Given below are two statements, one labelled Assertion (A) and the other labelled Reason (R).
Assertion (A): India's National Monetisation Pipeline (NMP) is expected to strengthen fiscal consolidation by reducing the fiscal deficit without cutting capital expenditure.
Reason (R): Proceeds from asset monetisation are treated as capital receipts, allowing them to be used for financing infrastructure creation rather than revenue expenditure.
- ABoth A and R are true, and R is the correct explanation of A
- BBoth A and R are true, but R is not the correct explanation of A
- CA is true, but R is false
- DA is false, but R is true
Show answer and explanation
Correct answer: (a) Both A and R are true, and R is the correct explanation of A
Explanation
The National Monetisation Pipeline (NMP), announced in August 2021 and prepared by NITI Aayog, aims to raise about ₹6 lakh crore over FY2022 to FY2025 by leasing operating brownfield public assets, such as roads, railways and power lines, to private operators. The government keeps the ownership, and the assets return to it at the end of the lease.
- R is true: the money from monetisation is a non-debt capital receipt, and it is meant to fund new infrastructure (asset recycling), not revenue spending such as salaries or subsidies.
- A is true, and R explains it: because this money replaces borrowing, the government can keep capital expenditure high while bringing the fiscal deficit down.