Union Finance Minister Nirmala Sitharaman announced an ambitious Rs 6 lakh crore asset monetisation plan. This asset monetisation plan, spread across four years upto 2024-25 and encompasses assets like roads, power-generation facilities, airports, sports stadiums, warehouses, gas pipelines and railway stations and trains. The government plans to encourage both foreign and private investment to utilise or redevelop these assets owned by the government and public sector undertakings (PSUs) to unlock economic value.
What the plan says
According to the plan laid out, the government is aiming to raise Rs 88,000 crore through asset monetisation in the current fiscal year, Rs 1.6 lakh crore in 2022-23, Rs 1.8 lakh crore in 2023-24 and Rs 1.6 lakh crore in 2024-25. The proceeds will be used to finance the Rs 110 lakh crore national infrastructure pipeline.
Asset monetisation is about utilising the existing asset base and using the proceeds for new infrastructure creation. The assets to be monetised are spread across 20 asset classes and 12 line ministries.
Roads and railways will together constitute more than half of the total monetisation pipeline in terms of value.
Asset monetisation proceeds from roads is estimated to be at Rs 1.6 lakh crore, and from railways it is pegged at Rs 1.5 lakh crore over the four-year period.
Different Models for different assets
Different models will be followed for monetisation depending on the nature of the assets like operate, maintain and then transfer, or redevelop, operate, maintain and then transfer.
For roads, the government plans to use a mix of its toll-operate-transfer or TOT model as well as the investment trusts or ‘InvIT’ model to monetise.
Dedicated freight corridor, railway station development, passenger train operations, spot stadiums and hill and Konkan railways are some of the assets lined up for monetisation in the railways sector.
In the power sector, hydro and solar energy generation assets of state-owned firms are listed to be monetised in addition to the transmission lines. In the oil and gas sector, petroleum and natural gas pipelines owned by oil PSUs are listed for monetisation.
The huge warehousing space owned by Central Warehousing Corporation and Food Corporation of India are also lined up.