National Monetisation Pipeline (NMP) UPSC Notes: Achievements & Significance
IMPORTANT LINKS
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GS Paper |
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Topics for UPSC Prelims |
Asset Management, Infrastructure Development |
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Topics for UPSC Mains |
Economic Reforms in India |
About the National Monetisation Pipeline (NMP)
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Key Details on the National Monetisation Pipeline (NMP) for UPSC |
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Feature |
Details |
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Launch Year |
2021 |
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Nodal Agency |
NITI Aayog, Ministry of Finance |
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Objective |
Unlock value from underutilized public assets to generate upfront capital for infrastructure development. |
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Timeframe (Phase 1) |
FY22-FY25 |
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Target (Phase 1) |
₹6 lakh crore |
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Achievement (Phase 1 - Feb '25) |
~90% target achieved (~₹5.4 lakh crore estimated). |
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Key Sectors (Phase 1) |
Roads & Highways, Railways, Power, Coal, Telecom, Ports, Mining, Aviation, Warehousing. |
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Monetisation Models |
PPP, InvITs, ToT, Strategic Divestment, Asset Securitisation. |
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Linked to |
National Infrastructure Pipeline (NIP), PM Gati Shakti |
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Phase 2 Target (FY26-FY30) |
₹10 lakh crore (announced) |
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Key Focus (Phase 2 - Likely) |
Highways, Mining, Power, Petroleum, Metro Rail, Railway Station Commercial Space, Green Assets. |
The NMP was launched in August 2021 by the Indian government. It plans to raise ₹6 lakh crore by giving public assets to private companies between 2021 and 2025. The government has said that this money will not be raised by selling the assets. Private firms will only take the assets for a limited period of time, and then they return to the government.
These resources come from significant sectors including:
These assets are from important sectors such as:
- Roads and Highways
- Railways
- Power lines and electricity grids
- Oil and gas pipelines
- Airports and Ports
- Telecom towers and stadiums
Why was the National Monetisation Pipeline needed?
India has many public assets, but some of them are not being used properly. This means the government is not earning money from them. At the same time, the country needs more money to build new highways, bridges, and railway lines.
So, the NMP helps in two ways:
- It uses existing assets to earn money.
- It helps build new and better infrastructure using that money.
Also, private companies often bring better technology and more efficient ways of running things. This helps improve the quality of public services.
Read the article on the Asset Reconstruction Companies (ARCs)!
Significance of the NMP Scheme
The NMP has many benefits:
- More money for development: The government earns money from assets without selling them.
- Better infrastructure: The money earned is used to build new roads, railway lines, ports, and more.
- Private sector help: Private companies can run things more smoothly and bring new ideas.
- Job creation: More development means more jobs for people in different sectors.
- Focus on core governance: The government can focus on making rules and policies instead of running businesses.
Read the article on the Non-Performing Assets!
Achievements of the National Monetisation Pipeline
The key achievements of the NMP are as follows:
- Approximately 90% of the ₹6 lakh crore target for the first phase is reported to have been achieved by February 2025. ₹3.85 lakh crore was monetised in the first three years alone.
- Roads and Highways and Coal sectors have been the frontrunners. They have contributed substantially to the overall monetisation value.
- The NMP has successfully attracted private sector investment in various infrastructure assets through different models like PPP, InvITs, and ToT.
- It has created investment opportunities for long-term institutional investors in infrastructure asset management.
- The NMP is closely linked with the National Infrastructure Pipeline (NIP) and the PM Gati Shakti initiative. This helps support the overall infrastructure development strategy of the country.
- The experience and learnings from the first phase have paved the way for a more ambitious second phase (NMP 2.0) with a target of ₹10 lakh crore.
Read the article on the Investment Models in India!
Challenges of the National Monetisation Pipeline
Even though the NMP is a smart plan, it also faces some problems:
- Fear of price hikes: People worry that private companies may increase prices for using roads or services.
- Trust issues: Some people think public assets should not be run by private firms.
- Limited investor interest: Not all companies want to invest in old or poorly maintained assets.
- Complex rules: Legal and policy rules can be difficult for companies to follow.
- State-level hurdles: Some state governments are not very keen to join the NMP due to political reasons.
These challenges need to be handled carefully to keep the program successful.
Read the article on the India Infrastructure Project Development Fund (IIPDF)!
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National Monetization Pipeline UPSC FAQs
What is the full form of NMP?
The full form of NMP is the National Monetisation Pipeline.
What is the NMP scheme?
The NMP is a government plan to lease public assets like roads and airports to private companies to raise money for building new infrastructure.
What is the Asset Monetisation Plan?
An Asset Monetisation Plan is a strategy to use government-owned assets to earn money by leasing them, without selling them.
Give an account of monetisation in India.
Monetisation in India means earning money by renting out government assets to private companies. The money earned is used for development.
How is NMP different from privatization?
In NMP, assets are leased for a few years but ownership stays with the government. In privatization, ownership is fully transferred to private companies.
Who manages the NMP in India?
The NMP is managed by the NITI Aayog along with different ministries like Road Transport, Railways, Power, and others.