When Finance Minister Nirmala Sitharaman unveiled the second phase of the National Monetization Pipeline (NMP 2.0) on Tuesday, it was a continuation of a policy experiment that began in 2021. But it was also a way to fine-tune the Centre’s strategy to fund infrastructure without burdening the public balance sheet. NMP 2.0, prepared by NITI Aayog in consultation with infrastructure ministries, implements the Asset Monetization Plan for 2025-30 announced in the Union Budget 2025-26.
The figures appear to be quite large. The government is planning to monetize more than 2,000 assets in 12 ministries, which has a total revenue potential of Rs 16.7 lakh crore. Of this, Rs 10.8 lakh crore is expected to be received between 2025-26 and 2029-30, and the remaining amount will come in subsequent years.
After NMP 1.0, which raised Rs 5.3 lakh crore. Whereas the target was kept at Rs 6 lakh crore. NMP 2.0 is a scaling-up exercise and also to test whether asset monetization can become a structural pillar of India’s infrastructure financing model. In a report of NITI Aayog, the GDP impact of NMP 2.0 has been estimated at about Rs 40 lakh crore in five to ten years.
Monetization and recycling, not privatization
At the heart of the NMP framework is a distinction that has been repeatedly emphasized by policymakers that asset monetization is not pure privatization. The government retains ownership of the underlying assets. What is transferred is the right to operate, maintain and earn revenue from the brownfield infrastructure for a fixed concession period, usually under a transparent bidding framework such as a toll-operate-transfer model, infrastructure investment trust, long-term lease or public-private partnership.
The economic logic of NMP 2.0 is simple. India has invested heavily in building physical infrastructure such as highways, transmission lines, ports, airports, pipelines and railway freight corridors. These are capital-intensive assets which have a long gestation period. Once operational and revenue generating, these can be leased to private operators who are often in a better position to extract efficiency gains and assume operational risks.
The initial income received by the government can then be recycled into new greenfield projects, creating a virtuous investment cycle. In effect, the government converts illiquid public assets into liquid financial resources without giving up actual ownership. This recycling of capital is the core principle of NMP 2.0.
Which sector got how much target?
The sector-wise distribution of assets under NMP 2.0 reflects both scale and maturity. Roads still remain the main segment. Overall, the highway, multi-modal logistics park and ropeway are expected to generate Rs 4.42 lakh crore in five years. This reflects the government’s confidence in traffic growth, tolling framework and investor interest for operational road assets.
Power sector is next, whose monetization target is Rs 2.76 lakh crore. Transmission lines, generation assets and distribution-linked infrastructure can be its possible parts. These assets provide relatively stable cash flows, making them attractive to long-term institutional investors such as pension and sovereign wealth funds.
Ports and Railways are right behind it, with targets of Rs 2.63 lakh crore and Rs 2.62 lakh crore respectively. In railways, dedicated freight corridors, station redevelopment projects and cargo terminals can be monetized through structured concessions. Ports, which have already seen private participation in cargo handling and terminal management, are another natural fit for long-term leases.
Coal and mining assets together account for potential earnings of more than Rs 3 lakh crore. Other sectors like urban infrastructure, civil aviation, petroleum and natural gas, warehousing, telecom and tourism contribute less but still significantly. The diversity of sectors shows that NMP 2.0 is not limited to one ministry or one asset class, but is a monetization strategy for the entire government.
Where will the money go?
The NITI Aayog report estimates that out of the expected Rs 10.8 lakh crore during 2025-30, Rs 4.61 lakh crore will be directly deposited in the Consolidated Fund of India. About Rs 1.63 lakh crore will go to public sector companies or port authorities and Rs 38,418 crore will go to the State Consolidated Fund. Apart from this, Rs 4.18 lakh crore will represent direct private investment made under the concession agreement.
The report said that if 70 percent of the central government’s earnings are reinvested in publicly-funded infrastructure projects, it would amount to new government investment of about Rs 3.2 lakh crore. Broadly speaking, estimating the monetization flow shows that the earning of Rs 6.2 lakh crore by the Center and PSUs can lead to a total investment of Rs 12.2 lakh crore.
Applying a capital expenditure multiplier of 3.25, the report estimates a GDP impact of about Rs 40 lakh crore over five to ten years. Although the multipliers are based on guesswork, the real argument is that there are strong forward and backward linkages of public capital expenditure, increasing demand for cement, steel, logistics, labor and services, and increasing private investment.
Fiscal Strategy and Balance Sheet Management
NMP 2.0 should also be seen in the context of India’s fiscal mathematics. The Center has significantly increased capital expenditure in the last several budgets, while it is trying for fiscal consolidation. Asset monetization provides non-tax, non-debt capital receipts that help finance infrastructure without increasing the fiscal deficit.
It has two meanings. First, it supports macroeconomic stability by reducing the need for further borrowing. Second, it allows the government to maintain a high capex trajectory even when revenue growth may be cyclical or limited.
From a public finance perspective, monetization is a balance sheet optimization exercise. Mature assets with predictable cash flows are better for private sector balance sheets seeking stable returns. The government, with its strong capacity for long-term planning and tolerance for early-stage risk, is best placed to focus on new projects with greater uncertainty but greater social and developmental returns.
Crowd in private capital
Another main objective is to deepen India’s infrastructure financing ecosystem. Long-term institutional capital, both domestic and global, has shown increasing interest in operational infrastructure assets in India. Infrastructure Investment Trusts and Real Estate Investment Trusts have already become established instruments.
By providing a pipeline of bankable, revenue-earning assets, NMP 2.0 seeks to crowd in private capital on a large scale. This reduces the burden on public banks and increases the investor base. Over time, a successful monetization program can also improve pricing benchmarks and risk assessment frameworks for infrastructure projects.
The main objective is to accelerate infrastructure
Beyond fiscal accounting and GDP multiplier, the larger economic logic of NMP 2.0 is to accelerate the creation of infrastructure. India’s path to development largely depends on logistics efficiency, reliable power supply, modern transport network and urban infrastructure. NMP 1.0 almost meeting its target gives some confidence, but NMP 2.0 has a larger scale and more complex scope. The government’s ability to coordinate between ministries and ensure timely transactions will be very important.
If monetization allows the government to build more highways, rail corridors, renewable energy parks and logistics hubs faster, then the long-term productivity gains could outweigh the short-term accounting debate.
In this sense, NMP 2.0 is an attempt to create a capital recycling model within the Indian state. By unlocking value from existing infrastructure, the government wants to fund the next wave of growth.
Whether the estimated GDP growth of Rs 40 lakh crore will actually happen or not will depend on the completion of the work, market conditions and the quality of new investment. NMP 1.0 almost meeting its target gives some confidence, but NMP 2.0 has a larger scale and more difficult scope. The ability to coordinate between government ministries and ensure timely transactions will be very important.