National Monetisation Pipeline 2.0

National Monetisation Pipeline 2.0 (NMP 2.0) has been launched as a strategic push towards sustainable infrastructure financing. Read here to learn more.

The Union Minister for Finance and Corporate Affairs has launched the National Monetisation Pipeline 2.0 (NMP 2.0), developed by NITI Aayog, to operationalise the Asset Monetisation Plan 2025-30 as announced in the Union Budget 2025-26.

This marks a significant evolution in India’s infrastructure financing strategy, building upon the experience of NMP 1.0 and aligning with the broader vision of Viksit Bharat.

From NMP 1.0 to NMP 2.0

NMP 1.0 (2021-25): A Baseline of Best Practices

The first National Monetisation Pipeline (2021-25) targeted asset monetisation worth ₹6 lakh crore.

It successfully achieved nearly 90% of its target, establishing operational frameworks, standardised concession agreements, and governance mechanisms.

Key lessons from NMP 1.0:

• Improved inter-ministerial coordination.
• Standardisation of PPP concession models.
• Better asset identification and visibility for investors.
• Strengthened monitoring mechanisms.

This performance provided the foundation and confidence to scale up under NMP 2.0.

What is National Monetisation Pipeline 2.0 (NMP 2.0)?

NMP 2.0 is a medium-term roadmap (2025-30) for monetising operational (brownfield) public assets to unlock capital for fresh infrastructure creation.

Core Philosophy: Asset Recycling

At its heart lies the principle of Asset Recycling:

• Monetise operational public assets.
• Leverage private sector efficiency for operation and maintenance.
• Use proceeds to fund new infrastructure (CAPEX).
• Avoid increasing fiscal deficit or budgetary outgo.

Thus, NMP 2.0 supports capital formation without creating new debt burdens.

Estimated Potential and Scale

• Aggregate monetisation potential: ₹16.72 lakh crore.
• Private sector investment component: ₹5.8 lakh crore.
• This is 2.6 times higher than NMP 1.0, signalling ambitious scaling.

This scale demonstrates the government’s intent to structurally transform infrastructure financing.

Participating Sectors

NMP 2.0 covers key economic sectors:

• Roads (National Highways)
• Railways
• Power (Transmission and Generation assets)
• Oil & Gas pipelines
• Civil Aviation (Airports)
• Ports
• Telecom
• Coal and Mines

These sectors are backbone industries with stable revenue streams, making them attractive for private participation.

Monetisation Instruments

NMP 2.0 employs diverse financial instruments:

1. Public-Private Partnership (PPP) Concessions

• Private players operate and maintain assets under long-term contracts.

2. Infrastructure Investment Trusts (InvITs)

• Trust structures that pool infrastructure assets and allow investors to earn stable returns.

3. Securitisation of Cash Flows

• Future receivables from infrastructure assets are securitised to raise upfront capital.
• This diversified toolkit enhances flexibility and investor participation.

Governance Framework

To ensure a “whole-of-government” approach:

• Monitoring is undertaken by the Core Group of Secretaries on Asset Monetisation (CGAM).
• CGAM is chaired by the Cabinet Secretary.
• It ensures inter-ministerial coordination, dispute resolution, and progress tracking.

This addresses one of the biggest challenges in infrastructure governance: fragmented accountability.

Revenue Allocation Mechanism

Proceeds from asset monetisation are allocated as follows:

1. Consolidated Fund of India: For ministry-led projects.
2. PSUs/Port Authorities: For entity-led monetisation.
3. State Consolidated Fund:  Particularly for mining royalties.
4. Separate accounting head: For direct private investment involving construction or major maintenance.

This transparent allocation system enhances fiscal credibility and audit clarity.

Economic and Fiscal Significance

1. Strengthening Capital Expenditure (CAPEX)

India’s growth strategy increasingly hinges on high public CAPEX. Monetisation:

• Releases locked capital from operational assets.
• Enables reinvestment in greenfield projects.

2. Fiscal Prudence

Instead of increasing borrowing:

• Government unlocks existing asset value.
• Maintains fiscal discipline.
• Improves debt sustainability metrics.

3. Crowding-In Private Investment

By offering stable, long-term assets:

• Institutional investors (pension funds, sovereign wealth funds) are attracted.
• Enhances investor confidence and deepens capital markets.

4. Enhancing Efficiency

Private sector expertise improves:

• Maintenance standards.
• Service delivery.
• Technological adoption.

Alignment with Viksit Bharat

NMP 2.0 aligns with India’s long-term development vision:

• Accelerates infrastructure creation.
• Improves logistics efficiency.
• Supports manufacturing competitiveness.
• Strengthens energy and transport networks.
• Promotes ease of doing business.

It creates a structured platform for long-term private participation in India’s growth story.

Challenges and Concerns

While promising, NMP 2.0 must address key concerns:

1. Risk of Undervaluation: Ensuring transparent and market-linked valuation mechanisms is critical.
2. Regulatory Certainty: A stable policy environment is essential for long-term concessions.
3. State-Level Coordination: Mining and infrastructure projects require seamless Centre-State cooperation.
4. Public Perception: Clear communication is needed to distinguish “monetisation” from “privatisation.”

Conclusion

National Monetisation Pipeline 2.0 represents a strategic recalibration of India’s infrastructure financing model. By leveraging asset recycling, institutionalising governance frameworks, and providing investor visibility, it seeks to convert dormant public capital into dynamic economic growth.

If implemented transparently and efficiently, NMP 2.0 can become a cornerstone in India’s journey towards becoming a developed economy, Viksit Bharat, by optimising public resources without compromising fiscal stability.

Potential Mains Question

Q. “Asset monetisation represents a shift from ownership-based governance to efficiency-based governance.” Examine in the context of the National Monetisation Pipeline 2.0.