| Introduction: Briefly explain the National Monetisation Pipeline. Body: Explain the salient features and benefits of NMP. Write the challenges associated with implementation of NMP. Conclusion: Briefly provide a way forward. |
National Monetisation Pipeline (NMP), announced in budget 2021, is an asset monetisation programme. Program envisages to raise Rs 6 lakh crore by leasing out government owned infrastructure in over 4 years from 2022 to 2025.
Salient features and benefits of the National Monetisation Pipeline (NMP):
- It aims to unlock the value of underutilized brownfield government projects by private sector participation. It would increase the efficiency of assets by ensuring optimum utilisation. It will also promote greater Public-Private Partnership
- It seeks to transfer only the revenue rights, while ownership rights remain with the government. Since only revenue rights are transferred, NMP will face lesser resistance as compared to disinvestment.
- It provides for structured partnerships with defined contractual frameworks and competitive bidding where participants will have to share to Key Performance Indicators. It provides structure to the government’s efforts to monetize assets
- Rail, roads and power sector will comprise over 66% of the total value generated under NMP.
- States are incentivized by the Union government to pursue monetisation of their assets. It will foster cooperative federalism
- The revenue generated from NMP will be utilised for the creation of greenfield projects. It reduces pressure on government resources by providing revenue for capital expenditure.The NMP is co-terminus with National Infrastructure Pipeline launched in 2019.
- An empowered committee headed by a cabinet secretary will oversee the implementation of the programme.
- Real time monitoring will be possible through the asset monetisation dashboard.
However, there are some challenges that need to be addressed to achieve the desired outcome of the programme.
- Lack of identifiable value streams in various assets may discourage the private sector.
- Since ownership is not transferred, infrastructure projects may not be attractive for the private sector.
- Lack of dispute resolution mechanism will lead to loss of time and resources in case of conflict.
- Risk of creation of monopolies where a few firms capture most of the assets.
- The issue of balancing social benefit and private profit.
- Lack of independent regulator will hamper smooth functioning.
- Government red tape and complex procedures may slowdown the process.
- Sector specific challenges like regulated power tariffs, low-capacity utilization in gas and oil pipelines, low investor interest in national highways less than four lanes will create difficulty in their monetisation.
National Monetisation Pipeline presents a good alternative to the disinvestment or privatisation for resources mobilisation. The success of NMP will require good execution of the programme, along with addressing issues like creation of independent regulator and dispute resolution mechanism.
