PUBLIC PRIVATE PARTNERSHIP (PPP)
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Public Private Partnerships (PPP) was adapted to auger growth in infrastructure development in the country and thereby giving a positive thrust to the Indian economy. The Government took the PPP route for implementation of projects in roads, ports, airports, railways, power and urban utilities as well as in social sectors. The contribution of PPPs in the infrastructure development across the country has been immense. However, poor planning towards implementation of the PPP model has led to faulty contractual structures and absence of remedial tools. This has created an illness of non-implementation and has proliferated growth of non-performing assets in the books of the project lenders in India. The failure of various PPP projects is a major reason for the books of the banks being saddled with non – performing assets.
The Government of India has therefore concentration on developing different enabling tools and activities to exuberance private sector investments into the country through public-private partnerships (PPPs). These are vital for catalyzing investments in new infrastructure, and for efficient operation and maintenance of assets, existing and new, over their lifetime and ensuring focus on service delivery.
Challenges in PPP:
Project development – The project development activities such as, detailed feasibility study, land acquisition, environmental/forest clearances etc., are not given adequate importance by the concession authorities. The absence of adequate project development by authorities leads to reduced interest by the private sector, misplacing and many times delays at the time of execution.
Regulatory environment – There is no uncommitted PPP regulator in India currently. In order to attract more domestic and international private funding of infrastructure, a more robust regulatory environment, with an independent regulator, is essential.
Financing availability – The private sector is dependent upon commercial banks to increment debt for the PPP projects. With commercial banks reaching the scrotal exposure limits, and large Indian Infrastructure companies being highly leveraged, funding the PPP projects is getting difficult.
Risks in PPP:
- Political interference
- Lack of transparency
- Cost attached
- Renegotiation of the assets due to long term nature of the projects
- Inexperienced personnel for project appraisal
The Government has introduced PPP model in various other sector including development of schools and urban areas. Under the 'Modern School Scheme', the Government will set up 2,500 modern schools through PPP. The first modern 'Anganwadi Centre' on PPP model took off in 2015 at Hasanpur village in Sonepat district of Haryana. In February of this year, the Telecom Regulatory Authority of India has recommended the implementation of rural broadband network by PPP model. Despite various setbacks, PPPs will continue to drive the infrastructure growth in the country. However, in order to maintain the momentum, the big reforms should be taken up on priority basis.