04/07/2019 - Indian Economy

What is meant by the concept of asset recycling? How does it help in imparting stimulus to the growth trajectory of Indian economy? Explain

KEY POINTS

Asset Recycling, a concept that helps modernise existing infrastructure while providing government with upfront capital to support a whole new generation of infrastructure.

Imparting stimulus to the growth of Indian economy

·        This idea also includes disinvesting government stakes in companies, but is not just limited to that, includes the selling/auctioning of several kinds of government owned assets such as roads, ports, airports etc.

·        The proceeds from these sales can be used for the creation of new assets — new roads, new ports etc which can be recycled again, when completed.

·        As such, the same pot of money is recycled several times over, without endangering the fiscal deficit, and yet upgrading India's infrastructure.

·        Many long-term investors, foreign and domestic, such as pension funds and insurance companies may be interested in this.

·        Several investors are averse to construction risk (for instance, building a road), but do not mind the operating risk (for instance, tolling and maintaining the road).

·        Here the government constructs and sells off to the private sector thereafter, key difference from Public private partnership model.

·        India's best bet to raise growth is by reviving the investment cycle. India's best bet to raise private investment (which makes up 75 per cent of all investment) is by creating a conducive environment, by stepping up public investment in a fiscally responsible way by adopting “asset recycling”. 

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Kindly evaluate sir .Thank u

Kindly review. Thanks.

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