Under the NMP, the central government plans to monetise Rs 6 lakh crore worth of state-owned assets over the next four years, i.e. 2022 to 2025.
The Congress-led Opposition has renewed its attack on the Narendra Modi government over its newly launched National Monetisation Pipeline (NMP), saying the asset monetisation plan was aimed at creating monopolies in key sectors.
Before we move forward to discuss the Opposition’s motive behind opposing the government’s move and what the government aims to get out of it, let us first take a brief overview of what is the ambitious medium-term National Monetisation Pipeline.
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Under the NMP, which was announced in the Union Budget 2021-22, the central government plans to monetise Rs 6 lakh crore worth of state-owned assets over the next four years, i.e. 2022 to 2025.
During this period, the government plans to offer existing assets across sectors to private players to generate additional revenue, and at the same time to maintain and manage the assets in a professional manner.
The top three sectors by value identified for asset monetisation include roads, railways, and power with a respective share of 27 per cent, 25 per cent, and 15 per cent in the total assets value.
Among the projects the government has identified are 26,700 km of roads across 22 stretches, 400 railway stations, 90 passenger trains, 28,600 km of transmission lines, Bharatnet fibre network, and BSNL and MTNL towers.
The government has stressed that these are brownfield assets, which have been “de-risked” from executive risks, and therefore should encourage private investment.
In all the cases, the private sector will only be allowed to use the government resources for a specified period of time while the ownership will remain in the government’s hands.
Finance Minister Nirmala Sitharaman said the end objective of this initiative is to enable “infrastructure creation through monetisation” wherein the public and private sector collaborate, each excelling in their core areas of competence, so as to deliver socio-economic growth and quality of life to the country’s citizens.
Congress, TMC say scheme akin to sell-off
The Congress has alleged that the asset monetisation plan was aimed at creating monopolies in key sectors.
Speaking to FinancialExpress.com, Congress spokesperson Anshul Avijit said that the NPM was another move by the government to sell-off the strategic assets of the country in a “mindless and arbitrary way”.
“First of all it’s the monopolistic tendencies that might arise from it because there is no regulatory mechanism that has been set up. And then, how Mr Chidambaram described it’s a grand closing down sale. You are gradually selling off bit by bit parts of the country because of your inefficiency. One is not against the private sector because the Congress always had the concept of a mixed economy anyway but we have never let go of our strategic assets in this mindless and arbitrary way,” Anshul said.
“Everything is wrong about this (NPM). The primary thing is who has in the private sector the money to invest, except the 4-5 large companies because anyway the private sector is deleveraging at the moment. Where is the demand increasing? They are busy making their balance sheets stronger, so they have no money,” he added
Earlier, Congress leader Rahul Gandhi tried to counter an allegation often levelled by the BJP that the Congress has not done enough for the country during the 70 years since Independence when it was in power. “BJP says nothing happened in India for 70 years, but now all assets created in 70 years are being sold,” he said.
Meanwhile, the Trinamool Congress said the NPM was a dangerous bid by the “bankrupt” Narendra Modi government to raise money by gradually handing over sectors such as rail, road, airport, and mining to corporations.
TMC’s deputy leader in the Rajya Sabha, Sukhendu Sekhar Roy, told reporters that the National Monetisation Pipeline was an “unprecedented anti-people move” that did not figure in the BJP’s election manifesto for the 2019 Lok Sabha polls. It was also not discussed in Parliament, added Roy, who is the TMC’s chief whip in the Upper House.
Why the Opposition’s charge is abortive
Speaking to FinancialExpress.com. political strategist and commentator Amitabh Tiwari said that the Opposition criticising the move will hardly have any impact on the government since the NPM is a complex thing which is not understood by many.
“The NPM is not an easy concept like price rise or unemployment which many people will understand, so obviously it will not yield much electoral mileage to any party, neither the ruling nor the Opposition. Some middle-class people who understand the complexities of this will feel that the government is serious towards exploring avenues to get maximum revenues at a time when COVID has devastated the economy,” said Tiwari.
“Even the people who understand and appreciate it, the fact is that the amount of Rs 6 lakh crore is very low, or Rs 1.5L crore per year, against the annual budget of Rs 35 lakh crore. So, it is not something which is like a pathbreaking move which can take India out of poverty. Plus, all of this is dependent on how the private players see this and whether they actually agree with the valuation which the government has put forth,” he added.
He may have a point. Over the past few days, the Opposition has failed to corner the government over issues which are actually relevant to the masses. By focussing on issues which a majority of the people are not aware of, such as the Pegasus case or the Rafale deal or the NMP, Congress leader Rahul Gandhi is reinforcing the notion that he is a leader who does not voice issues close to the people. Issues such as price rise, unemployment, and farm distress, have a greater connection with the people.
Tiwari says that Gandhi’s charge of the Modi government selling India’s ‘strategic assets’ to crony ‘friends’ is purely rhetoric — and it will be hard for such allegations to stick on a government headed by Prime Minister Narendra Modi, who has built the image of a leader who is fighting corruption.
The implementation of the NMP might turn out to be a tightrope walk for the government owing to the several hurdles that await. These include lack of identifiable revenues streams in various assets, level of capacity utilisation in gas and petroleum pipeline networks, dispute resolution mechanism, regulated tariffs in power sector assets, and low interest among investors in national highways below four lanes.
The slow pace of privatisation in government companies including Air India and BPCL, and less-than-encouraging bids in the recently launched PPP initiative in trains, indicate that attracting private investors’ interest is not that easy.