Durable and quality infrastructure is essential for the economic growth of the nation. This requires the involvement of highly sophisticated technology, labour and timely management and execution. It is not always feasible for the government to bring all of these components together, which is why we are drawn toa mutually beneficial model called Public Private Partnership. Involvement of a private entity in public infrastructure projects including industries liketransportation and urban infrastructure along with the government is called a Private Public Partnership. The government of India is presently taking up several steps to involve the private sector in various infrastructure projects.According to the World Bank’s Private Participation in Infrastructure (PPI) database 2021, India was the largest PPI investment country in South Asia with US$7.7 billion in comparison to 2020, while most South Asian countries saw a significant decrease in PPI during the same time period.
The lack of available funding is one of the most significant challenges that the nation’s infrastructure sector must contend with. The PPP has the potential to play a big role in providing for the same. The structure of a PPP is such that it often involves financing the project. This constitutes an additional benefit for the public sector in terms of keeping the costs of the project under control. When the public sector uses the financing provided by the private sector, it is also able to take big capital spending programmes “off balance sheet.” The government offers a variety of incentives to the public-private partnership sector, such as the Viability Gap Funding (VGF) subsidy, which allows for up to forty percent of the total cost of a project to be covered by capital grants; the India Infrastructure Project Development Fund (IIPDF), etc. The assignment of responsibilities and the imposition of penalties that are associated with the contract contribute to an increase in the level of productivity that the private partner achieves at each stage of the project. That in turn reflects on the overall timely completion of the project. The elimination of hazards, improvements in the administration of urban infrastructure, and a host of other benefits are also related to the implementation of a PPP model.
A PPP model is not a perfect solution that will solve all of the finance and infrastructure issues facing the public sector, and PPPs are not necessarily the most effective procurement option. There are many complexities associated with the same. It’s possible for an operation to be inefficient if there is no data available on the current assets. The issue of accountability comes around as a major criticism towards the model. Legal frameworks and regulations that are overly stringent could have a negative impact on the effectiveness of the PPP model’s implementation.
Joining hands with the private sector through a PPP model doesn’t relieve the real accountability and duties of the public sector agencies, rather it lays out a set of obligations on them to ensure that the arrangement is successful in protecting the public interest by administering the PPP in a manner that is fiscally responsible, efficient, and effective.
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