Source: This post is based on the article “The truth about asset monetisation” published in Indian Express on 1st September 2021.
Relevance: Resource mobilisation and Investment in Infrastructure
Synopsis: Criticism of the government’s plans to lease out assets to private players, raise resources for public investment, is baseless.
Criticism of NMP is baseless
Arguments have been offered against the criticism of asset monetisation.
- On crony capitalism: Assets under the National Monetisation Pipeline (NMP) project are going to be leased out to private partners through an open and transparent bidding process on terms that more than safeguard the public interest.
- Ensures Public participation: The Infrastructure Investment Trusts (InvIT) and Real Estate Investment Trusts (REIT), are like mutual funds, pool investments, which then flow to infrastructure and real estate. This will allow the people of India and prominent financial investors to invest in our national assets. Some InvITs and REITs are already listed on stock markets.
- On anti-competitive practices: India has institutions that deal with issues related to uncompetitive practices. There are sector specific regulators. For instance, the Competition Commission of India, consumer courts. All of these have the authority, quite independent of the Government of India, to come down heavily on any anti-competitive practices.
- On Monopoly: The government is also committed to market competition and will design processes in a way that minimize the probability of any concentration of market power. In some areas, like Railway tracks, where there is a natural monopoly, there will be no asset monetisation.
- Generates Positive multiplier effect: In addition to an increase in jobs in the assets being monetised, an entirely new set of jobs will be created when the government reinvests its revenue proceeds.
- On lack of public consultation: The asset monetisation was announced several months ago in the Union Budget in February 2021. Several rounds of webinars and national-level consultations were also organised.