- About Us
- Public Private Partnership
India's growth potential has been significantly constrained by inadequate infrastructure.
Quality infrastructure serves as a foundation to a country's growth. Infrastructure
development requires considerable resources and long term planning to ensure the
healthy and sustainable growth of a country's resources. Moreover, limited public
resources are available for investing in physical infrastructure, as social sectors
have a priority in the allocation of these budgetary resources.
As a solution to this, the Government of India has been promoting investment in
infrastructure sectors through a combination of public investment, private investment
and Public Private Partnerships (PPPs). PPPs are steadily becoming the preferred
mode for development, construction and operation of commercially viable infrastructure
projects. PPPs are prevalent in sectors such as highways, airports, ports, railways
and urban transit systems.
To promote and create an enabling environment for private participation, the Government
has undertaken a number of initiatives. These include the creation of an institutional
framework starting with the apex Committee on Infrastructure under the chairmanship
of the Prime Minister. The Government has also constituted a Cabinet Committee on
Infrastructure that steers the policy framework, approves projects and monitors
implementation. A mechanism for the appraisal and approval of Public Private Partnership
(PPP) projects has also been institutionalized. Since some of the infrastructure
projects may not be commercially viable, the Government has initiated a scheme for
providing financial support. The Government has also established the India Infrastructure
Finance Company that provides up to 20 per cent of the project costs as long-term
debt, half of which can be provided in the form of subordinated debt which typically
serves as quasi-equity.
The transition from traditional procurement to PPPs has created a change in procedures,
perceptions and mindset. A significant feature of the policy framework is the adoption
of model documents such as concession agreements and other bid documents for sanction
of PPP projects.
The PPP modality is the only device that allows private investment into public projects
with the objective of enhancing public welfare. The application of standard documents
and processes facilitates decision-making and project sanction in a manner that
is fair, transparent and competitive.