Public Private Partnership for Infrastructural Growth

Topics: Infrastructure, Economics, Public economics Pages: 11 (3474 words) Published: September 24, 2008

Private public partnership for infrastructure growth- Is it the best model?


The paper reviews the concept of PPP, its importance and relevance in furthering infrastructural growth in a developing nation like India. Thereafter the application of this theoretical overview is seen in the study of various successful projects in which PPP was implemented- one of the best examples being the Tirupur Project in Tamil Nadu. The objective of the paper is to bring forth the uniqueness of PPP and how in spite of it being an excellent model for infrastructural growth in each project a different PPP model is relevant.


1.Introduction to Infrastructure in India
2.Private Public Partnership (PPP)
Reasons behind importance of PPP model in India
3.Relevance of PPP model in infrastructure sector for India 4.Success of PPP in India
5.Concerns and Risks Associated with PPP

1. Introduction to Infrastructure in India
Infrastructure has been defined as “comprising those basic services without which primary, secondary and tertiary productive activities cannot function.” It includes non-tradeables such as 1.Transportation services- road, railways, ports and civil aviation 2.Telecommunication

4.Water supply
6.Solid waste management.
Currently, the Indian economy is positioned to grow at an annual rate of 9% over the next five years. However, this speedy growth needs an equally robust infrastructure to support it, which unfortunately is lacking. Infrastructure development is considered as the key driver to sustain the momentum of current and potential economic growth. Growth in infrastructure is bound to boost the Indian economy, which in turn will work wonders for urbanization. The increase in the infrastructure is undoubtedly of prime importance, as recognized by both the private sector and the Government. Since independence, several models to improve infrastructure financing have been implemented. In the 1950 through the 1980, the plan process helped the public sector attain the commanding heights of infrastructure sector. But since the 1980s the public sector’s role in providing and financing infrastructure has sort of diminished because of the absence of competition and effective communication. So far, the bulk of infrastructure has been in the public sector which is largely subsidized by the government. Since, the launching of the reforms the government is trying to reduce its borrowing which implies further subsidization and that is not possible. There is a wide gap between the potential demand for infrastructure for high growth and the available supply. In India, the planning commission has estimated that an investment of USD 320 billion will be required for infrastructure development during the 11th plan period. The government concedes that this target is unattainable through government funding alone. The task of finding such large amounts and thereafter deploying them productively calls for a close partnership between the public and private sectors, with a vital role reserved for foreign capital. To finance this large short fall, the domestic saving rate needs to be increased by a minimum of 26.7%. Besides, this has to be supplemented at the margin by FDI. However, this "margin is indeed very important since the role of foreign investment has to be read not only as a gap filler between saving and investment but also as a means for bringing better technology and management. The paper is divided into six broad sections. The first section, gives an introduction to the topic. The second section, Private Public Partnership (PPP) gives a theoretical explanation of PPP and the importance of PPP model in a developing nation like India. The third section, analyzes the...
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