Public-Private Partnership in Infrastructure Development: Indian Experience and Options

Topics: Private sector, Public economics, Infrastructure Pages: 20 (4470 words) Published: October 24, 2011
Public-Private Partnership in Infrastructure Development: Indian Experience and Options

Dr. Velu Suresh Kumar* & M. Appavu**


Infrastructure bottleneck has been a serious concern in India in its way of robust pace of economic progression. While many advanced economies and fiscal constrained developing countries have developed their physical infrastructure successfully either through private participation or through public-private partnership (PPP) model, in India, private participation in the process of infrastructure development has received lackluster response. While private telecom services is a success story in India, the PPP constitutes a miniscule share in overall infrastructure building despite initiation of various policy adjustments and sector-specific reform programmes. The main focus of this paper is to assess the global practices towards PPP in the infrastructure development and the Indian experience in private participation in infrastructure development. It also focuses on the sector-wise developments of infrastructure projects with the status of PPP. The paper also identifies some generic issues such as inadequate transparency of procedures, inappropriate risk allocation, improper project appraisal, cost and time overruns, overlapping of regulatory independence, dearth of good governance, etc., which need attention to attract private investors to participate in the public infrastructure building.

Keywords : Infrastructures, Public Provided Private Goods

*Assistant Professor, Department of Economics, H.H. The Rajah’s College (Autonomous), Pudukkottai, Tamil Nadu – 622 001. **M.Phil Research Scholar in Economics, Jamal Mohamed College (Autonomous), Trichy.

Public-Private Partnership in Infrastructure Development: Indian Experience and Options

Dr. Velu Suresh Kumar* & M. Appavu**


Physical infrastructure is an integral part of development of an economy and provides basic services that people need in their everyday life. The contribution of infrastructure to economic growth and development is well recognized both in academic and policy debates. Well developed physical infrastructure provides key economic services efficiently, improves the competitiveness, extends vital support to productive sectors, generates high productivity and supports strong economic growth. Physical infrastructure covering transportation, power and telecommunication through its forward and backward linkages facilitates growth; social infrastructure including water supply, sanitation, sewage disposal, education and health, which are in the nature of primary services, has a direct impact on the quality of life.

Over the years, the basic infrastructure in India has been developed to an extent, which is not sufficient enough while considering India’s geographical and economic size, its population and the pace of overall economic development. Infrastructure bottleneck has been a serious concern in India and basic infrastructure like roads, railways, ports, airports, communication and power supply are not comparable to the standards prevalent in its competitor countries.

To develop the Indian infrastructure to a world class and to remove the infrastructure deficiency in the country, the investment requirements are mammoth, which could not be met by the public sector alone due to fiscal constraints and mounting liabilities of the Government. This would call for participation of private sector in co-ordination with the public sector to develop the public infrastructure facilities. In this direction, the economic reforms initiated in the country provide forth the policy environment towards public-private partnership (PPP) in the infrastructure development. Sector-specific policies have also been initiated from time to time to enhance the PPP in infrastructure building.

Accordingly to overcome the infrastructure deficit, the...
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