The National Monetization Pipeline (NMP) is a program developed by NITI Aayog, in consultation with infrastructure line ministries, based on the mandate for 'Asset Monetization' under the Union Budget 2021-22.
The NMP aims to unlock the value of brownfield projects by engaging the private sector and estimates an aggregate monetization potential of Rs 6.0 lakh crores through core assets of the Central Government over four years from FY 2022 to FY 2025.
The primary objective of the program is to tap private sector investment for new infrastructure creation, creating employment opportunities, and enabling high economic growth.
The mechanism of the NMP involves the following key aspects:
Asset Identification: The NMP serves as a medium-term roadmap for identifying potential monetization-ready assets across various infrastructure sectors.
Structured Partnerships: The framework for monetization of core assets involves structured partnerships under defined contractual frameworks with strict KPIs and performance, ensuring efficient and effective management of assets.
Monetization of Rights, not Ownership: The government transfers revenue rights to private parties for a specified revenue share and commitment of investments in the assets, without transferring ownership.
Handing Back of Assets: The assets are handed back to the government at the end of the transaction life, ensuring that the primary ownership of the assets remains with the government.
Revenue Generation and Employment Opportunities: The funds generated from the NMP are used for infrastructure creation, creating employment opportunities, and enabling high economic growth.
Transparent Mechanism: The NMP is aimed at creating a systematic and transparent mechanism for public authorities to monitor the initiative and for investors to plan their future activities.
The National Monetization Pipeline (NMP) has several benefits for the government, the private sector, and the economy as a whole. Some of the key benefits include:
Shore up revenues of government and PSUs: The NMP aims to unlock the value of brownfield projects by engaging the private sector, which can help improve the financial position of the government and public sector undertakings (PSUs).
Reduce budgetary support for PSUs: By monetizing assets, the government can reduce its financial support for PSUs, which can help them become more financially sustainable and efficient.
Increase infrastructure expenditure: The funds generated from the NMP can be used for infrastructure creation across the country, which can help improve the quality and quantity of infrastructure.
Revive investments in the economy: The NMP can help revive investments in the economy by providing a ready-made and de-risked asset to the private sector, which can lead to a repeat cycle of monetization.
Spillover effect on jobs and investments: The value received as consideration from the monetization of assets can unlock greater value for the government and PSUs, which can provide a boost to the Gati Shakti Plan and create employment opportunities.
Structured partnerships: The NMP framework envisions structured partnerships under defined contractual frameworks with strict KPIs and performance, which can help ensure efficient and effective management of assets.
Seamless integration of rural and semi-urban areas: The NMP can help integrate rural and semi-urban areas into the economy by creating employment opportunities and improving infrastructure in these areas.
Recently, the Centre has decided to conduct an Asset Recycling Drive under the National Monetization Pipeline (NMP), aiming to generate resources for new investments in infrastructure.
The Centre's asset recycling drive is expected to generate around Rs 1.5 trillion in the fiscal year 2024-25. Transactions with monetisation values of around Rs 0.97 trillion were completed in 2021-22, and Rs 1.32 trillion in 2022-23.
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