Explained | The Centre#39;s Rs 2.5 lakh crore asset monetisation policy

PM Narendra Modi with FM Nirmala Sitharaman (Image: PTI)

PM Narendra Modi with FM Nirmala Sitharaman (Image: PTI)

After years of false starts — the latest due to the Covid-19 pandemic in 2020, the Narendra Modi government has made privatisation and asset monetisation cornerstones of its economic agenda. The government’s plans for privatisation, which include marquee names Air India and Bharat Petroleum, are well known.

However, since 2018-19, plans to monetise the assets of the government and PSUs across the board, from key gas pipelines, power transmission lines and sports stadia to office spaces, land and apartments deemed surplus to requirements, have been taking shape. They were finally spelt out by Finance Minister Nirmala Sitharaman in her 2021-22 Union Budget

“Monetising operating public infrastructure assets is a very important financing option for new infrastructure construction. A “National Monetisation Pipeline” of potential brownfield infrastructure assets will be launched. An Asset Monetisation dashboard will also be created for tracking the progress and to provide visibility to investors,” she had said.

Later in February, Prime Minister Narendra Modi had said that the plan is to monetise 100 government and PSU-owned assets worth a Rs 2.5 trillion ‘investment opportunity’.

Modi said the government has no business to be in business, but to focus on development projects. “When the government engages in business it leads to losses. The government is bound by rules and lack of courage to take bold commercial decisions.” Modi made his stance clear.

While there are still some strands to be tied and names of a number of prospective assets are being drawn up, the government already has a lot to go on.

Under the ‘National Asset Monetisation Policy’, the assets identified so far can be broadly divided into two categories: Core or Productive Assets, and Non-Core Assets. It should be remembered that the asset monetisation pipeline is not bound by yearly targets, and the assets named below (and those that will follow) will ensure that asset monetisation remains a key plank of divestment over the next few years.

Core Assets

These include some of the centre’s prominent ‘blue-chip’ assets, including Hotel Ashok in the heart of New Delhi, sports assets such as Jawaharlal Nehru Stadium and Major Dhyanchand National Stadium, highway operational toll roads, power transmission assets, oil and gas pipelines, airports in tier II and III cities, telecom assets and warehousing assets.

The railways will also monetise Dedicated Freight Corridor assets, including time slots, and may also monetise heritage railway lines like the Darjeeling Railway and Kalka-Shimla Railway.

In the case of core assets, one thing is clear: There will be no outright sale, a top official told Moneycontrol. Instead, there are various models being planned based on the assets up for monetisation.

“In the case of assets with operational revenue streams, an InVIT is the most likely route we will use to monetise,” the official said.  InVIT stands for infrastructure investment trust, a collective investment scheme similar to a mutual fund, which enables direct investment of money from individual and institutional investors in infrastructure projects to earn a small portion of the income as return.

These assets will include gas pipelines, power transmission assets, telecom towers and others. The NHAI has already monetised road assets through the Toll-Operate-Transfer (TOT) model, and as per Sitharaman, the highway agency and Power Grid each have sponsored one InvIT.

“Five operational roads with an estimated enterprise value of Rs 5,000 crore are being transferred to the NHAI InvIT. Similarly, transmission assets of a value of Rs 7,000 crore will be transferred to the PGCIL InvIT,” she had said.

Among the other assets to be monetised through the InVIT route in 2021-22, the first ones could be the telecom towers and other assets of MTNL and BSNL.

For the assets in which revenue streams have to developed and augmented further, the route of choice will be a long-term lease and revenue sharing agreement with a private party. Take for example, Hotel Ashok, which is a prime property in the heart of Lutyens’ Delhi.

“In the case of Ashok, a long term lease is being considered where the land will remain with the government and the hotel will be operated by a private player who will also be tasked with revamping the facilities of the hotel to maximise revenue opportunities. The revenue earned will be shared with the government,” said the official, who is deeply involved in various asset monetisation plans.

Something similar could happen in case of assets such as the JLN stadium. A private sector entity may be handed over the facilities on a long-term lease and then be tasked with maximising revenue streams by attracting more sports tournaments, concerts and other such events, with the proceeds shared with the government.


Most of these plans are at quite a mature stage and in fact the centre is confident that some power, telecom, oil and gas, road and rail assets, and Hotel Ashok can be on the way to monetisation in 2021-22. The proceeds from most of these assets will be used for the centre’s and PSUs’ capex needs, rather than be counted as part of divestment proceedings.

Non-Core Assets

These are assets deemed surplus to requirements and for the most part consist of land, office space, factories, commercial spaces, apartments and properties belonging to the railways, defence and a number of PSUs.

Some of these assets could be earmarked for outright sale and hence be counted as part of divestment proceedings. In other cases, there are options of a REIT, long-term lease, or various development models.

“In the case of non-core assets there is a possibility of different models. If you have a big patch of land, it is not necessary that you have to sell it outright. You can lease it, you can also develop it into a commercial, residential or mixed space and then earn revenues from the development,” the official said.

As the list above indicates, there are a number of PSUs with huge tracts of land and idle office spaces and other facilities. Most of these are sick or loss-making PSUs meant for sale or closure.

These are just the proverbial tip of the iceberg as they do not include the two biggest landholders: railways and defence.

The official said that while discussions with the Defence Ministry are ongoing, the Railways Ministry has decided to monetise a number of land tracts.

The Department of Investment and Public Asset Management has already started the process of selling non-core assets of HMT Ltd and BSNL Ltd.

All in all, these plans combined, and the ones yet to be formulated, clearly show the direction the Modi government wants to take. The centre is clear that it has no business being in business, except certain key sectors, and that the vast assets at its disposal can be better utilised through the monetisation policy. Do watch this space over the coming months.