From Disinvestment to Asset Monetisation

Context

• Despite launching a revamped disinvestment policy in 2021, the government’s focus has decisively shifted toward extracting maximum value from existing assets.
• PM Modi in 2021 asserted that the government has “no business to be in business”, signalling intent to minimise state presence in commercial activities.
• The recent launch of National Monetisation Pipeline 2.0 marks a clear extension of this policy direction.

Decline of Disinvestment Revenue

• Except for a brief surge in 2022-23 (₹35,294 crore), disinvestment revenue has been falling consistently every year.
• Revenue fell sharply to ₹16,507 crore in 2023-24 and further to ₹10,163 crore in 2024-25.
• The private sector showed little interest in buying PSUs due to large employee headcounts and loss-making assets.
• In 2023-24, the Centre removed the separate disinvestment header from Budget documents, clubbing it under ‘Miscellaneous Capital Receipts’.
• The government no longer sets annual disinvestment targets, marking a quiet but significant policy retreat.

Rise of Dividend-Based Revenue

• The government shifted focus to maximising dividends from Central Public Sector Enterprises ( CPSEs).
• DIPAM issued a consistent dividend policy advisory in 2020, directing CPSEs to pay higher dividends considering profitability and reserves.
• Revised Guidelines on Capital Restructuring (2024) emphasised creating value in CPSEs to maximise returns for government and shareholders.
• Dividend receipts from CPSEs (excluding banks and RBI) rose from ₹39,750 crore in 2020-21 to ₹74,128 crore in 2024-25, a near doubling.

Asset Monetisation: The New Strategy

• In 2021, the government launched the National Monetisation Pipeline (NMP) — leasing brownfield assets to the private sector without transferring ownership.
• NMP 1.0 target was ₹6 lakh crore (2021-25), with the government claiming 90% achievement.
• NMP 2.0 was launched in February 2025 with a target of ₹16.72 lakh crore over 2025-30 — nearly three times the earlier pipeline.
• Asset monetisation allows private sector efficiency without permanent loss of public assets — a middle path between privatisation and state ownership.

Implications and Way Forward

• The shift reflects a pragmatic acknowledgement that outright privatisation faces political and practical resistance in India’s economic landscape.
• Maximising dividends and monetising assets ensures fiscal revenue without permanently exiting public ownership.
• However, over-dependence on PSU dividends raises questions about long-term sustainability if PSU profitability declines.
• The success of NMP 2.0 depends on credible regulatory frameworks, investor confidence, and transparent leasing mechanisms.
• The broader question remains whether this shift represents a genuine reform vision or a tactical retreat from the original disinvestment ambition.