National Monetisation Pipeline a good move if govt can avoid cronyism, make stable rules

There is no reason why a Taj Mahal or any number of other national monuments cannot be strictly owned by the State

The National Monetisation Pipeline (NMP) is an excellent initiative. In principle, the initiative retains the ownership of public assets in the hands of the government, even as it forks out the operations of such assets to the more efficient private sector. Of course, caveats apply, as we shall see later.

The initiative is a tweak on the PPP model – of the airports fame – except that in this case, the ownership will stay with the government, even as the asset is leased or licensed to a private operator for a pre-specified length of time. Variants of such models have also been used in case of highways, railways, bus stands, and power transmission and supply sectors in more recent years.

I am particularly enthused about the NMP model for a reason. Each newspaper takes pride in stating that they were the first to bring such and such news to their readers. I may therefore be pardoned if I say that three years ago, I had pointed out in these very columns (PPP Way to Go, Deccan Herald, October 12, 2018), that given the sorry state of Indian national monuments, we needed to lease or license them to private players, while of course retaining the ownership with the State. These monuments, with monumental potential for forex generation, are maintained in such an abysmal state by the State that separating their ownership from their maintenance and operations through a lease or licensing arrangement may bring in the much-needed foreign exchange to the country.

My precise lines in the aforesaid piece were, “…it should be apparent that as long as the ownership and control of the heritage sites vest with the governments, whether central or state, leaving only the maintenance of the monuments and operation of hotels and restaurants attached to them to the private sector, there would be no compromise of the public interest involved in any way.” I have no reason to think any different now.

There is no reason why a Taj Mahal, or even a Red Fort, or the Ajanta, Ellora, or Khajuraho, or any number of other national monuments cannot be strictly owned by the State, but operated by private operators like, say, the Taj or Oberoi or other well-regarded hospitality groups. Of course, such arrangements should be governed by the strictest terms and conditions through finite period licensing arrangements, terminable with ease should the private operators violate the agreed terms.

Also read: National Monetisation Pipeline: Pipe dream or bold reform?

Such arrangements should have the potential to increase tourist foot-falls – both Indian and international (making allowance for Covid conditions) – manifold in the shortest time. The fact is, today, even around such well-known tourist places like the Golkonda Fort of Hyderabad, or Mahabalipurum near Chennai, or somewhat lesser known places like the Lepakshi Temple near Bengaluru or Somanathapura Temple, or other monuments -- and for that matter, any number of scenic waterfalls or trek routes around the length and breadth of the country -- do not even have a half way decent cafeteria or a restaurant for the tourists, not to mention wider approach roads and parking facilities. Licensing to reputed hospitality groups could easily improve the attractiveness of such spots, especially if the roads and parking infrastructure to these spots are also licensed to private operators along similar lines.

Perhaps a few half-hearted attempts were indeed made along the above lines, but they were as hastily withdrawn as they were implemented, in the face of some criticism. Bad implementation does not make a strategy bad. Perhaps NMP should be the way forward, with certain caveats of caution. More than any other infrastructure, tourism remains our best bet to earn precious foreign exchange.

Changing the context somewhat, we lost an estimated Rs 30,000 crore from the 2010 Commonwealth Games. Much of the loss could have been on account of rampant corruption involved in the development of the infrastructure. But an equally important reason for this was that there was no cogent plan for the use of these assets after the event. As a consequence, after the Games were over, much of the built-up infrastructure, like stadia, swimming pools, tracks, living apartments, et al., went to seed without appropriate usage, supervision and stakeholder interest.

Had there been participation of the private players in the development of the infrastructure, this may have been averted, as the lessees or the private players would have retained an abiding interest in the operations of the assets. Had the Government brought in private lessees or licensees to participate in these projects, the private bidders would have factored in post-Games use of these facilities and would have had a continuing skin in the game to maintain the assets in good condition. I did draw attention to this as well in the aforesaid piece, saying “private participation in heritage and sports will give a booster shot to the tourism and sports climate in the country.”

There is much enthusiasm in the air today about the medals that our outstanding athletes have won in the recently concluded Olympics. But unless we make our sports infrastructure an integral part of the lives of our youth, we will never achieve the place which may be our due in international events, whether in sports or athletics. That’s why an NMP-like strategy in sports facilities is absolutely important.

Of course, for the NMP system to work seamlessly and sustainably, the government will have to be careful that they plug the loopholes of the earlier PPP arrangements, retain full transparency, and not change the rules of the games arbitrarily after the game has commenced. These are not idle worries either. The conditions governing the competition for airports were tweaked (dropping the ‘prior experience’ clause in the original PPP) in the course of the process, which resulted in a particular entity winning an unprecedented number of airports. Such moves lead to public distrust in the PPP prospects – a danger the government must honestly address.

The sale of public sector assets has traditionally invited much wrath from several quarters as “selling out the family jewels”. Well, NMP wisely skirts that challenge and takes a sensible approach.

(The writer is an academic and an author)