Disinvestment and asset monetisation are two strategies that the government uses to raise funds from its public sector enterprises (PSEs) and other assets. Both have different objectives, processes, and outcomes, and are important for the fiscal health and economic growth of the country. Here are some key points to understand about disinvestment and asset monetisation:
Disinvestment:
This is the process of selling or transferring the government’s stake in a PSE to a private entity, either partially or fully. The main objective of disinvestment is to reduce the government’s involvement in non-strategic sectors, improve the efficiency and competitiveness of PSEs, and generate revenue for the government. Some of the benefits of disinvestment are:
- It helps the government to reduce its fiscal deficit and debt burden, and free up resources for social and infrastructure spending.
- It enables the PSEs to access the capital market, attract foreign investment, and enhance their corporate governance and performance.
- It promotes the development of the private sector, especially in sectors where there is a need for innovation, technology, and competition.
Asset monetisation:
This is the process of unlocking the value of the government’s idle or underutilised assets, such as land, buildings, roads, railways, airports, etc., by leasing, renting, or selling them to private entities. The main objective of asset monetisation is to create a revenue stream for the government, without losing ownership or control of the assets. Some of the benefits of asset monetisation are:
- It helps the government to augment its non-tax revenue, and create fiscal space for public expenditure and investment.
- It enables the government to optimise the utilisation and management of its assets, and enhance their quality and productivity.
- It facilitates the participation of the private sector in the development and maintenance of public assets, and creates opportunities for employment and growth.
The government has set ambitious targets for both disinvestment and asset monetisation in the recent budgets, as part of its efforts to revive the economy and boost public spending amid the COVID-19 pandemic. According to the DIPAM Secretary, the government may look to book around Rs 35,000 crore from disinvestments and Rs 15,000 crore from asset monetisation in 2024-25. The government has also announced several initiatives to facilitate the process, such as the National Monetisation Pipeline, the Asset Monetisation Dashboard, the Strategic Disinvestment Policy, etc.
In Conclusion
Disinvestment and asset monetisation are complementary and not contradictory, as they both aim to create value for the government and the economy. However, they also face some challenges, such as legal, regulatory, and political hurdles, valuation and pricing issues, stakeholder resistance, etc. Therefore, the government needs to adopt a transparent, consultative, and pragmatic approach to implement these strategies effectively and efficiently.
