Big-bang plan to monetise govt assets, but will it work?
The Union government has announced another big-bang plan to raise and spend money on key infrastructure projects. Over the next four years, a pipeline of sarkari assets will be monetised to generate as much as Rs 6 lakh crore. Over 60% of the funds will come from assets belonging to the roads, railways and power sector, but the National Monetisation Plan (NMP) covers as many as 20 different asset classes and 12 ministries. On the face of it, this is a good option for a cash-strapped government to fund the infrastructure sector. The Centre says it is not just about funds, but is also to rope in partners to make existing government assets work efficiently and to enhance value.
This is not a new idea. For decades, there has been experimentation with monetising government assets, with mixed results. The railways in Mumbai have allowed for technology parks above stations in Navi Mumbai; development rights for municipal bus yards have been sold to builders. The government, however, is keen to emphasise it is not selling off the family jewels. The two important restrictions underlined are: one, the ownership of the assets will remain with the government. Two, only the existing brownfield projects are part of the monetisation plan and will be handed back, after the contracted lease period is over.
To make government assets work at their most efficient levels is a good perspective, but a lot depends on how well the monetisation plan has been drawn up. If it’s a general vision without detailed targets, it will be another road to failure paved with good intentions. It is indeed laudable that Union Finance Minister Nirmala Sitharaman has ruled out monetising land as an asset. Hopefully this will keep the sharks out. However, there are numerous imponderables: the actual worth of government assets will only be known after due diligence and market valuation. Second, legal disputes and bottlenecks created by competing government departments paralyse plans. Four years is a long time and the record of the government in similar schemes is not exactly shining. The jury therefore is still out on whether it will work.