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INFRASTRCUTURE-2

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 ECONOMICS HANDOUT
by Jayant Parikshit
1. National Infrastructure Pipeline (NIP)
2. National Monetisation Pipeline (NMP)
a. Meaning of Asset Monetisation
b. Core Vs. Non-Core Sector
c. Approach of NMP
3. PM-Gati Shakti
4. Application: Aviation, Railways, Bharatmala, Sagarmala, Economic Corridors etc
5. Problems with PPP in India
6. Report of the Committee on Revisiting & Revitalising the PPP Model of Infrastructure
Development Chaired by Dr.V.Kelkar: 2015-16
7. Note: This handout MUST be used along with class lecture + relevant current affairs
videos uploaded on our portal/youtube channel + relevant Economic survey/Budget

MULTIPLE CHOICE QUESTIONS (MCQs) FOR PRACTICE

Question-1: Consider the following facts about Toll-Operate-Transfer (TOT) Model:

1. It is based on the concept of asset recycling.
Y x
2. The government identifies the viable non-operational projects, leases it out to private

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sector for operations and management. R
period.
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3. The project’s ownership is ultimately transferred to the private sector after the concession

4. The projects which have been non-operational for atleast two years are considered under
TOT model currently in India.
How many of the above options are correct?
a. Only One
b. Only Two
c. Only Three
d. All Four

Question-2: Consider the following statements about National Monetisation Pipeline

(NMP) 2021-22 to 2024-25:
1. NMP will prima-facie help in evolving a common framework for monetisation of all
government assets.
2. NMP would monetise risky greenfield-field projects.
Choose the correct option:
a. Only1
b. Only 2
c. Both1&2
d. None of these

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Question-3: Asset Monetisation has received a big push from government of India as a tool
of infrastructure financing in India. Consider the following statements regarding this policy:
1. The government has raised around Rs 4 lakh cr through NMP as of now.
2. The estimated value ( Rs 6 Lakhs Crore) corresponds to ~5.4% of the total infrastructure
investment envisaged under the NIP.
3. Asset Monetisation’s limitation is the fact that it only captures the resources from private
sector without much focus on efficiency aspect of the project.
4. Asset Monetisation leads to crowding-out of private investment in infrastructure.
How many of the above options are correct?
a. Only One
b. Only Two
c. Only Three
d. All Four

QUESTIONS FOR MAINS (for self practice):

Question-1: Define “Public private partnership (PPP)”. What are their aims? And what are
its key features in India?
Question-2: Distinguish between privatisation & PPP. Discuss the general trend of
evolution of PPP in India. Highlight some of the recent developments.
Question-3: Why did government go for PPP in airport development in India?
Question-4: “PPP can revamp our health sector”. Do you agree? Discuss.
x
Question-5: What do you mean by Hybrid-Annuity-Model (HAM)”? What are its key
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advantages? Has it succeeded in India?

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Question-6: Discuss some of the recent developments of PPP in Indian Railways.

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Question-7: What are some of the shortcomings of India PPP? How can we improve these
shortcomings?
Question-8: Define the term “Asset Monetisation”. How would National Monetisation
Pipeline help to bridge the gap between current and expected level of infrastructure
investment in India?

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 NATIONAL MONETISATION PIPELINE (NMP)
Meaning of Monetisation:
§ To monetise something means to ‘express it or convert it into the form of currency’.
Basically, monetising is ‘to utilise something as a source of profit,’ or ‘to convert an asset
into money.
§ Monetisation is different from ‘privatisation’. Monetisation signifies ‘structured
partnerships’ with the private sector under certain contractual frameworks. Whereas
under privatisation, ownership and control of the government asset is permanently sold
to private sector.
Meaning of Asset Monetisation:
§ Asset monetisation is also commonly referred to as asset recycling. This consists of
limited period transfer of performing assets (or disposing of non-strategic /
underperforming assets) to unlock “idle” capital and reinvesting it in other assets or
projects that deliver improved or additional benefits.
§ Asset Monetisation, as envisaged here, entails a limited period license/ lease of an asset,
owned by the government or a public
authority, to a private sector entity for an § In India, the idea of asset
upfront or periodic consideration. monetisation was first suggested by a
§ Asset monetisation does not involve the committee led by Dr Vijay Kelkar on
selling of land, but it is about monetising the roadmap for fiscal consolidation.
brownfield assets.
Motives of Asset Monetisation: Y x The committee had recommended
that the government should start

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1. It unlocks value from the public investment R monetisation to raise resources for
in infrastructure.

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2. It utilises productivity in the private sector.
§
further development and financing
infrastructure needs.
NMP was announced in the Union
3. Asset monetisation aims to tap the private
sector investment for new infrastructure Budget 2021-22.
creation.
Which assets are to be considered for monetisation?
CORE ASSETS:
§ Assets which are central to the business objectives of a public entity/ Government body
and/or are being utilised for delivering infrastructure services to public/ users have been
categorised as Core Assets for the purposes of monetisation.
§ Core Assets includes asset classes such as transport (roads, rail, ports, airports), power
generation, transmission networks, pipelines, warehouses etc.
NON-CORE:
§ The other assets, which generally include land parcels and buildings, can be categorised
as non-core assets.
NATIONAL LAND MONETISATION CORPORATION (NLMC):
What is NLMC?
§ NLMC undertakes monetization of surplus land and building assets of Central Public Sector
Enterprises (CPSEs) and other Government agencies.
Establishment & Funding:
§ Department of Public Enterprise, Ministry of Finance, has set up the company and act as
its administrative ministry.

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§ NLMC is a wholly owned Government of India company with an initial authorized capital
of ₹5000 crore and paid-up capital of ₹150 crore.
Functions of NLMC:
1. NLMC is also expected to own, hold, manage and monetize surplus land and building
assets of CPSEs under closure and the surplus non-core land assets of Government owned
CPSEs under strategic disinvestment.
2. NLMC will also advise and support other Government entities (including CPSEs) in
identifying their surplus non-core assets and monetizing them in a professional and
efficient manner to generate maximum value realization.
3. NLMC will have necessary technical expertise to professionally manage and monetize land
assets on behalf of CPSEs and other Government agencies.
4. The NLMC will hire professionals from the private sector with a merit based approach.
APPROACH TO NMP:
§ Time Period of NMP: 2021-22 to 2024-25
§ The total indicative value of NMP for Core Assets of Government = Rs 6.0 lakh crore
§ The estimated value corresponds to ~5.4% of the total infrastructure investment
envisaged under the NIP which is ~Rs 111 lakh crore.

ECONOMIC SURVEY & BUDGET 2024-25 UPDATES:

§ NMP-1 achievement has been Rs 3.85 trillion or 90% of the Rs 4.3 trillion targeted in
the first three years.
§ Coal and other mining and highways which were major contributors to NMP so far.
x
§ India is aiming for a USD 30 trillion economy by 2047.
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SECTORAL BREAK-UP

Top 5 Sectors:
§ The top 5 sectors (by estimated value) capture ~83% of the aggregate pipeline value.
§ These top 5 sectors include: Roads (27%), Railways (25%), Power (15%), oil & gas
pipelines (8%) and Telecom (6%). Roads and Railways together contribute ~52% of the
total NMP value.

Y x
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NATIONAL INFRASTRUCTURE PIPELINE (NIP):
2019-20 to 2024-25
§ In order to achieve the GDP of $5 Trillion by 2024-25, India needs to spend about $1.4
trillion over these years on infrastructure. Keeping this objective in view, National
Infrastructure Pipeline (NIP) was launched with projected infrastructure investment of
around 111 lakh crore (US$ 1.5 Trillion) during 2020-2025 to provide world- class
infrastructure across the country. The National Infrastructure Pipeline (NIP) unveils the
infrastructure projects across various states which will receive the expected funding of
US$ 1.4 Tn over the next 5 years.3

§ NIP was launched with 6, 835 projects, which has expanded to over 10,000 projects
covering 34 infrastructure sub-sectors.

OBJECTIVES OF NIP:
As per Atanu Chakraborty Task Force, the key objectives of the NIP programme are:
1. To provide a positive and enabling environment for significant private investment in
infrastructure at all three levels of the government.
2. To design, deliver and maintain public infrastructure projects, to meet efficiency, equity
and inclusiveness goals.
3. To design, construct and maintain public infrastructure, to meet disaster-resilience goals.
x
4. To create a fast-track institutional, regulatory and implementation framework for
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infrastructure.

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5. To benchmark infrastructure performance to global best practices and standards.

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6. To leverage technology to enhance service standards, efficiency and safety.

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FEATURES OF NIP:
§ NIP includes economic and social infrastructure projects.
§ During the fiscals 2020 to 2025, sectors such as Energy (24%), Roads (19%), Urban (16%),
and Railways (13%) amount to around 70% of the projected capital expenditure in
infrastructure in India.
§ It has outlined plans to invest more than ₹100 lakh crore on infrastructure projects by
2024-25, with the Centre, States and the private sector to share the capital expenditure
in a 39:39:22 formula.

PM GATISHAKTI
CONTEXT:
§ Lack of coordination among different ministries/departments involved in infrastructure
creation.
DIGITAL PLATFORM:
§ Integrated and seamless connectivity for movement of people, goods and services from
one mode of transport to another.

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1. Comprehensiveness:
§ All the existing and planned initiatives of various Ministries and Departments on one
centralized portal.
§ Every Department will now have visibility of each other's activities
2. Prioritization
§ Different Departments will be able to prioritize their projects through cross-sectoral
interactions.
3. Optimization:

identification of critical gaps.

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§ The National Master Plan will assist different ministries in planning for projects after

4. Synchronization
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§ Individual Ministries and Departments often work in silos. PM Gati Shakti will help in

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synchronizing them by ensuring coordination of work between them.
5. Analytical
§ The plan will provide the entire data at one place enabling better visibility to the
executing agency.
6. Dynamic
§ All Ministries and Departments will now be able to visualize, review and monitor the
progress of cross-sectoral projects, through the GIS platform, as the satellite imagery
will give on-ground progress periodically.
SEVEN ENGINES OF PM-GATISHAKTI:
§ The approach is driven by 7 engines which will pull forward the economy in unison:
1. Roads
2. Railways
3. Airports
4. Ports
5. Mass Transport
6. Waterways
7. Logistics Infrastructure
2 FOUNDATIONAL PRINCIPLES OF -GATISHAKTI:
It has two foundational principles leading to job and entrepreneurial opportunities for all:
1. Powered by Clean Energy
2. Partnership: Central Government, the state governments, and the private sector
together.

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 PPP IN AVIATION INDIA
AIRPORT AUTHORITY OF INDIA
The Airports Authority of India (AAI) was constituted by an Act of Parliament on 01 April 1995
and entrusted with the responsibility of creating, upgrading, maintaining, and managing civil
aviation infrastructure.
WHY WAS THERE A NEED FOR PPP IN AIRPORT?
§ In the early 90’s the government and Airport Authority of India (AAI) had invested
substantial resources in the development of airport and navigation services
infrastructure. However, this was a significant strain on Government finances, more so as
the aviation sector had not taken off. This gap in supply-demand necessitated the influx
of private capital to build capacity and drive traffic.
§ Airports suffered from poor financial performance like low air traffic, low revenue
potential, high operations and maintenance cost due to regulatory and security
requirements.
§ During the Eleventh FYP (2007-2012), the private sector played an unprecedented role in
the area of airport development. Five international airport projects were successfully
completed through the public–private partnership (PPP) mode, viz.
1. Greenfield development of Hyderabad and Bengaluru international airports and
2. Modernisation of Kochi, Delhi and Mumbai international airports
§ In recent years, airport modernization in the country has taken a new form, with private

Y x
players bringing in new technologies that not only improve airport operations but also
enhance customer experience.
2019 PPP IN AIRPORTS:
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§ AAI had awarded six airports: Ahmedabad, Lucknow, Mengaluru, Trivandarum, Guwahati
and Jaipur --for operations, management and development under Public-Private
Partnership (PPP) for a period of 50 years in the year 2019-20. Delhi and Mumbai were
already leased out to private sector under PPP.
§ Further, the AAI board on September 5, 2019, approved the leasing of six more airports
in Bhubaneshwar, Varanasi, Amritsar, Raipur, Indore and Trichy for undertaking
operations, management and development through PPP.

ASSET MONETISATION PIPELINE:

§ AAI has decided to club Bhubaneshwar,
Varanasi, Amritsar, Raipur, Indore and
Trichy with nearby smaller airports for the
purpose of joint development in the PPP
mode.
Benefits of clubbing:
1. By clubbing small airports with viable
airports it will be possible for any private
partner to bid for the combination of
airports as both put together will become
viable; otherwise, these small airports will
never get into PPP mode.
2. The clubbing or pairing of smaller or non-
profitable airports with profitable airports

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 would ensure integrated development of smaller and non-profitable airports with
profitable airports.
3. Further, smaller airports would also be developed faster through professional efficiency
of private operators.
4. Pairing of airports is expected to enhance negotiation capacity of airport operators with
the airlines for commercialisation and route optimisation and generation of non-aero
revenue and lead to improved connectivity to the smaller cities and nearby areas realizing
the goal of Atma Nirbhar Bharat.
EVALUATION OF PPP IN AIRPORTS
§ While these PPP experiments have helped create world class airports and helped in
delivery of efficient and quality services to the airport passengers, it has also helped AAI
in enhancing its revenues and focusing on developing airports and Air Navigation
infrastructure in the rest of the country.
§ Revenue received by AAI from PPP partners enabled AAI to create infrastructure facilities
in Tier-2 and Tier-3 cities and also to upgrade their airports to international standards.
§ The PPP airports in India are consistently ranked among the top 5 in their respective
categories by the Airports Council International (ACI) in terms of Airport Service Quality
(ASQ).
§ AAI is saving around Rs 515 crore annually in terms of running cost of six airports that
have been on lease under the public private partnership since 2019.

RAILWAYS
NATIONAL RAIL PLAN FOR INDIA-2030:
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§ The Plan is to create a ‘future ready’ Railway VISION 2024 UNDER NATIONAL
system by 2030. The objective of the Plan is to RAIL PLAN

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create capacity ahead of demand, which in turn Implementation of the NRP has
would also cater to future growth in demand already commenced. The Indian
right up to 2050 and also increase the modal Railways has identified and
share of Railways to 45% in freight traffic and to prioritised a large number of
continue to sustain it. projects designated as Super
§ The main features of the National Rail Plan are: Critical, Critical and Coal/Port
1. Formulate strategies based on both connectivity, for completion as per
operational capacities and commercial policy the Vision 2024 document which is
initiatives to increase share of the Railways in a subset of the National Rail Plan.
freight to 45%.
2. Reduce transit time of freight substantially by increasing average speed of freight
trains to 50Kmph.
3. As part of the National Rail Plan, Vision 2024 has been launched for accelerated
implementation of certain critical projects by 2024 such as 100% electrification, multi-
tracking of congested routes, upgradation of speed to 160 kmph on Delhi-Howrah and
Delhi-Mumbai routes, upgradation of speed and elimination of all Level Crossings on
all GQ/GD route.
4. Identify new Dedicated Freight Corridors.
5. Identify new High Speed Rail Corridors.
6. Assess the total investment in capital that would be required along with a periodical
break up.
7. Sustained involvement of the Private Sector in areas like operations, development of
freight and passenger terminals, development/operations of track infrastructure etc.
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§ To achieve these objective, all possible financial models including Public Private
Partnership (PPP) are being considered.
New India New Railway Initiative:
§ The GoI has allowed the private players to operate in the Railways sector through the PPP
mode under the "New India New Railway" initiative.
§ Indian Railway (IR) is one of the world’s largest railway systems and the passenger
business is estimated to be worth $ 7.5 billion
annually. The passenger demand for IR is robust NRP & DISTRICTS:
as it has withstood long term modal shifts and § The NRP is for the entire Indian
has consistently reported unserved demand Railways network and not only for
levels of ~15% in form of waitlisted passengers. districts connected to the existing
The cluster of projects identified envisages rail network but also districts
private train operations on ~109 pair of routes indirectly impacted by rail
structured as 12 clusters with a targeted private transportation.
investment of Rs. Rs.30,000 crore. The project § In effect virtually all the districts of
will incrementally add over 150 modern trains the country get linked to the plan.
to the IR system.
PPP Model to be followed:
§ The private entity shall be responsible for financing, procuring, operating, and
maintenance of the trains and shall have the freedom to decide on the fare to be charged
from its passengers.
§ The private entities that would undertake the project is being selected through a

Y x
competitive bidding process. Private trains are likely to be introduced in the coming year.
§ The clusters in the current set of packages being bid out are dense demand routes and

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include Delhi-Mumbai, Delhi-Chennai, Mumbai-Chennai among others. The bidding

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process for a batch of 12 clusters has been undertaken.
AMRIT BHARAT STATION SCHEME (Station Redevelopment Programme):
§ Redevelopment of railway stations across India is a priority agenda of Ministry of Railways,
Government of India. Indian Railways has initiated the redevelopment of railway stations
with the primary objectives of providing world class passenger amenities, making them
hubs of economic development and re-establishing them as the nerve centres of cities.
§ This initiative is being driven by the Government with the participation of private players
as a part of PPP projects.
§ Under it, Railways would redevelop 1321 railway station across India through the Public
Private Partnership (PPP) mode. The program focused on improving passenger amenities
by leveraging real estate available with railways to fund the development.
The station redevelopment comprises Among the stations being taken up for
two components: redevelopment under the Amrit Bharat
1. Mandatory station redevelopment Station Scheme, Uttar Pradesh has the
2. Station Estate (Commercial) maximum number of 149 railway stations,
development followed by Maharashtra 126, West Bengal
§ The origin of the Amrit Bharat Stations 94, Gujarat 87, Bihar 86, Rajasthan 82 and
scheme can be traced back to 2021, Madhya Pradesh 80.
when Gandhinagar became the first
Railway station to undergo modernization, replete with all modern facilities and a five star
hotel. Later on in the same year, Rani Kamalapati Railway Station, formerly known as
Habibganj wore a new look. In 2022, Union Cabinet approved redevelopment of 3 major
railway stations, viz. New Delhi Railway Station, Ahmedabad Railway Station and the

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 Chhatrapati Shivaji Maharaj Terminus in Mumbai, which is already a UNESCO World
Heritage site.
PPP for redevelopment of Good Sheds as Private Freight Terminals (PFT) / Multi Modal
Logistics Hubs:
§ IR allows PFTs on railway land adjacent to stations with a view to utilising vacant land
parcels better, increasing PPP investments, and boosting freight revenue.
§ Commercial viability of private terminals is higher in case of terminals’ proximity to
cement industries, ports, and power plants, which are key consumption centres.
§ At present, private freight terminals are built by private investors on private land, and
connectivity is provided by railways to the operators.

Asset Monetisation of IR:

Y x
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NOTE:
The class dictation/lecture related to the following sub-topics (schemes) are sufficient for
UPSC prelims and mains purposes. These topics are current in nature, so we need to
update them from time to time using newspaper:
1. Bharatmala
2. Economic Corridors
3. Sagarmala
4. Udan/Regional Connectivity Scheme

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FLOWCHARTS

Y x
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SAGARMALA:

Y x
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 Y x
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