Institute for Social and Economic Change

Established in 1972 by Professor V K R V Rao, ISEC is an All-India Institute for Interdisciplinary Research and Training in the Social Sciences

Public-Private Partnership’s Growth Empirics in India’s Infrastructure Development – isec

Public-Private Partnership’s Growth Empirics in India’s Infrastructure Development

Abstract

Public-Private Partnerships (PPP) have now emerged as an alternative to the traditional mode of infrastructure provision both in India and rest of the world due to its proven potential to solve infrastructure inadequacies faster and cost-effectively. The paper analyses trends and patterns of various infrastructure sectors and regional distribution of PPPs at global, national and sub-national levels to identify to what extent PPPs have been able to curb infrastructure deficit. The growth empirics reveal that there has been a sharp increase in the number of PPP projects, and that these have contributed immensely to enhance regional and sectoral infrastructure availability. In addition, the paper has observed that PPP projects under the national highway category are way ahead in time and cost efficiency as compared to the non-PPP projects. However, these projects have tended to concentrate in certain sectors and regions, both globally and in the Indian context despite the incentives currently available to these endeavors. The present paper explores the possible reasons for this uneven growth in India. Probable reasons for this uneven growth factors like differences in political will across national and sub-national governments in promotion of infrastructure PPP policies and lack of effective functioning of governments’ various infrastructure executive departments including PPP nodal agencies for identifying, executing, coordinating various departments and in promotion of policies for hassle free and quick implementation and to redress the various differences. Financial assurances to the concessionaires on their investments, availability of land and other incentives like tax incentives, capital grant (Viability gap funding) and coordination by users and nature of project risks, degree of private sector risk management capacity are some the other important factors.

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