a reasonable return on its investment.
    "As long as the period of lease is long enough - if it is at least 25 years or 30 years, that is good enough for a private party to be able to commercialise, renovate, renew and rebuild on an existing asset to be able to get back a reasonable return on its investment. As long as that is done with a sufficient duration of lease period, I think this will work and it is in the right direction."
    Shailesh Pathak, Co-Chairman of FICCI Transport Infrastructure Panel said there is a lot of interest by global investors in infrastructure assets and first years monetisation target of Rs 88,000 crore seems realistic.
    "Infrastructure projects and infrastructure assets are very different. A lot of international dollar interest is in assets, not in projects. Today, what we have heard is fleshing of the details out on how exactly the process is going to operate. I am very happy to hear that there are four kinds of PPPs talked about operate-maintain-transfer (OMT), TOT, operate-manage-develop (OMD) and ROMT and two kinds of structures talked about the InvITs and Real estate investment trusts (REITs). We have launched an InvIT in May 2018 and we can see that there is lots of global investor interest. The only thing I would like to say is that the first year's target is Rs 88,000 crore, the second year's target is 1.62 lakh crores and that is pretty good because you don't want to start with a large target. So in the first year, what we are going to establish as a benchmark is going to lead to success in year two, year three, year four and I just wish that quarterly bidding calendar could be shared with potential bidders."
    Vijay Chhibber, Former Secretary of Road Transport & Highways Ministry said this is a move in the right direction. Not only will it mobilise resources but also bring in the private sector, use the brownfield assets, upgrade them and roll them on.
    "I think this is a move in the right direction. At the launch of National Infrastructure Pipeline (NIP) I had said that the maths is just not adding up because the intention is so big and the resources are just not available. So we came to the conclusion that private sector participation in that grand design just had to be ramped up. So this is actually one of the ways to ramp it up. Not only you sort of mobilise resources for alternative use but you also bring in the private sector, and use the brownfield assets, upgrade them and roll them on. So I think this is a very good idea."
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