maximum Non Performing Assets
in the infrastructure project and
funding is a major problem for
such projects. To attract private
investments, government should
provide various incentives in
housing, electricity, ICT, educa-
tion, health, recreation, sports fa-
cilities and other sectors.
So far maximum investment is
coming for building transport in-
frastructure and ICT as these pro-
jects are profitable for the private
sector. The physical infrastructure
projects, where the requirement is
maximum is yet to develop a fi-
nancially attractive viable model
which can attract private players.
Apart from difficulties in at-
tracting private capital, lack of co-
ordination between various gov-
ernment agencies and project
execution are other areas of con-
cern. Also lack of proper dispute
resolution mechanism is making
many private players wary.
“Even when many players have
expressed their interest in partici-
pating in the project, actual in-
vestment is not coming in all sec-
tors. The private investment is
much lower than expectation. The
government is working on devel-
oping various models which are
viable for the PPP,” a member of
NITI Aayog said.
Recently Amitabh Kant, CEO,
NITI Aayog made a presentation
to the Prime Minister in this re-
gard. The officials are working on
the various PPP models which can
be customized for the smart cities.
He also said that the Aayog is
working on a dispute resolution
mechanism for the public-private
partnership projects will be put in
place by this year.
Another demand from the pri-
vate players is that for timely com-
pletion of the project, all clear-
ances should use online processes
and should be cleared in a time
bound manner. An equitable allo-
cation of risks and rewards be-
tween the parties will benefit both
the commercial interests and pub-
lic welfare.
A regulatory body should be set
up for all utility services so that
level playing field is made available
to the private sector and tariffs are
set in a manner that balances fi-
nancial sustainability with quality.
Large citywide development
projects with long gestation pe-
riod and huge capital investment
can be used from government
funds and smaller infrastructure
projects can be developed through
PPP with quick turnaround time.
Small-scale PPP projects in trans-
portation such as installation of
traffic monitoring camera or wa-
ter supply project or street light-
ing, can improve citizens’ quality
of life and will go a long way in
making cities better and safer.<RISKS AND LIMITATIONS
OF CHOOSING A PPP
n PPPs are time-consuming and
costly. The local administration
must be aware that the whole
preparation process of the
PPP (evaluation studies,
tender procedure, drafting and
negotiation of the contract)
takes an average of 2 years.
Thus, PPPs shall not be chosen
to finance and manage urgent
projects. However, in the
specific case of PPPs for SMART
projects at small scales , the
process might be less costly and
time-consuming.
n Local banking sectors
generally lack experience in
terms of PPP financing for long-
term lending.
n Lack of experience among
public officials and private staff.
n The public perception of PPPs
is not always positive as they are
often associated privatization
with increased servicing costs,
exclusion of those at the base of
the pyramid and disengagement
of the public sector from service
provision.