The infrastructure sector in India and Public Private Partnership (PPP)

To fulfill India's aspirations to generate significant increases in infrastructure spending in the years to come, it will have to rely heavily on private investors as opposed to earlier policies of state-run agencies building roads, airports, and power projects. The government has been keen to involve the private sector in the delivery of infrastructure but it is complicated for the private sector to work out service standards while maintaining social responsibility and keeping the enterprise financially viable. Failure to devise financially viable models for rural roads, power plants, or mass transit systems in the last fifteen years can be attributed to the opacity of public–private transactions related to the infrastructure sector. This report provides a short tour of various models which can be used in infrastructure and social sectors by gaining a better understanding of the social requirements of infrastructure, the government's public obligations to provide infrastructure services and the private sector's need to maintain financial viability. The notion that only the government can and should provide all public infrastructure service has been gradually abandoned in India over the course of the past decade. With private sector participation—in telecoms, roads, ports, civil aviation, and airports—leading to visible improvements in service quality, time, and cost there is growing acknowledgement of the benefits that the private sector brings to the infrastructure sector. In its Eleventh Five Year Plan the Government hopes to harness the private sector's efficiencies in delivery of infrastructure projects to a much greater extent in meeting India's infrastructure needs, either through fully private ventures or through public private partnerships (PPP). The paper is aptly ‘Business Models of the Future’. The research will be considers various models of PPP and covers issues in their design. It will also explore different forms of partnerships between government, NGOs, private sector, and users in the delivery of infrastructure services. What is exciting is that new vistas are opening up. There is a range of models that can be used to extend services in a sustainable manner for rural and social infrastructure. Minimum subsidy bidding, franchises, and the use of vouchers are just some of the means by which the private sector can be profitably and competitively involved and more users provided with access and choice. Surveys have shown that the poor are willing to pay for quality public services. At present, they often end up paying more than the rich for access to basic services that are sub-standard. The report presents scalable case studies of quality service provision at low cost, suited to meet the needs of the poor in areas such as drinking water, primary health care, and education. Indeed, there is a real opportunity for business to innovate and play a constructive role in inclusive growth by providing services adapted for the ‘bottom of the pyramid’. The attention to vocational training in the report is pertinent because India is facing constraints of trained manpower in almost all sectors. Provision of quality education— elementary and secondary—to our young population remains a challenge that can be effectively addressed through PPP endeavors. I am pleased to note that the research will come up with some innovative models to deliver these in the country.