Union finance minister Nirmala Sitharaman earlier this week announced a pipeline of assets the government is looking to monetise to garner Rs 6 lakh crore to fund its ambitious infrastructure projects over four years ending 2024-25. Assets and the benefits from them are a long-term multiplier. It is a remedy and stimulus for a slowing and a pandemic-disrupted economy. From what one sees, it does seem that the government has done a lot of groundwork. However, the challenge is often in taking it through and making it work, Crux Management Services president Dr Vikas Singh tells Y V Phani Raj in an interview. Excerpts–
Asset ownership
There are often very good reasons for government ownership of public assets, if they are effectively used for public good. We know it hasn’t been the case. Government should be open to the idea of transferring the assets, and provide for a transparent and fair mechanism. The government must own in the rarest of cases. It must build, then cede, and support; always enable asset optimisation. It should regulate to ensure competition and avoid exploitation.
Outcome optimisation
Asset monetisation must be seen as ‘effectively’ utilising the assets and delivering benefits for the purpose it was created for. While we must be mindful of the revenue generated, the focus must be on creating long-term impact, positive outcomes for the larger ecosystem. Outcome optimisation is the true metric and should be evaluated on that basis; not on revenue basis. Partnership must be forged with the best; desist picking the highest bidder. It will be solving the wrong problem. And that solution too will quickly depreciate in its value. Government must prioritise rural asset creation. Similarly improve urban space to enhance ‘ease of living’. It must invest in sustainable and large multiplier sectors such as education and health.
Opportunities for private sector
The private sector should see this as a great opportunity to acquire, utilise, exploit and benefit from these assets. In an infrastructure-deficit and ‘difficult to create’ asset ecosystem, this indeed is a timely opportunity. It will free up their liquidity to invest in other value enhancing opportunities. Similarly, they will gain because most of these assets are revenue ‘worthy and operational’ and can contribute to the top line from day one.
Bundling assets
Government must strategically bundle assets and incentivise private partnerships. Rural infrastructure supplements the rural economy and rebalances growth. The forward-backward linkages, enhances equity & opportunity, and elevates rural living conditions. Governance and transparency will be critical to garner all-round support and buy-in. In its absence, projects will get embroiled in controversy, tied up in courts. One way to garner support will be to persuade the opposition, create inclusive committees/teams. Similarly, India will need a cadre of ‘designers & doers’. Government needs to strengthen its institutions and create entities that can hire the best talent. It must, in addition, augment capacity, upgrade capabilities of its implementation agencies.
Ideal model
Doing it right is a virtue. Government must not rush. Pick the low-hanging fruit. Identify the ones most likely to succeed. Be ‘open’. Select models (build-operate-transfer for some; for non-strategic assets even outright sale) based on the nature, and the way assets are to be utilised. Ensure compliance and under-regulate. A substantial portion of the monetisation will emerge from the building blocks of the economy, particularly roads, transit, water, power and rail network etc.
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