National Monetization Pipeline: Monetization or Privatization?

On Monday 23 August 2021, Finance Minister Nirmala Sitharaman launched the National Monetization Pipeline(NMP). As we discussed in the earlier article that what is the meaning of NMP and how it will work? But in this article, we will take some new factors into account and look about will it going to be successful or will prove a failure?

National Monetization Pipeline

Monetize but not Privatize

In the NMP the government is not selling anything to any private party so it makes sense that the government is not privatizing anything but under NMP, the government will unlock the value of the country’s Assets across various sectors like Power, railways, road, etc. by leasing it to the private parties. And will monetize the Assets with private participation. This will not include the selling of lands.

What and why it’s happening?

The answer of What is simple that the government will provide the assets to the private parties on a long-term lease of about 20, 30, or 40 years. And they have to pay for it. And the answer to the Why is that today the investment has failed to take off the fascial years. And it’s a major concern. So let’s go in deep into this whole concept.

How the NMP is different from Privatization?

Initially in the article, I have already told you the basic difference of how this NMP is for only monetization, not privatization but how? And how will the private parties act on this when the asset will come under them. I am considering two examples to make it clear.


Suppose a road from Delhi to Mumbai will be leased to an “X”(can be any private party) by the government for 20 years. Then all the tolls across that road will come under that X party. And the profit or the money coming from the tolls will be gained by the X for 20 years. X has to pay just a specific amount to the government for 20 years.

Transmission lines

The transmission lines of about 28,000 KM will be leased. There are 13,567 towers of BSNL and 1,350 towers of MTNL for leasing. The total value of the towers is 8,800 Crores. And the Public sector undertaking(PSUs) jointly owns 69,047 mobile towers. So we can imagine the amount. This will maybe take by Jio or Airtel.

Center is encouraging the states

The central government is encouraging the state to make their asset to be the part of NMP. They are also providing incentives which show that the government is very serious this time.

100% Incentive

If the state takes part in the monetization plan and divests its stakes in PSUs then the central government will provide 100% matching value to the state government as an incentive. An amount of five thousand crores are already aside by the central government.

One more step forward

On the off chance if the state lists the PSUs in the stock markets, then the central government will provide it 50% of the amount raised through the listing. This will make a transparency of all the values between the public and the government.

After this, if the state monetizes its assets then it will also receive 33% of the amount raised from the monetization, from the central government.

Where will the money use?

It is promised by the government that money garnered from the National Monetization Pipeline(NMP) will not be used in the populist project or for an election campaigning.

The Money will be used in the National Infrastructure Pipeline which is about a 100 lakh crore Project. So, in short, the money will be used in the development of the Infrastructure of our Country, and it’s a very good idea. As if a country wants development and growth then it has to build its infrastructure strong.

And when the NMP money will invest in National Infrastructure Pipeline(NIP) then it will make our infrastructure double and triple. And this is the best part of NMP. No doubt the concept of NMP is very good to take the infrastructure investment in India forward.

Challenges for NMP

Six lakh crore is a very huge amount and the question raises that in reality will we get 6 lakh crores or not? We can only make predictions on the future of the NMP but taking the past into account the government lacks the trust of people on behalf of previous disinvestment plans.

Lack of trust

A few years ago when the Indian railway privatization was implemented then we all know that it proved a failure for the government. And the railway ran into losses because the initial laying of the track was not properly planned, leaving large tracks redundant and the system was unable to compete. And this showed that the past derivative of the same concept hasn’t worked.

What’s the point?

Let me remind you that we are talking about thousands of crores and there are still some questions like which private parties would be interested and how would it work? Who will make such a big investment in this and still not own the assets? As the government earlier mentioned that they are on lease the ownership will always remain under the government. The private sector will invest, operate, provide resources, and take risks but still will not own it.

The Past of Implementation

I repeat the concept of NMP is very good but what about the implementation. We know the articulation matters but the thing matter more is implementation. The idea of GST and MAKE IN INDIA was also good or can say masterstroke (as everyone was saying) but as we all are witnesses that the implementation was a failure.

And in this case of asset monetization under NMP, there must be a need for an independent regulator. But as the past highlight, the government always interfere and ignore the Independent regulators. And the nature of not taking any kind of back off on any issue is a bold concern.

It would be significant for the government to get the initial not many activities in every area right to set the ball moving in the correct way. The smooth execution of the initial 10,000 crores will decide the destiny of the 6 trillion adaptation plan.

Also read:

National Monetisation Pipeline to raise Rs 6 lakh crore

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