The National Monetisation Pipeline (NMP) is a Government of India initiative. It is a program for monetizing underutilized public sector assets by leasing them to private parties. The NMP, which was launched in August 2021, presents a four-year roadmap (FY 2022-2025) for monetization of core infrastructure sectors' assets. This includes roads, railways, power, oil and gas pipelines, telecom, and civil aviation. The objective is to generate approximately ₹6 lakh crore, which will be reinvested into new infrastructure projects.

The National Monetisation Pipeline is important for UPSC General Studies Paper 3. This paper includes topics like the Indian economy, development, infrastructure, and investment models. Questions related to NMP may be asked in both UPSC Prelims and Mains exams.

Download the UPSC Practice Questions on the National Monetisation Pipeline for Prelims & Mains!

Latest Updates on the National Monetisation Pipeline

• First Phase (FY22-FY25) Nearing Completion: The initial four-year NMP, aiming to generate ₹6 lakh crore, is concluding in March 2025.
• Achievement of Targets: By February 2025, about 90% of the first phase target was reportedly achieved, with ₹3.85 lakh crore monetised in the first three years (FY22-FY24). The FY25 target was ₹1.9 trillion.
• Sector-wise Performance: Roads and Highways and Coal have been the top performers. Railways lagged initially but is expected to see increased monetisation in the near future through commercial leasing.
• National Monetisation Pipeline 2.0: The government has announced the second phase of NMP for FY26 to FY30, with a significantly higher target of ₹10 lakh crore.
• Focus Areas for NMP 2.0: This stage is expected to emphasize highways, mining, power, and petroleum, but will include the metro rail networks and commercial leasing of railway station areas. Green asset monetisation will also be a high priority.

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)!

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)!

Enhance your UPSC preparation with the Testbook App now!