National Asset Monetisation Pipeline (NMP) 2.0

The Union government has launched the second iteration of the National Asset Monetisation Pipeline (NMP), designed by NITI Aayog in collaboration with various ministries. This initiative aims to recycle considerable public assets.

Investment Potential

• Investment Mobilisation: ₹16.72 trillion potential, with ₹6 trillion linked to private capital expenditure.
• Comparison to NMP 1.0: The first version mobilised ₹5.3 trillion, achieving 90% of its target.

Rationale and Benefits

• Fiscal Constraints: The Union finance ministry views asset monetisation as crucial for reducing the debt-to-GDP ratio.
• Public-Sector Capital Expenditure: Historically relied upon by the government, but showing signs of slowing despite an 11% increase in the 2026-27 budget.
• Attracting Long-Tenure Financing: Unlike market borrowing, asset monetisation can attract insurance finance and sovereign wealth funds through predictable revenue streams like toll revenue.

Strategic Goals

• Market Discipline and Efficiency: Aims to enhance productivity and output by exposing public sector assets to market needs.
• Blending Public and Private Capital: The initiative seeks to combine public and private investments to enhance asset productivity.
• Potential for Upgrades: Private operators might invest in smart grids or predictive highway maintenance, improving yields significantly.

Challenges and Considerations

• Trust Issues: The Indian state, including regulatory systems, is not fully trusted by investors due to past contract reversals.
• Efficiency Boosts: Piecemeal cooperation may raise revenue but lacks the efficiency of full privatisation.
• Privatisation Debate: The government has mostly abandoned full privatisation except for notable cases like Air India. It is suggested to reconsider this strategy.