“NEXT-GEN DEMONETIZATION”- The Smart Way of Selling It All

If you are waiting for the government to announce this time that they are going for demonetization, you are wrong. This time it’s the other way around, the next wave of demonetization follows through “Monetization of Assets”. The government is on the mission to sell the public assets to those who can afford or in their words increase the public ownership in government owned assets.

THE NEED OF THE HOUR

Likewise, to support the deficit of the economy government has few options: -

Firstly, they can print the unlimited currency in the economy which in the first instance looks good but eventually destroy the whole economy as happened in Zimbabwe, Venezuela leading to hyperinflation.

Secondly, disinvestment is the option to realize the revenue from the underlying government assets followed by increase taxation, reduced subsidy.

In the long run reducing the deficit by changing policies & better management and governance hold the key but in the short run the best possible way around to manage deficit is either to borrow money or to dis-invest from non-core assets of the government.

THE JUSTIFICATION

A major chunk of governments money is blocked into the assets owned by the government across the length & breadth of the land. To realize the value from these assets & explore the unheard sources of finances is just the primary justification.

The real objective of the government behind this whole process of Asset Monetization is as follow: -

1. To Redeem the value of investments from those public assets which have not provided optimal return so far.

2. To witness unexplored source of revenue for the organization & its stakeholders.

3. To estimate the value of public assets lying with the government more accurately for better financial management.

HOW THEY DO IT

The government assets are broadly classified into four categories namely: -

1. Land & Building

2. Brown-Field Operation Assets incl. pipe lines, roads, mobile tower etc.

3. Financial Assets incl. Stock, Hybrid Securities etc.

4. Other Miscellaneous Assets

The bigger question is that from where will government Dis-invest: - Which all are the Decision making Bodies in this whole process: -

In order to function in a coordinated way, government has formed decision making bodies at various level namely: -

•ALTERNATIVE MECHANISM (AM) - Union finance minister, minister of road & highway & other concerned ministers

•CORE GROUP OF SECRETARIES ON ASSET MONETIZATION (CGAM) - Cabinet secretary including secretary of DAE, revenue, DIPAM, DPE, corporate affairs, legal affairs & secretary of concerned department.

•INTER MINISTERIAL GROUP (IMG) - Chaired/co-chaired by secretaries & representatives of concerned departments incl. CMD & director finance of concerned department.

The Process for Asset Monetization goes as follow: -

THE NATION WANTS TO KNOW

The companies, organizations, establishments owned by the public & ruled by the government in the form of CPSES, PSUs etc. play’s a very major role in counterbalancing the capitalist & Socialist economy. This transfer of power is justified to some extent only but when it overtakes primary motive of these organizations it creates the following problem in the economy: -

1. Anti- Profiting Scenarios

2. Job Creation

3. Reservation of backward society in these establishments etc.

The answer might lie in the question which we didn’t ask the government from independence till now that, “Why these establishments run on the parameters of bureaucracy rather than profit making through efficiency & effectiveness” if we have gotten the answer then there will be no concept of Dis-investment & Asset Monetization.