What are the major pre-requisites if the government has to make a big success of its Rs.6 trillion National Monetization Plan?

The finance minister, Nirmala Sitharaman, announced a grand national monetization plan or NMP to raise up to Rs.600,000 crore over the next 4 fiscal years. Out of that total amount, nearly Rs.88,100 crore will be raised in the current year itself. The bigger question is whether the government is prepared? Experts have pointed out four major conditions if the NMP has to be a success. Here are a few suggestions to look at.

· Most of the monetization of roads and power transmission lines will be via the public private partnership or PPP mechanism. Hence it is essential to make the PPP attractive to private investors. In the past, private sector was unwilling to get into PPP with GOI as terms were loaded against them. GOI has to ensure IRR for centre and ROI for investors.

· Need for dedicated regulatory body for monetization and PPP projects. Government must consider a full-fledged ministry and a central regulator to oversee, supervise and control the entire monetization activity. Otherwise, it is not going to work in practice. More importantly, regulation should be consistent and cases like retrospective taxation must be avoided.

· Get the states involved at an early stage itself if NMP has to succeed. In many of these assets, the state has control or presence or some form of economic interest. Unless states buy into this plan, this is not going to take off. Of course, there must also be an economic rationale for the states.

· Finally, there is the need for a proper dispute redressal mechanism. Disputes cannot be allowed to hold up projects endlessly. We have seen that happen in the past. The dispute redressal mechanism must define legal jurisdictions and methods of resolving disputes without approaching courts. Global investors insist on watertight contracts and proper dispute redressal.