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National Monetisation Pipeline

Tue 31 Aug, 2021

Why in news 

  • Finance Minister Nirmala Sitharaman  recently announced the National Monetisation Pipeline (NMP), which is expected to fetch around ₹5.96 lakh crore to the government.

Static

  • The plan is in line with Prime Minister's strategic divestment policy, under which the government will retain presence in only a few identified areas with the rest tapping the private sector.

Monetisation

  • 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.

 National Monetisation Pipeline

  • The NMP names a list of public assets that will be leased to private investors. Only brown-field assets, which are assets that are already operational, are planned to be leased out under the NMP. So, to give an example, an airport that is already operational may be leased out to an investor. Assets that are yet to be developed, such as an undeveloped piece of land, for example, may not be leased out
  • The NMP has been announced to provide a clear framework for monetisation and give potential investors a ready list of assets to generate investment interest.
  • Roads, railways and power sector assets will comprise over 66% of the total estimated value of the assets to be monetised, with the remaining upcoming sectors including telecom, mining, aviation, ports, natural gas and petroleum product pipelines, warehouses and stadiums.