PPPs on the Front Foot

In today’s scenario, the role of Infrastructure acts as a magnet for attracting enormous interest from foreign players spreading a profound impact in shaping the face of nation globally. The Infrastructure sector in India is traversing through one of its most exponential phases today. The Government of India is actively striving towards stimulating flow of investment in the country. For the past few decades, both government as well as private enterprises were targeting in maximizing economic benefit together as a direct outcome of the prevalent macroeconomic policies of the Government. Public Private Partnership gives a huge opportunity for private sectors to participate in the infrastructure sector’s growth across India. Due to the deficiency of the investment requirements and the limited availability of public resources for investment, it is vital to explore avenues for increasing investment in infrastructure through a combination of public investment and private investment; Public Private Partnerships (PPPs). Private-public investment in infrastructure is endeavoring to achieve growth momentum during recent years. The Government of India is actively encouraging PPPs through several initiatives which include standardising contractual documents as sector specific Model Contracts/ Concession Agreements, standardising bidding documents, establishing institutional mechanism like the Indian Infrastructure Finance Company Limited to facilitate infrastructure development and PPP, creating the India Infrastructure Development Fund, relaxing the restrictions on foreign direct investment in most infrastructure sectors, fiscal Incentives including the Income Tax Act, 1961 and state laws to developers and lenders of Infrastructure Projects. The private sector is expected to contribute at least half of the over $1 trillion dollar investment planned in infrastructure in the XII plan (2012-17). To accelerate economic growth in the country, Indian government needs to step up in boosting 5 main sectors i.e. power, roads, ports, airport and health care. A successful and growing stream of PPPs in these sectors will bring immense developments in taking the nation on global track. India on its quest to become a bright spot in global economy has made significant strides towards the development of these sectors through the advancements of PPPs role. A high-powered committee set up by the finance ministry to review public-private partnership (PPP) in infrastructure recommended independent regulators for PPP projects in various sectors. Panel said the committee strongly endorses the 3PI, which can function as a centre of excellence, enable research, and review and roll out activities to build capacity. PPPs in railways can bring opportunities for a chunk of investments. The committee submitted the relatively simpler PPP projects in the Railways to attract more funding. Projects could include monetisation of existing station, heritage station buildings, greenfield development of stations, maintenance and operations of identified tracks. Three PPP projects worth Rs 3016 crores are being executed through the annuity route and in-principle approval has been accorded to six others worth Rs 3078 crore. Indian Railway has proposed Rs 8.56 lakh crores investment plan for the next five years. The Committee on public-private partnership (PPP) has concentrated on faster environmental clearances for ports and also seeking to make the authorities responsible for availing infrastructure. Airports at Mumbai, Delhi, Bengaluru and Hyderabad have been developed under the public-private partnership (PPP) route. The road transport and highways ministry has proposed projects worth Rs 50,000 crores under public-private partnership route in the years 2016-17. This will be the largest highways projects to be awarded by the ministry under PPP in a single financial year. The government has set out a grand vision of higher physical investment in infrastructure business. Thus, it is expected that the investment in infrastructure will provide a fillip to dominant economic development in future.