InvestorQ : How does the government propose to monetize its infrastructure assets as proposed in the Union Budget 2021?
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How does the government propose to monetize its infrastructure assets as proposed in the Union Budget 2021?

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3 weeks ago
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In the Union Budget 2021, the government announced that it would monetize infrastructure assets to generate close to Rs.75,000 crore in the coming year. The government has also triggered off the plan for the same. In the last few years, the government managed to monetize road assets and power assets through INVITs route. These are the asset classes where the cash flows could be easily attributed to the particular asset class.

Apart from highways and toll-ways government also monetized transmission assets of the power sector. For example, Power Grid monetized transmission lines and now this list could expand to more sectors. But now the government is making a big move into the oil sector. To begin with, the government plans to immediately raise Rs.20,000 crore by monetizing the pipeline assets of GAIL, which holds the biggest portfolio of gas transmission pipelines.

Additionally, the government will also go beyond GAIL and has prepared plans to monetize the infrastructure assets of HPCL and IOCL also through the INVIT route. Infrastructure Investment Trusts or INVITs are pass-through structures that hold the infrastructure assets in trust and pass on the benefits to the end investors. If the government manages to raise Rs.20,000 crore from GAIL, then target of Rs.75,000 crore does not look far-fetched.

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