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05 SEP,2022 | MEDC
The events of the past two and a half years have made our complex world even more challenging. It has had a severe impact on our economy, and despite all the policy support offered by the government and international agencies, a full recovery remains a convoluted process. In this context, the need for inclusive economic growth has never been greater, and, to this end, the private sector is equipped to play a pivotal role. Today, to spur more sustainable growth in our economy, the revolutionary success of some of our public-private partnerships (PPPs) must be replicated all over the country, and constantly upgraded with inputs from stakeholders.
India has experimented with PPPs in the course of its economic development. The railways, in the latter part of the 19th century, had a component of private enterprise to them. Electricity distribution companies in Mumbai, Kolkata and Ahmedabad have existed under private control, and so did private generation of power in pockets across the country.The green shoots of PPPs were first witnessed about three decades ago, before it became an integral part of official economic policy. But we still have a long way to catch up with much of the world – primarily by creating institutional mechanisms to link isolated efforts together into a pan-India network and direct them towards shared national socioeconomic development goals.
Beyond synergizing those efforts already underway, PPPs can help find new and innovative avenues to leverage multi-stakeholder relationships and optimize project impact. This could be a real opportunity for the public sector to provide the foundational capital which may go a long way in supporting private sector innovation. Such innovation is often necessary to provide the public sector the necessary technological edge in its development endeavours. Thus, it could be a practical development philosophy for generating ideas in the service of nation-building activities.
PPPs in India started declining from 2012 onwards due to inappropriate risk-management systems, aggressive bidding, twin balance-sheet problems, stalled projects, policy flip-flops, mounting NPAs, and inadequate dispute resolution mechanisms. Now PPP has again come back in the limelight with 100% of the National Monetization Pipeline target and 40% of the National Infrastructure Pipeline target of Rs. 111 trillion expected to be funded under PPP formats. That targets an expectation of Rs. 50 trillion of private capital over the coming five years – a welcome sign.
Covid has come as a wake-up call for redesigning many of our socioeconomic development strategies. PPPs have repeatedly created value where government action alone would have fallen short. With so many climate transition and inclusive growth challenges facing us today, such collaborations are not a "nice to have", but a "must have".
The road ahead is rocky. Many Indian corporations and commercial lending institutions are wary of investing in Greenfield PPP projects, and foreign investors prefer operating brownfield assets. On the flip side, it must be noted that in many key sectors like telecom, ports, airports, electricity transmission and renewable energy, PPP models have delivered above-average results, overcoming many adversities on the way.
Under enlightened government policies, PPPs may well see a much-needed revival in India. Having an unbiased framework will make it easier to pursue projects and initiatives across the country, and perhaps, face less resistance from vested interests. Policy needs to provide a clear roadmap for PPPs, and create the regulatory environment necessary for their success.
*Picture Credit:Google
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