Bridging the Gap

Context: Asset monetisation is crucial for the government to sustain spending in the near to medium term.

Fiscal Challenges 

• Relief measure announced: may not be sufficient and additional measures would widen the fiscal deficit.

• Recapitalization of public sector banks as their asset quality is likely to worsen.

• Providing employment through an urban employment scheme will put an extra burden on government finances.

Way Forward: Need to devise a medium-term framework for fiscal management.

• Selling infrastructure assets:

• Assets in areas of railways and highways are being looked at.
• The government is working on a new Public Sector Enterprise (PSE) Policy. 

• Act fast: Due to the economic uncertainties, the more the delay the lesser the chance of getting the right valuation of the assets

• A sharp recovery in the stock market could help attract foreign buyers.

• Carefully structured monetization plan: should be prepared to avoid the mistakes of the Air India experience.

• Ensure full transparency: to overcome the hurdles due to political issues.