Hobson’s choice. Suppose your Municipal Council has to decide whether a private toll bridge in the periphery of your town or city is better than no bridge at all, that would be a classic case of the proverbial ‘Hobson’s choice’. It is no real choice at all.

History is perhaps repeating itself and rather quickly. After four-and-a-half years of the November 8, 2016 disastrous demonetization of high value currencies that took away a chunk of the Indian GDP, the ‘National Monetisation Pipeline (NMP)’ launched by the BJP-led NDA regime on August 23, 2021, of Union Ministries and Public Sector Undertakings (PSU)’, makes the people stare at another ‘Hobson’s choice’.

In ‘monetising’ core assets of the Union Government in a range of public infrastructurefrom stretches of the National Highway (NH), ports, airports, hundreds of miles of railway routes, gas pipelines, Power Grid Corporation of India’s extra high tension cable lines, telecom towers to mines and tourism brand hotels, the basic idea is to lease out or get the private sector to operate and manage them for long periods under a contract or equivalent agreements in return for they forking substantial cash up front, depending on the value of the asset that is sought to be ‘monetised’. The Union Government can in turn plough that money for building other much-needed infrastructure with long-gestation periods.

While launching the NMP in New Delhi, Union Finance Minister, Dr. Nirmala Sitharaman said, based on the conceptual and policy framework of the ‘NITI Aayog’, the aim of the massive project is to tap private sector investments for new infrastructure creation. State Governments are also being incentivised to recycle state-government owned assets for “fast-tracking greenfield infrastructure,” she then said.

The ‘Monetisation Guidebook’ in two volumes, brought out by ‘NITI Aayog’, puts the ‘aggregate monetization potential ‘at Rs. Six lakh crores over a four-year period from the financial year (FY) 2022 to FY-2025, through ‘core assets’ of the GOI. The document makes it clear that it is ‘monetisation of rights, not ownership’. Assets will be handed back to the government at the end of the contract or transaction tenure.

Stating that under the Union Budget 2021- 22, “monetisation of assets” – what it terms as ‘brown field core infrastructure assets- has been identified as “one of the three pillars for enhanced and sustainable infrastructure financing in the country,” the document says that the Union Budget also envisaged a ‘National Monetisation Pipeline (NMP)’ policy to provide a direction to the ‘Monetisation Initiative’.

In pursuance of this goal, it says that the ‘NITI Aayog’ was tasked to formulate the NMP, which has been created to be “co-terminus’ with the remaining period of India’s ‘National Infrastructure Pipeline (NIP)’ initiative. The latter is envisaged to raise an aggregate Rs.111 lakh crore for investing in big infrastructure building over five years from FY2020-FY25.

“Financing of infrastructure investments at such scale necessitates a re-imagined approach and tapping alternative financing through innovative ways,” says the ‘NITI Aayog’ document, in justifying the NMP as a tool to achieve it. The NMP will focus only on brown field ‘de-risked assets’ with ‘stable revenue stream’ and be governed by “structured partnerships under well defined contractual framework with strict performance standards”, the document underscored.

The document reads neat on paper, but as in all such texts, the devil is in the details. It was former Union Finance Minister, P. Chidambaram, firing the first salvo against NMP, at a joint press conference with the Congress leader Rahul Gandhi in Delhi, described the whole exercise as a “grand bargain, closing down sale”, apprehending there will be virtually no public sector left after the NMP exercise.

Referring to the NMP being co-terminus with the NIP, Mr. Chidambaram took potshots at Prime Minister, Mr. Narendra Modi, who during the last three Independence Day addresses from 2019 to 2021, cited different outlays to be raised for the NIP. “The Prime Minister thought nobody will remember,” quipped Chidambaram. Even discounting that, the former Union Minister questioned the scheme’s strange arithmetic.

Over the next four years, the Government hopes to raise about Rs. Six lakh crore through monetising assets marked out for the next four years, “You collect this money (Rs. Six lakh crore) in four years to build infrastructure worth Rs.100 lakh crore? What arithmetic is this,” asked Chidambaram.

EX-LAW MINISTER SLAMS POLICY

Led by the Congress, other opposition parties too have raised concerns about the assets’ valuation process and ‘cronyism’ creeping into the bidding process. Former Union Minister of Law and Justice in the UPA Government, Dr. Ashwini Kumar, lambasting the NMP policy at a press conference in Chennai, charged it with being “tailor made for rent seeking” at various levels, reeks of crony capitalism and represented organised plunder of national assets.” The ‘fire-sale’ of core assets through this mechanism was against national interest.

Describing the policy as “virtually a transfer of taxpayer-funded assets to a handful of business groups,” Dr. Ashwini Kumar said it will lead to a rising concentration of economic power in crucial sectors of the economy, at the cost of price stabilization. It will result in “loss of public revenue for 30 to 50 years,” he said, adding, the effective return from the parting of public assets needs to factor in this loss of revenue.

Dr. Ashwini Kumar further contended that public sector banks will be called upon to lend for these projects virtually owned by the private sector, even as the policy could lead to job insecurity and “defeat the policy of reservation in jobs for the SC/ST/OBCs’ and others.” The former Law Minister also alleged that there was no consultation with stakeholders before announcing this “grand clearing sale policy.”

RECONSIDER NMP, MK STALIN URGES PM

Even the staunchest free-market proponents swearing by Adam Smith would gape at such an astronomical range of monetisation programme of public assets, and the Union Government’s move has hardly enthused the States.

From the South, the DMK leader and Tamil Nadu Chief Minister, M.K. Stalin, defending the primacy of the public sector as “collectively owned by the people”, told the State Assembly on September 2, “any move to either sell or lease out public assets is not in the national interest.” The DMK’s stand is clear on this issue, he said to thumping of desks.

The Chief Minister followed up his Assembly statement with a letter to the Prime Minister, Mr. Narendra Modi on September 3, urging him that the Union Government reconsider its NMP policy. “Given the state of the Indian economy now, by whatever name it is called, the privatisation move on such a large scale would pave way for priceless public assets being cornered by few private monopolies or industrial biggies,” Mr. Stalin said in his letter.

The public sector units and assets have not only made India self-reliant in Industry, but their establishment has also involved State governments and local area people offering their lands for the projects. This has made the people take pride in their “ownership” in such public sector units, Mr. Stalin pointed out in his letter.

Stating that the implications of the ‘monetisation’ of public assets on labour, on small and medium scale industries which have evolved around major PSUs’, and on the economy as a whole are not known, Mr. Stalin also urged the Prime Minister that the Union Government should consult all the States before taking such big decisions.

FISCAL DEFICIT DEFENCE POOR

It is true, as economists have pointed out, that the country is “struggling with a large fiscal deficit” in the backdrop of huge spending commitments to fight Covid-19 and declining tax revenues due to the novel Coronavirusinduced lockdowns.

The Government would have to think of other ways to raise revenues in the post-Covid scenario; yet, as Dr. Ajit Ranade, Economist and Senior Fellow at the Takshashila Institution, points out in his syndicated article published in the ‘National Herald’, the Union government’s Rs. Six trillion raising targets from the NMP in the next four years “are very ambitious and unrealistic” given its PSU privatisation record so far.

Nonetheless, justifying the move, Mr. Rajiv Kumar, NITI Aayog’s Vice-Chairman, told a national television recently that monetising assets “where value is blocked” would have a multiplying effect on infrastructure development. He added that ‘Sovereign Wealth Funds’ from the Middle East were “already showing interest” to invest in this programme.

But seasoned economists counter, arguing that given the political fallout of such a large swathe of public assets being put on the block and given the experience of public-private partnership (PPA) contracts abruptly breaking in the past, the NMP is clearly no ‘one-stop solution’ to funding both future infrastructure and helping to reduce the budgetary deficit. The 1990-91 fears over selling our ‘family silver’ is back again.