Accelerating Public Private Partnerships in India

India has been witness to a fairly high growth on the economic front. The last decade has brought out the focus on India as next super power along with China. One of the major contributors to this growth has been the Public Private Partnership (PPP) ventures.

 

Unfortunately, the 2008 global recession affected this economic growth and PPP was one of the areas affected. Although PPP sector experienced slow growth, it was not entirely due to recession. There are other major reasons why the PPP sector has not achieved success it was expected to.

 

We spoke to Mr. Arun Lakhani – MD Vishvaraj India, one of the leading private players in PPP ventures to understand how the growth of PPP be accelerated in India. But before that, let's take a look at the current situation.

 

Current PPP Scenario in India:
The infrastructure sector in India has seen significant amount of investment in the past few years. It is expected that almost half of this investment will be coming from private players with the Government contributing to the other half of the investment.

 

India is a dynamic market for businesses and there is no dearth of willing participants for Public Private Partnerships. However, the ground reality is that the PPP ventures have not seen a hundred per cent success.

 

Some landmark projects such Nagpur 24x7 water supply, led by Vishvaraj Infrastructure have achieved phenomenal success while other have just about managed to cross the line. This is happening even after various initiatives have been undertaken by the Indian government to facilitate growth of PPPs.

 

So we discussed four fundamental ways in which the Government can accelerate growth in PPP

 

1.    Make PPP Data Accessible:
There is an evident lack of a single repository of information regarding various PPP ventures executed in India. There is no central point which could act as a source of information for those who want to access data on policies, frameworks, successful models etc.

 

Such an information database can act as a critical reference point for future PPP projects and act as a guide for companies and government bodies looking to implement PPP ventures for various projects.

 

An information portal of this nature would also bring about transparency to the entire process. Data such as reports, agreements, status would be available for interested parties.

 

2.    Have A Dedicated PPP Regulatory Authority:
Currently there is no regulatory authority for PPP in India. If there is to be a sustained growth of PPPs then having an independent authority to administer PPPs is essential. Having such an authority in place ensures PPP ventures are not affected by unwanted outside interferences in it execution.

 

'A glance at nations like UK, US, Australia will give us a compelling reason as to why there is a need for such authority in India too. Not only will it help in disciplined growth of PPP but it will also attract foreign investors to India' Says Lakhani.

 

Even the local private players who want to participate in PPP will receive encouragement and guidance.

 

3.    Increase financing:
The private sector is highly dependent on banks for their financial needs. Unfortunately, due to the limits imposed by Reserve Bank of India, banks can only offer loans to a single business entity up to a certain limit. This has resulted in private partners in PPP becoming helpless when there is a huge financing required for PPP ventures, which is more often than not.

 

One of the key issues plaguing this model in India is the limited financial support for private partners by banks. Although the banks try their best at offering financial help to the PPP venture, unfortunately it just is no sufficient.

 

There is a need for creating more financial channels for private partners in PPP so that they can take on ventures that require heavy financial investments.