The Indian government is intensifying its focus on infrastructure monetisation as a complement to traditional public-private partnerships (PPPs), while maintaining ownership of public assets. This strategy, articulated in the recent launch of the National Monetisation Pipeline (NMP) 2.0 in February, aims to raise ₹16.72 trillion through 2030—nearly three times the target set under NMP 1.0, which spanned 2021 to 2025.

Unlike privatisation, monetisation involves transferring operating rights of government-owned infrastructure to private entities without divesting ownership. This approach allows the state to retain underlying assets while leveraging private sector efficiencies in the operations phase. Policymakers view this as a pragmatic evolution after 25 years of greenfield PPPs, which largely shifted development, construction, and operational risks to private developers. The earlier model, particularly prominent in national highway projects under the build-operate-transfer (BoT) scheme, faced setbacks due to optimistic traffic projections, delays in land acquisition, and cost overruns, leading to the termination of many contracts and diminished investor confidence.

The monetisation model reflects lessons learned, emphasizing a more balanced allocation of risks. The hybrid annuity model, introduced in the mid-2010s, was an early step in this direction, with the government assuming land and revenue risks while private partners handled construction and operations under fixed returns. NMP formalises this framework, extending it beyond roads to sectors including railways, power, pipelines, and telecommunications.

During NMP 1.0, the government deployed tools such as toll-operate-transfer agreements, Infrastructure Investment Trusts (InvITs), and securitisation mechanisms, mobilising approximately ₹5.3 trillion—89 percent of its target. Performance varied across sectors; roads and coal assets saw strong interest, whereas railways and aviation lagged. With NMP 2.0, the government plans larger, more ambitious monetisation targets and has incorporated the sale of minority stakes in listed public sector units (PSUs). For instance, seven railway PSUs are expected to generate more than ₹82,000 crore through disinvestment, contributing to a wider disinvestment target of ₹80,000 crore for fiscal year 2027, up from ₹47,000 crore in 2026.

Market response to the new pipeline has been encouraging. The National Highways Authority of India (NHAI) has already raised over ₹28,000 crore for FY26 via InvITs and toll-operate-transfer deals. A notable event was the launch of the Raajmarg Infra Investment Trust (RIIT), NHAI’s first InvIT open to retail investors, which was oversubscribed nearly 14 times and listed on the Bombay Stock Exchange in March 2026. This complements the existing National Highways Infra Trust (NHIT), which has attracted substantial domestic and international institutional investment.

Railway sector reforms under NMP 2.0 signal a shift as well, with targets set at ₹2.62 trillion in monetisation. The Railway Board’s 2025 proposal to extend concession periods to 50 years and assume responsibility for land acquisition reflects an evolved approach to risk sharing.

Despite its promise, the monetisation framework faces complex challenges. Structuring contracts to ensure that private operators meet rigorous service-level agreements (SLAs) related to safety, punctuality, and customer grievance mechanisms remains critical. Balancing adequate returns for investors against the need for public service obligations, such as maintaining loss-making but socially essential routes, requires carefully calibrated subsidies or viability gap funding. Short concession periods may deter investments in modernization and renovation, while overly punitive penalties may discourage bidders.

Overall, monetisation represents a nuanced evolution of India’s infrastructure policy, aiming to foster greater private sector participation without ceding asset ownership. Success will depend on crafting policies that align interests across public and private sectors, manage risks effectively, and maintain service quality for users.