Monetise assets, the right way
Be pragmatic, ensure transparency, grant autonomy and focus on the details
The announcement of a national asset monetisation plan, where ₹6 lakh crore of government assets across sectors such as roads, railways, power, aviation, sports infrastructure, shipping, telecom, and housing will be monetised over four years is welcome; the target for this year is ₹88,000 crore. It could, if implemented well, optimise the utilisation of assets, ensure their maintenance, provide a high level and quality of service, improve efficiencies of operation, and generate employment. And it will also free up the government’s resources for social sector spending. By structuring the exercise as a partnership, and not divestment or privatisation, and by emphasising that the asset is not being sold, and no land is being transferred — land is the most political of issues in the country — the government has given the exercise a chance to succeed.
But the extent of this success will depend on four factors. One, pragmatism. The government has to value the assets fairly (not exorbitantly) and moderate its expectations, at least for the initial tranche of assets involved. Learnings from similar, but smaller, exercises in the past, including public private partnerships, indicate that valuation can make or break. Unfortunately, in the past, it has often been the latter. Two, regulation and regulators. Many of the assets being monetised are in sectors where the State still has a dominant presence (or where it has had one until now). The regulatory regime in place, as well as the transparency, impartiality, and autonomy with which the sector’s regulator operates could either help licensees or concessionaires meet the objectives of the exercise or create a policy and legal quagmire.
Three, the autonomy granted to the licensees and concessionaires to operate the asset, and manage unions (where these are involved) on their terms. The fact that the assets involve high public-interface ones such as airports and railway stations and sports stadium, or those in politically sensitive ones such as coal mining and telecommunications, will make it difficult for the government to adopt a hands-off approach (but it must). Four, the ability of the government’s think-tank Niti Aayog to “handhold ministries” through this process, as described by the body’s chief executive officer, and the speed with which it and the ministries can finalise and formalise the fine print for the asset monetisation. With seven months remaining this financial year, a stiff target to meet, and a diverse and wide portfolio of assets across ministries, what is now needed is a proper and detailed operational plan.