Asset monetisation to have enhanced CapEx spending with multiplier impact

The Union government has launched the much-awaited National Asset Monetisation Pipeline. It has listed out a four-year-long strategy that aims to enrich the government exchequer by as much as Rs 6 lakh crore.

Roads, railways and power have been identified as the top 3 sectors for monetisation, while the list includes about 20 sectors. The proceeds will be used for infrastructure development.
The government, however, made it clear that there would be no transfer of ownership from government hands and stressed that monetised assets needed to be mandatorily handed back to the government.

The government also asserted that this is not a fire sale and they will derive fair value for each asset. The centre is looking at raising up to Rs 88,000 crore this fiscal.

In an exclusive interview to Shereen Bhan, Amitabh Kant, CEO of Niti Aayog said the objective of asset monetisation is to have enhanced CAPEX spending with multiplier impact on growth, employment as well as revive credit flows.

“Objective of asset monetisation is to have enhanced CAPEX spending and also have a multiplier impact on growth, employment and revive credit flows. Government assets can be better operated and maintained by the private sector when they take it. While the ownership of assets remains with government, these are structured contractual partnerships over a long period. Secondly, they are brownfield de-risked assets. Also since the revenue streams are already coming in, the private sector is keen to come in.”

He said Niti Aayog will provide all the hand-holding support as the line ministries drive the entire process.

“While the ministries will drive this, Niti Aayog will provide all the hand-holding support. We will drive the ministries vigorously and ensure that this is constantly reviewed at the highest levels.”

The leasing period will differ from asset to asset. The government wants to ensure it is a win-win for all, Kant said.

“Leasing period is a function of asset by asset. For roads 30 years is fine but airports may require longer-term because you need fresh investment in many of these infrastructures. So that is a function of the inputs that we receive from the transaction advisor. We want to ensure that it is a win-win, the private sector must invest and must be able to raise credit. If we are not able to give a viable long term period private sector will not invest, banks will not lend them. The objective is that there should be a multiplier impact on growth and revival of credit flows.” CNBC