Budget 2023: Asset Monetisation May Determine Budgetary Support To Infrastructure, Says Report

As some Central ministries are lagging in leveraging asset monetisation, a new approach may be considered to fund their investment needs.

The Union Finance Ministry may link budgetary support to infrastructure ministries with the performance of their asset monetisation in Budget 2023-24, which will be presented by Nirmala Sitharaman on February 1, according to a report in Mint. The report cited two government officials aware of the matter as saying that the plan was being prepared by the ministry’s Department of Expenditure. 

A senior finance ministry official told Mint, “Performance in asset monetization will be one of the factors taken into account in determining budgetary support to infrastructure ministries.” 

This comes as the Central government is likely to miss its National Monetisation Pipeline (NMP) target for this year. In this fiscal, transactions of Rs 33,100 crore have been completed under the NMP so far, with an eventual total of Rs 1.24 trillion expected to be achieved by March-end, according to the report.

As of now, proposals worth Rs 1.36 trillion are under various stages of implementation. For this fiscal year, government has targeted Rs 1.62 trillion under its National Monetisation Pipeline (NMP). 

In the last fiscal year, transactions worth Rs 96,000 crore under the NMP were completed, exceeding the target of Rs 88,000 crore. 

The National Monetisation Pipeline was announced in the FY22 budget. It has been designed for a dozen ministries and is spread across 20 asset classes. As some ministries are lagging in leveraging asset monetisation, a new approach may be considered to fund their investment needs.

One of the officials told Mint, “By the current performance, the annual transaction under NMP for the current financial year will be lower than the target.” 

Asset monetization was identified as one of the three pillars for enhanced and sustainable infrastructure financing in the country in the FY22 Budget. The NMP is expected to raise Rs 6 trillion by FY25 from leasing out public assets in sectors such as roads, airports, railways, mining, telecom, and housing. This will contribute towards the National Infrastructure Pipeline (NIP) which has a projected infrastructure investment of around Rs 111 trillion by 2025.