{"id":130276,"date":"2021-08-31T20:19:44","date_gmt":"2021-08-31T14:49:44","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=130276"},"modified":"2021-09-01T18:21:34","modified_gmt":"2021-09-01T12:51:34","slug":"making-nmp-work","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/making-nmp-work\/","title":{"rendered":"Making NMP work"},"content":{"rendered":"\n<p><b><span data-contrast=\"auto\">Source:\u00a0<\/span><\/b><span data-contrast=\"auto\">This post is based on the following articles published <\/span><span data-contrast=\"auto\">on\u00a031<\/span><sup><span data-contrast=\"auto\">st<\/span><\/sup><span data-contrast=\"auto\"> August 2021:<\/span><\/p>\n<ul>\n<li><span data-contrast=\"auto\">Asset monetization mustn\u2019t end up as a Potemkin show &#8211; <\/span>Livemint<\/li>\n<li><span data-contrast=\"auto\">A monetization move that doesn\u2019t tick most boxes &#8211; <\/span>The Hindu<\/li>\n<li><span data-contrast=\"auto\">Making NMP work &#8211; <\/span>Business standard<span data-contrast=\"auto\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Relevance:\u00a0<\/span><\/b><span data-contrast=\"auto\">Resource Mobilisation<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Synopsis:\u00a0<\/span><\/b><span data-contrast=\"auto\">Challenges in\u00a0the\u00a0Implementation of National\u00a0Monetisation Pipeline (NMP)\u00a0and suggestions to overcome those challenges.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<h5><b><span data-contrast=\"auto\">Is asset monetization new to India?<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"auto\">Asset monetization is not a new concept in India. The\u00a0<\/span><b><span data-contrast=\"auto\">Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Sarfaresi) Act of 2002<\/span><\/b><span data-contrast=\"auto\">\u00a0introduced the concept of monetization of stressed assets to turn the illiquid ones among them fungible and create a market for non-performing assets.<\/span><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/p>\n<table style=\"width: 100%; border-collapse: collapse; background-color: #f7f2f2;\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><strong>Must Read<\/strong>: <span style=\"color: #0000ff;\"><strong><a style=\"color: #0000ff;\" href=\"https:\/\/forumias.com\/blog\/national-monetization-pipeline-explained-pointwise\/\" target=\"_blank\" rel=\"noopener\">National Monetisation Pipeline (NMP) project &#8211; Explained<\/a><\/strong><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h5><b><span data-contrast=\"auto\">Issues\/Challenges<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h5>\n<ol>\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">India\u2019s Poor record in\u00a0contract enforcement:\u00a0<\/span><\/b><span data-contrast=\"auto\">India ranks No. 163 among 190 countries on the World Bank\u2019s index for contract enforcement, and not much progress has been made on this. The case of India\u2019s insolvency code shows how weak judicial infrastructure and a poor debt market can pose a challenge to the success of a well-designed law.<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Asset recycling is not a silver bullet that always works well for the public or eases the sovereign debt<\/span><\/b><span data-contrast=\"auto\">: For instance,<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">In Chicago, the US, where 36,000 parking slots were handed over to a private consortium, asset recycling only made parking more expensive. In the case of Transport of London, which was being operated by a private operator, it had to be bailed out twice by the UK government from near bankruptcy.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Risks involved in the prescribed\u00a0modes of implementing the monetisation:\u00a0<\/span><\/b><span data-contrast=\"auto\">The main instruments proposed for implementing the NMP are public-private partnerships and a stock market-based investment trust (InvIT). Both have serious shortcomings, as experience demonstrates.<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Issues in PPP<\/span><\/b><span data-contrast=\"auto\">:<\/span><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><span data-contrast=\"auto\">PPP in infrastructure has been a financial disaster in India.\u00a0After the 2008 financial crisis, as the world economy and trade plummeted, and as India\u2019s GDP growth rate slowed down, many PPP projects failed to repay bank loans.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Issues in\u00a0Infrastructure Investment Trust (InvIT):<\/span><\/b><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">An Infrastructure Investment Trust (InvIT) is being mooted as an alternative means of raising finance from the stock market.\u00a0The\u00a0idea\u00a0is based on the\u00a0current stock market boom.<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">However, the current high stock prices seem like a bubble with heightened uncertainties in the global financial market.<\/span><span data-contrast=\"auto\">\u00a0<\/span><span data-contrast=\"auto\">With the U.S. Fed committed to reducing its assets purchase programme, it may cause financial instability.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"%1.\" data-font=\"\" data-listid=\"1\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">External Instability:<\/span><\/b><span data-contrast=\"auto\"> Rising external debt by foreign portfolio investors carries a greater risk to external instability. Foreign portfolio investment has skyrocketed by 6,800% in 2020-21, over the previous year, to $38 billion as per RBI data. This, perhaps, poses a greater financial hazard as portfolio investment is risky.<\/span><\/li>\n<\/ol>\n<h5><b><span data-contrast=\"auto\">Suggestions\/measures<\/span><\/b><span data-ccp-props=\"{&quot;201341983&quot;:0,&quot;335559685&quot;:360,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/h5>\n<ol>\n<li><b><span data-contrast=\"auto\">Asset Monetisation Plus Privatisation<\/span><\/b><span data-contrast=\"auto\">: The government could adopt both measures of selling and leasing assets, depending on the nature of each asset and also the associated risk and return, etc. The centre should retain its ownership only of those assets that have a chance of offering the Centre higher returns in the future.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Resource Mobilisation<\/span><\/b><span data-contrast=\"auto\">: Government should also cash in the other two methods of raising resources;<\/span>\n<ul>\n<li><span data-contrast=\"auto\">Setting up of a development finance institution (DFI).<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><span data-contrast=\"auto\">Raising the share of infrastructure investment in the central and State Budgets.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<\/ul>\n<\/li>\n<li><b><span data-contrast=\"auto\">Trust building measures by the government<\/span><\/b><span data-contrast=\"auto\">: In\u00a0order to make the NMP work, the government will have to make matching investments of its own\u00a0i.e.,\u00a0In\u00a0institutional and regulatory capacity.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Independent Regulators<\/span><\/b><span data-contrast=\"auto\">: If the NMP is to work, each sector in which assets are to be monetised will need an independent, empowered regulator with no connections to the bureaucracy.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}\">\u00a0<\/span><\/li>\n<li><b><span data-contrast=\"auto\">Participatory governance<\/span><\/b><span data-contrast=\"auto\">: In a democracy, policymaking must be done through public consultation. This is especially so for any project that has wide ramifications and could affect the lives of citizens at large.<\/span><\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Source:\u00a0This post is based on the following articles published on\u00a031st August 2021: Asset monetization mustn\u2019t end up as a Potemkin show &#8211; Livemint A monetization move that doesn\u2019t tick most boxes &#8211; The Hindu Making NMP work &#8211; Business standard\u00a0 Relevance:\u00a0Resource Mobilisation\u00a0 Synopsis:\u00a0Challenges in\u00a0the\u00a0Implementation of National\u00a0Monetisation Pipeline (NMP)\u00a0and suggestions to overcome those challenges.\u00a0 Is asset&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/making-nmp-work\/\">Continue reading <span class=\"screen-reader-text\">Making NMP work<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[8671,8942,8782,216,9277],"class_list":["post-130276","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-changes-in-industrial-policy","tag-fiscal-policies","tag-government-policies-and-interventions","tag-gs-paper-3","tag-national-monetisation-pipeline","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704639266},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/130276","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=130276"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/130276\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=130276"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=130276"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=130276"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}