Union Budget 2022-23 – Expected to Set New Targets for Asset Monetization

Budget 2022-23 - Expected to Set New Targets for Asset Monetization.

The Center is alleged to finalize the asset monetisation target for FY23. According to one of the senior government officials, it could go above Rs.1 lakh crore. The assets likely to get into monetisation incorporates railway stations, tracks, power transmission lines, and roads.

The asset monetisation is also supposed to be targeted, just like tax and non-tax revenue or divestment. The asset monetisation platform will soon be the NMP (National Monetisation Pipeline), which evaluates an aggregate budget of Rs 6 lakh crore that ranges core assets over a 4 year period as told by Finance Minister Nirmala Sitharaman.

She had also stated that asset monetisation would not include the trading of land and would involve monetising brownfield estates. The NMP, disclosed by the government, endeavours to include private sector participants for brownfield projects. This asset monetisation would make it similar to private-public partnerships. 

Monetisation Benefits

Unlike the stake sale of the state-owned firms and privatisation, the Central government will not receive any funding from the budget 2022-23 asset monetisation. Instead, public sector assets and government associations that own the units will get the funding.

The companies can pass the part of profit to the Center by means of share buybacks or dividend payments. In the case of unpublicized PSUs just as NHAI (National Highways Authority of India), AAI (Airports Authority of India), BSNL (Bharat Sanchar Nigam), the Center is eligible to get the complete dividend amount and the share buyback.

“The main objective for the PSUs is to use the benefits they will avail from asset monetisation to fulfill their capital expenditure needs,” the official said. 

It means that although there will be asset monetisation objectives, the profit that the Center makes from them will be considered in the non-tax revenue measures of the budget. Especially the projects titled ‘Dividends through Public Sector Enterprises or other such investments.’

The Budget average for proceeds from non-financial PSUs is around Rs 50,027.81 crore for the present financial year, i.e. FY22. The dividend from non-financial PSUs might increase significantly from FY23 or FY24 onwards, if the asset monetisation drive goes as per the planning.

Transport Infrastructure

While introducing the NMP, the Finance Minister Nirmala Sitharaman had said: “This whole pipeline is discussing brownfield projects in which investments have already been made, where a finished asset which is one of the two, either languishing or it’s not completely monetised or it is under-execution. So by carrying out the private participation, you will have access to monetise it better and make further investments in the infrastructure building.”

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