Earlier this week, the Central government presented its ambitious asset monetization framework. The plan is one of the most aggressive frameworks by the Modi Government.
As expected, this move of the Central Government brought allegations from the opposition parties for selling off countries’ assets.
Followed by the privatization plan, asset monetization is perhaps the most ambitious plan of the Modi Government. Also, the implementation of the monetization plan will be the most challenging task for the Central Government in the upcoming years.
What is all at Stake?
Finance Minister Nirmala Sitharaman presented the plan of the Central Government to lease our public infrastructure. Things that will be rented out include roads, railway trains and stations, power transmission lines, warehouses, and sports stadiums. Apart from these, the assets in the line to be monetized include airports, urban real estate, telecom, and ports.
The asset monetization plan covers a time period of four years. It also involves leasing out 20 types of brownfield assets.
What will the Central Government get out of this plan?
From the monetization of the public assets plan, the government will get a lump sum or periodic payments. The Central Government is banking on monetizing its railway and roads assets.
Interestingly the two assets- roads and railways will be contributing to more than half the set targets from the asset monetization plan.
What is the Strategy for Criticism?
The government has taken all the necessary steps to ensure that the momentum of the monetization plan continues. It will include regular reviews by the cabinet secretary. And quarterly reviews by the FM Nirmala Sitharaman.
The Central Government has been aggressively leasing out public assets to private companies in the last few years. However, this is the most comprehensive plan to earn maximum revenues.
Sitharaman and the top officials of NITI Aayog repeatedly stressed that the government was not selling off the land or the assets. Instead, the government was leasing them with clauses of mandatory hand back mentioned in the contracts. Moreover, this move will unlock the economic value of the assets.
Also, this plan will bring in efficiency and lead to job creation in the country.
However, all this could not stop the criticism. The Opposition was fast to blame the Central Government for using this plan to favor some selected industrialists.
Congress, led by Rahul Gandhi, said that the government is gifting India’s assets built over 70 years to a few selected industrialists’ friends. Additionally, the Opposition also highlighted the negative impacts of the asset monetization plan on job creation.
What is the focus area moving forward?
For now, the Modi Government should worry about its implementation capabilities.
The monetization plan will not be just about meeting the timelines or the annual targets. The plan if not implemented properly, with safeguards will encourage crony capitalism. It will result in the concentration of India’s assets among a chosen few. Also, there could be a sharp increase in user charges for the end customers.
Hence, we understand that the government will need to ramp up its implementation and monitoring abilities.
The Modi Government will also have to ensure watertight contracts with the private sector companies. The contracts should specify the timelines with mandatory hand back of the assets policy.
Additionally, the Modi Government will have to ensure that the charges remain reasonable and affordable for everyone. Why?
Some, not well-listed infrastructures are also there.
Unlike the airports, the roads and the railways are used by everyone including the poor people. Hence, the charges imposed in terms of tolls, fares, station entry fare, and for using public services will have to be taken into consideration.
To cite another example, are the sports stadiums across the country. Leasing out sports stadiums to private companies will increase the user charges. The government will have to take necessary steps to see that the sportsperson can use the services at reasonable and affordable prices.
To summarize, the success of the asset monetization plan will not depend on the amount of money collected. But it will be whether or not the infrastructure is available. Also, if or not the infrastructure remains reasonable and affordable to the masses.
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