Today’s Big Story
The government on Monday announced a Rs 6 lakh crore National Monetisation Pipeline (NMP) for monetizing infrastructure assets across sectors in India from rail to road to power. The plan was announced by FM Nirmala Sitharaman and CEO of Niti Ayog, Amitabh Kant. It aims to unlock value in infrastructural projects by engaging the private sector to monetize government owned assets that are under-utilized.
📯 What’s Going On?
The NMP is a gigantic effort by the government to bring private sector participation in several key areas of infrastructural development in India - roads, power and airports. It is basically the transfer of several government owned assets to the private sector for a fixed amount of time so that the private sector companies can run the operations and generate more revenue. The ultimate goal of the PMP is to operationalize under-utilized assets, recycle assets, and create better quality infrastructure.
For example, under this plan railway stations can become a better place of economic activity, railway stadiums can be used for sport activities etc.
🔍 What Does this Mean?
The left argues that the NMP is a gateway process into eventually selling government assets to create a monopoly by private firms.
The right argues that the Centre must encourage private investment into infrastructure for long-term growth and development.
"Addressing a press conference at the party headquarters, along with former Finance Minister P Chidambaram, Gandhi said: "The Prime Minister and the BJP said that the Congress had done nothing in last 70 years. There is a list here of all the assets that the Congress has helped build using the public money. Now, the prime minister is in the process of selling the crown jewels of this country." Listing out the sectors that are going to be privatised, Gandhi said that these are being sold and one can guess to whom it is going. "And frankly, these will go to three to four people," he said. - The Quint
"Among the key challenges that may affect the NMP roadmap are lack of identifiable revenue streams in various assets, level of capacity utilisation in gas and petroleum pipeline networks, dispute resolution mechanism, regulated tariffs in power sector assets, and low interest among investors in national highways below four lanes, according to the NMP framework. Analysts also point to issues such as the lack of independent sectoral regulators as potential impediments." - The Indian Express
"Besides providing visibility to investors, NMP will also serve as a medium-term roadmap for the asset monetisation initiative of the Government. Niti Aayog has also developed an asset monetisation dashboard for monitoring real-time progress of NMP. The dashboard will serve as a one-stop shop to investors keen on taking over assets of government departments and ministries." - Swarajya
"For mechanisms proposed under NMP, monetisation of assets is by way of structural contractual partnerships, similar to public-private partnership projects which have now been undertaken for almost 20 years in the country. Well-defined contractual frameworks redressal of challenges including protection of interests of the public and common citizens." - Times of India
💭 Why Should I Care?
It can be argued that our government is good at construction but not so good at maintaining and operating infrastructure. The NMP will essentially target monetization of already existing infrastructure which is not being used optimally as a way of creating a cycle for more infrastructural development - more grid creation, more roads, more railway tracks etc. So, if all goes to plan, this could be a game-changer for India and raise the desired 6 lakh crore.
Unfortunately, this plan was not discussed in Parliament so the concerns related to monopolization in the infrastructural sector are valid.
Niti Ayog CEO Amitabh Kant has clarified that the process of transfership will remain transparent and bids will be invited through a competitive process. He also added that the ultimate objective of the NMP is to create a win-win for all stakeholders including public authority, private investors and most of all the common citizen, through universal access to high-quality and affordable structure.
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