National Monetisation Pipeline (NMP) 2.0, Features, Mechanism

Why in the News?

The Government of India has launched the second phase of the National Monetisation Pipeline (NMP 2.0) for the period FY 2025-26 to FY 2029-30. It was announced in the Union Budget 2025-26. It sets a monetisation target of about ₹10 lakh crore, while the broader Total Monetisation Value (TMV) is estimated at ₹16.72 lakh crore over five years.

National Monetisation Pipeline 2.0?

• National Monetisation Pipeline (NMP 2.0) is a government programme to generate funds by leasing out already built public infrastructure assets (brownfield public infrastructure) for a fixed period.
• Under this model, operational assets such as highways, railway infrastructure, ports and power transmission lines are leased to private players for operation and maintenance.
• It is not privatisation, as ownership remains with the government while the private sector manages the asset and shares revenue.
• The proceeds generated are reinvested into new infrastructure projects, reducing pressure on government finances.
• This approach of unlocking value from existing assets and reinvesting it into fresh capital expenditure is known as Asset Recycling.

The pipeline has been prepared by NITI Aayog in consultation with infrastructure ministries. It builds upon the first phase of NMP, which covered FY22–FY25 and achieved 90% of its ₹6 lakh crore target.

‹ ›

Key Features of National Monetisation Pipeline (NMP 2.0) 

• The programme covers 12 major sectors including highways, railways, power, ports, coal, mines, telecom, petroleum and natural gas, civil aviation, warehousing, urban infrastructure and tourism.
• Highways, multi-modal logistics parks and ropeways account for the largest share of monetisation value. 
• The power sector, railways and ports also constitute significant portions of the pipeline. 
• Coal and mining assets are expected to generate substantial revenues over the five-year period.
• The Total Monetisation Value of ₹16.72 lakh crore includes both direct proceeds to government entities and private sector capital investment mobilised through Public-Private Partnerships (PPP).

National Monetisation Pipeline (NMP 2.0) Working Mechanism 

• Under NMP 2.0, assets are monetised through models such as concession agreements (PPP), Infrastructure Investment Trusts (InvITs), securitisation of revenue streams, or transparent commercial auctions.
• The private sector operates the asset and pays the government either upfront, periodically, or through revenue sharing, depending on the agreement.
• The money received is credited to different accounts based on the project structure.
  • If the project belongs to a central ministry, the revenue goes to the Consolidated Fund of India.
  • If a Public Sector Undertaking (PSU) monetises an asset, the proceeds go to that PSU.
  • In sectors like coal and mining, royalty payments go to the respective State Consolidated Funds
  • Private sector investment in PPP projects is recorded separately as part of overall infrastructure financing.
• The entire programme is monitored by an empowered Core Group of Secretaries, chaired by the Cabinet Secretary, to ensure coordination and transparency.

Achievements of NMP 1.0

• The first phase of the National Monetisation Pipeline mobilised ₹5.3 lakh crore against a target of ₹6 lakh crore. 
• Sectors such as coal, highways, ports and petroleum performed strongly. However, railways, telecom and civil aviation showed relatively lower achievement levels.
• Importantly, NMP 1.0 helped institutionalise asset recycling, attract domestic and global investors such as pension and sovereign wealth funds, and improve coordination across ministries.

How NMP 2.0 is Different from NMP 1.0

National Monetisation Pipeline (NMP) 2.0 builds upon the experience of the first phase, but with a bigger target and stronger implementation framework.

• Higher monetisation target: NMP 1.0 (2021–25) had a target of about ₹6 lakh crore and achieved nearly 90% of it. NMP 2.0 (2025–30) proposes an estimated potential of around ₹16.7 lakh crore, making it about 2.6 times larger in scale.
• Greater private investment component: NMP 2.0 includes an estimated ₹5.8 lakh crore of private sector investment, indicating deeper private participation compared to the first phase.
• Stronger focus on Asset Recycling: While NMP 1.0 introduced the concept, NMP 2.0 more clearly links monetisation proceeds with fresh capital expenditure (CAPEX) to fund new infrastructure.
• Improved governance structure: NMP 2.0 will be monitored by the Core Group of Secretaries on Asset Monetisation (CGAM), chaired by the Cabinet Secretary, ensuring closer inter-ministerial coordination.

National Monetisation Pipeline (NMP 2.0) Significance

National Monetisation Pipeline (NMP 2.0) is significant because if following reasons: 

• NMP 2.0 aligns with the broader vision of infrastructure-led growth and the goal of building a “Viksit Bharat”. 
• It improves efficiency by allowing specialised private operators to manage assets.
• It creates fiscal space for new capital expenditure.
• It aligns with the broader vision of long-term economic development and infrastructure expansion.
• At a time of global economic uncertainty, such mechanisms provide alternative financing routes to maintain growth momentum.

National Monetisation Pipeline (NMP 2.0) Challenges 

The experience of NMP 1.0 shows that asset monetisation is not just about setting big targets. It requires strong institutions, investor trust and clear policies. While the first phase achieved close to 90% of its target, it also revealed practical challenges that NMP 2.0 must address.

• Uneven investor interest: Roads performed well, but sectors like railways and telecom saw limited participation.
• Valuation concerns: Fixing the right price is difficult. Overpricing discourages bidders, while underpricing raises public criticism.
• Regulatory uncertainty: Policy changes and approval delays reduce investor confidence. NITI Aayog has stressed the need for stable and predictable frameworks.
• Public perception issues: Monetisation is often misunderstood as privatisation, leading to political resistance.
• Institutional capacity gaps: Some ministries and PSUs lack expertise in structuring PPP contracts effectively.
• Revenue risks: Lower-than-expected traffic or usage affects returns and investor interest.
• Coordination challenges: Asset monetisation requires smooth coordination between the Centre, states and multiple agencies. Delays in clearances and approvals slowed progress in certain projects.
• Market conditions: Market conditions and investor sentiment may affect the pace of monetisation.

Way Forward

If these steps are taken, NMP 2.0 can support infrastructure growth through sustainable asset recycling without increasing fiscal burden.

• Provide policy stability to build long-term investor confidence.
• Ensure transparent and realistic valuation to attract competitive bids and avoid public criticism.
• Strengthen institutional capacity within ministries and PSUs to manage PPP contracts effectively.
• Improve communication to clarify that monetisation is not privatisation. 
• Adopt balanced risk-sharing mechanisms to handle revenue and demand uncertainties.
• Enhance Centre-State coordination for faster approvals and smoother implementation.