DAILY NEWS ANALYSIS

GS-III : Economic Issues Economic reforms

10 December, 2021
12 Min Read

National Monetization Pipeline

In the Union Budget 2021-22, the Finance Minister announced the National Monetization Pipeline.
The National Monetisation Pipeline comprises a four-year pipeline of the Central Government's brownfield infrastructure assets.
The Union Finance Minister announced launch of a “National Monetization Pipeline” of potential brownfield infrastructure assets stating that Monetizing operating public infrastructure assets is a very important financing option for new infrastructure construction.
As part of the National Monetization pipeline, assets created by PSUs such as NHAI, PGCIL, Railways etc. would be sold and money raised would then be used for the creation of new infrastructure assets.
Presently, we have around 2 publically listed InVITs ( IRB InVIT and India Grid) both of which have been sponsored by private companies. Now, the PGCIL has become the first PSU in India to sponsor its own InVIT to monetize its assets.
The Minister informed that an Asset Monetization dashboard will also be created for tracking the progress and to provide visibility to investors.
The National Monetisation Pipeline will serve as a medium-term roadmap for the Asset Monetisation initiative of Centre, besides providing visibility to the investors.

Some important measures in the direction of monetisation are as follows:

National Highways Authority of India and PGCIL each have sponsored one InvIT that will attract international and domestic institutional investors. Five operational roads with an estimated enterprise value of Rs.5,000 crore are being transferred to the NHAIInvIT. Similarly, transmission assets of a value of Rs. 7,000 crores will be transferred to the PGCILInvIT.
Railways will monetize Dedicated Freight Corridor assets for operations and maintenance, after commissioning.
The next lot of Airports will be monetised for operations and management concession.
Other core infrastructure assets that will be rolled out under the Asset Monetization Programme are:

NHAI Operational Toll Roads
Transmission Assets of PGCIL
Oil and Gas Pipelines of GAIL, IOCL and HPCL
AAI Airports in Tier II and III cities,
Other Railway Infrastructure Assets
Warehousing Assets of CPSEs such as Central Warehousing Corporation and NAFED among others and
Sports Stadiums.

Infrastructure Investment Trust (InvITs)

Infrastructure and real estate are the two most critical sectors in any developing economy. A well-developed infrastructural set-up propels the overall development of a country. It also facilitates a steady inflow of private and foreign investments, and thereby augments the capital base available for the growth of key sectors in an economy, as well as its own growth, in a sustained manner.
Given the importance of these two sectors in the country and the paucity of public funds available to stimulate their growth, it is imperative that additional channels of financing are put in place.
An Infrastructure Investment Trust (InvITs) is a Collective Investment Scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as a return.
The InvIT is designed as a tiered structure with the Sponsor setting up the InvIT which in turn invests into the eligible infrastructure projects either directly or via special purpose vehicles (SPVs).
The InvITs are regulated by the SEBI (Infrastructure Investment Trusts) Regulations, 2014.

Source: PIB

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National Monetization Pipeline

National Monetization Pipeline

Some important measures in the direction of monetisation are as follows:

Infrastructure Investment Trust (InvITs)

India–Azerbaijan

India–Australia Economic Cooperation and Trade Agreem

ADR Report on Political Funding

Maritime Chokepoints

US-Israel-Iran War

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