The government’s core group on asset monetisation has expressed concerns regarding the slow progress in monetising public assets across various ministries. Key sectors such as railways, tourism, telecom, and petroleum have been brought into light for failing to meet their targets. This scrutiny comes as part of a broader initiative to enhance government revenue and address the financial challenges faced by public sector undertakings (PSUs).
Current Context of Asset Monetisation
The asset monetisation initiative aims to generate funds for the government by leveraging public properties and infrastructure. However, recent evaluations reveal delays and inadequate performance in achieving set targets. The Cabinet Secretary TV Somanathan leads a high-level panel overseeing these efforts, which has been critical of several ministries.
Railways Performance Issues
The railways sector has faced particular criticism for its lack of progress in monetising key assets such as stations and freight terminals. Despite a target of Rs 1.7 trillion, the Railway Board Chairman requested a reduction to Rs 1 trillion, which was firmly rejected by the panel. Officials have been urged to devise innovative solutions to meet the original target.
Tourism Sector Challenges
The tourism department’s progress has also been deemed ‘very slow’, particularly concerning the Ashok Hotel transaction. The government has emphasised the need for a more aggressive approach to asset monetisation in the tourism sector to unlock potential revenue.
Telecom Department Scrutiny
The Department of Telecommunications (DoT) has come under fire for abandoning plans to monetise BSNL’s telecom towers. Officials were reminded that government funding alone cannot sustain the PSU’s debt obligations. The panel has urged the DoT to revive and expedite monetisation plans.
Petroleum Ministry’s Revitalisation Efforts
The petroleum ministry has been instructed to revisit its plans for monetising the gas pipeline network. A target of Rs 30,000 crore has been set for the next cycle, reflecting the government’s commitment to maximising revenue from public assets in this sector.
Urban Land Monetisation Concerns
The housing and urban affairs ministry has faced criticism for setting a low target of Rs 5,000 crore for land monetisation in the capital. The focus has shifted to selling properties to PSUs, with reliance on the National Buildings Construction Corporation (NBCC) for transactions.
Highway Monetisation Targets Increased
The road transport ministry has received a new target of monetising 35,000 km of highways, aiming to raise Rs 3.5 trillion. This new target represents increase from previous goals. However, the ministry has halted the bidding process for Toll-Operate-Transfer (TOT) projects to conduct a detailed analysis of monetisation models.
Future Directions for Asset Monetisation
The government is exploring new approaches to asset monetisation, including potential changes to tolling rights and securitisation of toll receivables. NHAI has been tasked with formulating a new scheme to enhance monetisation efforts and submit a report within a month.
Questions for UPSC:
- Critically discuss the impact of asset monetisation on public sector undertakings in India.
- Examine the challenges faced by the railways and tourism sectors in meeting monetisation targets.
- Analyse the role of the government in facilitating successful asset monetisation strategies.
- Estimate the potential revenue generation from highway monetisation initiatives in India.
Answer Hints:
1. Critically discuss the impact of asset monetisation on public sector undertakings in India.
- Asset monetisation aims to alleviate the financial burden on PSUs by generating revenue from underutilized assets.
- It can help reduce the debt obligations of PSUs, providing them with more operational flexibility.
- Potential risks include loss of control over strategic assets and reduced public service capabilities.
- Success in monetisation can lead to improved infrastructure and economic growth, benefiting the overall economy.
- Challenges include bureaucratic delays and resistance from stakeholders within the PSUs.
2. Examine the challenges faced by the railways and tourism sectors in meeting monetisation targets.
- The railways sector struggles with outdated infrastructure and a lack of innovative monetisation strategies.
- There is resistance to change and a lack of urgency in executing monetisation plans, as seen in the Ashok Hotel transaction.
- Regulatory hurdles and bureaucratic red tape can impede progress in asset sales and leases.
- Inadequate market research and assessment of asset value can lead to unrealistic targets and expectations.
- Coordination issues among various government departments complicate the monetisation process.
3. Analyse the role of the government in facilitating successful asset monetisation strategies.
- The government sets clear targets and guidelines for asset monetisation to ensure accountability among ministries.
- It can provide financial and technical support to streamline the monetisation process.
- Establishing a high-level panel, as led by Cabinet Secretary TV Somanathan, ensures oversight and direction.
- Government can incentivize innovative solutions and best practices from the private sector to enhance monetisation efforts.
- It must address regulatory and procedural bottlenecks that hinder asset sales and leases.
4. Estimate the potential revenue generation from highway monetisation initiatives in India.
- The new target of Rs 3.5 trillion from 35,000 km of highways indicates revenue potential.
- Highway monetisation can improve infrastructure quality and boost economic activity, leading to indirect revenue gains.
- Past models like Toll-Operate-Transfer (TOT) have shown that monetisation can yield substantial returns.
- Innovative approaches such as securitisation of toll receivables can further enhance revenue generation.
- Successful highway monetisation can attract private investment, increasing overall funding for infrastructure projects.
