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PUBLIC PRIVATE PARTNERSHIPS IN INFRASTRUCTURE DEVELOPMENT IN INDIA

Other Topics - By: - Mr. M. GOVINDARAJAN - Dated:- 10-3-2016 - Needs of Infrastructure Infrastructure is the basic physical and organizational structure needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function. It can be generally defined as the set of interconnected structural elements that provide a framework supporting an entire structure of development. It is an important term for judging a country or region's development. I .....

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rowth by increasing the productivity of labors and capital thereby reducing the costs of production and raising profitability, production, income and employment Impact of infrastructure Dr. Jeffrey Delmon, Senior Infrastructure Specialist of The World Bank, begins his book indicating that, Poor infrastructure impedes a nation s economic growth and international competitiveness (The World Bank 2006). Insufficient infrastructure also represents a major cause of loss of quality of life, illness and .....

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, ports, and air transport, enable entrepreneurs to get their goods and services to market in a secure and timely manner and facilitate the movement of workers to the most suitable jobs. Economies also depend on electricity supplies that are free of interruptions and shortages so that businesses and factories can work unimpeded. Finally, a solid and extensive communications network allows for a rapid and free flow of information, which increases overall economic efficiency by helping to ensure t .....

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pping to get their goods to market. There is no doubt that providing support for infrastructure in an environment is challenging and evidence shows that investors in infrastructure are very sensitive to country risk. In this sense, it is the job of institution such as the World Bank Group to assistant governments to manage such risks, whether through enabling effective regulation and policy, through increased transparency, or risk sharing through instruments such as guarantees. Economic growth T .....

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alth, which are in the nature of primary services and has a direct impact on the quality of life. The performance of infrastructure is largely a reflection of the performance of the economy. Infrastructure industries are measured by six key infrastructure and core industries (i.e., electricity, crude oil, petroleum refinery products, coal, steel and cement). Indian scenario India is the second fastest growing economy next to China. The development of infrastructure will develop the economic grow .....

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.88 12.80 63.33 12.32 Water supply and sanitation 16.20 7.44 35.93 6.99 Ports 3.52 1.61 22.00 4.28 Airports 1.69 0.78 7.74 1.51 Storage 1.20 0.55 5.59 1.09 Gas 2.43 1.11 4.21 0.81 TOTAL 217.85 100% 514.03 100 In crores 871,445 2,060,193 The development of infrastructure in all aspects is required to be fulfilled in India. The inadequate infrastructure results in the following: significant constraint on India s growth potential; retards GDP growth by 1% - 2% per annum (estimates); acts as a major .....

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of economy; Investment increased by 2.1 times in XI plan; 7.2% of GDP; share of private investment rose to 38%. Need for Public Private Partnerships The gap between the existing and required infrastructure is to be filled up. To improve the availability of the infrastructure is possible only by increased investments in the infrastructure assets. There is also a need to enhance the quality of service, minimum acceptable standards of service. The traditional public procurement will not meet the re .....

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ts and/or related services for public benefit; Through investments being made by and/or management undertaken by the private sector entity for a specified period of time; Where there is a substantial risk sharing with private sector; and the private sector receives performance linked payments that conform (or are benchmarked) to specified, pre-determined and measurable performance standards. Essence of PPPs The essence is partnership. The purpose of partnership is to deliver a project or a servi .....

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Government is actively pursuing PPPs to bridge the infrastructure deficit in the country. Several initiatives have been taken during the last three years to promote PPPs in sectors like power, ports, highways, airports, tourism and urban infrastructure. Under the overall guidance of the Committee of Infrastructure headed by the Prime Minister, the PPP programme has been finalized and the implementation of the various schemes is being closely monitored by the constituent Ministries/Departments u .....

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esulted in the creation of new capacities and much greater choice for travelers. The annual growth in air traffic has been in excess of 20 percent and fares have dropped significantly. Even in the road sector, PPPs have demonstrated their efficacy wherever they have been used such as on the Jaipur-Kishengarh highway. Share of Private Investments in XI plan The share of private investments in XI plan for the development of infrastructure is as shown in the following Table: Table - 2 - Share of pr .....

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infrastructure. The sector wise investment in infrastructure for the XII plan is as tabulated below: Table - 3 - Sector wise investment in infrastructure for XII plan Sectors Rs. in crore US $ billion Share (%) Electricity (including NCE) 1,820,292 350.1 32.7 Roads & Bridges 914,536 175.9 16.4 Telecommunications 943,899 181.5 16.9 Railways (including MRTS) 643,379 123.7 11.5 Irrigation (including watershed) 504.371 97.0 9.0 Water supply & sanitation 255,319 49.1 4.6 Ports (including inl .....

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XII plan: Table - 4 - Investment by Centre, States and Private X Plan (Actual) XI Plan (Anticipated) XII Plan (Projected) Centre 3,52,504 $68 bn (42) 8,56,717 $165 bn (35) 16,01,061 $308 bn (29) States 2,98,633 $57 bn (36) 6,80,056 $131 bn (28) 12,89,762 $248 bn (23) Private 1,86,023 $36 bn (22) 8,87,504 $171 bn (37) 26,83,840 $516 bn (48) Total 8,37,159 $ 161 bn (100) 24,24,277 $466 bn (100) 55,74,663 $1072 bn (100) (Percent in brackets) PPP Projects in India The following table will show the .....

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d industries across the country. Under the Twelfth Plan, the private sector is likely to account for a major share of the additional capacity (55.6 per cent). PPP is likely to be the preferred route for such ventures. Recent initiatives in India The Government of India is promoting public-private partnerships (PPP) as an effective tool for bringing private-sector efficiencies in creation of economic and social infrastructure assets and for delivery of quality public services. By end March 2014 t .....

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PP - The India Infrastructure Project Development Fund (IIPDF) was launched in December 2007 to facilitate quality project development for PPP projects and ensure transparency in procurement of consultants and projects. National PPP Capacity Building Program - This program was launched in December 2010n and has been rolled out in 16 states and two central training institutes i.e., the Indian Maritime University and Lal Bahadur Shastry National Academy of Administration. The roll out in the respe .....

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