InvITs and Asset Monetisation

How India raises money by leasing or selling stakes in completed roads, pipelines and power lines through investment trusts and its National Monetisation Pipeline.

Building new infrastructure needs money. One way governments raise it is by monetising assets they already own: selling or leasing the rights to earn revenue from completed projects, then using the money to build new ones. This is called asset recycling.

Infrastructure investment trusts

An InvIT, or infrastructure investment trust, is like a mutual fund that owns income-generating infrastructure, such as:

Toll roads.
Power transmission lines.
Gas pipelines.
Telecom towers.

Investors buy units of the InvIT and receive regular distributions from the assets’ income, such as tolls or transmission charges. InvITs are regulated by SEBI and listed on stock exchanges.

Why they work

Developers and governments recover money tied up in finished projects.
Long-term investors, such as pension funds and insurance companies, get steady income matched to their long-term needs.
Completed assets have lower risk than projects under construction.

NHAI launched its own InvIT in 2021, raising money from toll roads.

The National Monetisation Pipeline

In 2021, the government announced the National Monetisation Pipeline, aiming to raise about 6 lakh crore rupees over four years by monetising assets including:

Roads and railways.
Power transmission and generation.
Gas pipelines.
Airports and ports.
Stadiums and warehouses.

Ownership generally remains with the government; private operators gain rights for a set period.

Concerns

Underpricing: selling revenue rights too cheaply.
User charges: private operators may raise tolls or fees.
Monopoly power in regulated assets.
Achieving targets: actual monetisation has fallen short of targets in some sectors.

The economics

Asset recycling makes sense if the money raised is invested in projects with higher social returns, and if contracts protect users.

The road that funds a new road

A completed toll road is placed into an InvIT. Pension funds buy units, giving the government upfront money. The government uses it to build a new highway in a less developed region, while investors earn steady returns from tolls on the old road.

Thinking asset monetisation means selling government assets forever

Most monetisation grants rights for a fixed period, with ownership returning to the government.

Key takeaways

Asset monetisation recycles money from completed projects into new ones.
InvITs let investors earn income from roads, power lines and pipelines.
The 2021 National Monetisation Pipeline targeted about 6 lakh crore rupees.
Pricing, user charges and monopoly power are key concerns.