Asset Monetization

Posted 22 Jul 2025

Updated 25 Jul 2025

5 min read

Why in the News?

National Highway Authority of India has outlined its strategy to monetize assets to unlock value and increase public-private participation for developing road infrastructure in India.

What is meant by Asset Monetization?

It is the process of creating new/alternative sources of revenue by unlocking the economic value of underutilised public assets. It is also known as asset or capital recycling. It does not necessarily mean disinvestment of the asset.

Need for Asset Monetization

Bridging Investment Gaps: Development of infrastructure requires massive investments. With limited fiscal space, monetization helps in mobilization of non-tax revenue.
Overcoming Public Sector Inefficiencies: It helps in enhancing managerial and operational efficiency through participation of private sector.
Unlocking Value from Brownfield Assets: It focuses on brownfield de-risked assets with stable revenue streams and makes them attractive to investors.
Enhancing Global Competitiveness: High-quality infrastructure attracts foreign investments in the form of better FDI inflow, logistics and increased market access. It also leads to improving India's integration with the global value chain.

The below infographic gives information about various institutions responsible for Assest Monetisation.

Models of Asset Monetization in India

Toll, Operate & Transfer (TOT): It aims to attract private capital for management of completed assets in exchange for toll collection rights. The concessionaire pays a lump sum amount in the beginning and undertakes Operations and Maintenance obligations.
Design-Build-Finance-Operate- Transfer (DBFOT): Concessionaire has responsibility of designing, building, financing and operating the facility before transferring the project to government after expiry of specified period.
Infrastructure Investment Trusts (InvITs): It is a pooled investment vehicle that raises funds from investors by issuing units. It offers stable and predictable cash flows, and diversification and tax benefits. It is regulated by SEBI.
Real Estate Investment Trusts (REITs): They are pooled investment vehicles like mutual funds. However, they invest in real estate.
Project-based Financing: It allows sectors to raise long-term finance from banks by securitizing user fee receipts. E.g. Toll Plazas
Long Term Lease: Lessor confers to the lessee the right to use an asset for an agreed period in return for a payment or series of payments.
Asset Concession: It consists of mining assets, real estate transactions and other monetisation projects such as station redevelopment and airport concessions.

Initiatives for Asset Monetization in India

National Monetization Pipeline: It aims to generate (~Rs. 6 lakh crore) by leasing out public infrastructure assets over the course of four years, from 2022 to 2025.
National Land Monetization Corporation (NLMC): It is a 100% government owned company under administrative control of the Department of Public Enterprises to carry out monetization of non-core assets of CPSEs.
Asset Monetisation dashboard: It tracks progress and provides visibility to investors.

Asset Monetization in India: Impediments versus Strategic Interventions

Domain	Impediments in Asset Monetization	Strategic Interventions Required
Transparency & Governance	Allocation of Assets for monetization is vulnerable to favoritism towards selected corporates, political influence and cronyism. Lack of advance disclosure leads to uncertainty among investors	Public Disclosure of Future Monetization Pipeline to enhance investor visibility, predictability, and trust. Adopt transparent bidding frameworks.
Sectoral Issues	It remains concentrated in highways and ports while urban infra, railways remain neglected. E.g. Recently government core group has pulled up railways for poor monetization.	Broaden and Bundle Monetization: Bundle smaller assets across under-invested sectors to make them commercially viable and attractive.
Valuation Discovery & Competitive Bidding	Risk of undervaluation of assets due to poor bid design. Limited participation of bidders due to capital intensive nature may lead to private monopolies.	Adopt De-risked Models (e.g TOT adoption by NHAI) and foster competition through innovative models (E.g. InvITs).
State-Level Readiness	Negligible private participation in state infra sectors and lack of financial incentives to monetize assets.	Unlock potential in state assets such as state highways through toll roads, terminals etc. Use of interest free loans to states for 50 years under the Capital Expenditure Scheme is a right step.
Consumer & Public Interest	Over exploitation by private players may lead to price hikes.	Adopt "Monetize rights, not ownership" model. Ensure strict contractual obligations and service standards.
Institutional Fragmentation	Involvement of multiple ministries lead to poor coordination and absence of centralised planning.	Form an Infrastructure Ministry to align national and state priorities, supported by NITI Aayog.
Regulatory Uncertainty	Lack of clarity between monetization vs disinvestment in certain sector. (E.g Telecom)	Develop sector-specific monetization guidelines. Independent evaluation and contract monitoring mechanisms.
Fiscal Utilization & Public Trust	Historical misuse of disinvestment proceeds for management of fiscal deficit leading to trade-off between one-time capital gains versus recurring public revenues.	Use of funds for PSU's restructuring and explore leasing/rental models for sustained non-tax revenue streams.
Monitoring & Performance Tracking	Weak post-monetization oversight leads to inefficiencies.	Define clear Key Performance Indicators (KPIs) for revenue, efficiency, compliance.

Conclusion

Asset Monetization Strategy is not just a financial tool but a transformative approach that aligns with the broader goals of economic growth and sustainable development. By unlocking the value of existing assets and reinvesting in new projects, asset monetization can pave the way for a robust and resilient infrastructure network that will support India's growth for years to come.