Mains Booster-Public Private partnership for inclusive growth

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Public Private partnership for inclusive growth

Public private partnerships have become increasingly popular in government policy. Especially in the domain of international cooperation and development aid, an increasing part of the budget is spent on public private partnerships. The expectation is that this will enhance the efficiency of public good provisioning, improve local representation and increase the overall effectiveness of international cooperation and development aid.

Use of a Public-Private Partnership (P3) for economic development or redevelopment purposes involves the use of public resources or financing capabilities to promote local economic development.

Need of the ppp mode for faster growth

  • Public Private Partnership or PPP provides a way to increase the volume of investment throughout the country as a whole and increasing the operational efficiency as well as rendering quality public services.
  • PPP initiates the implementation of infrastructure and urban development projects.
  • PPP is in particular need due to inefficiency, overstaffing and low productivity in govt. services and govt. owned enterprises.
  • The projects under PPP go through competitive pricing process which clearly shows that the cost of public services is ‘bench marked’ against market standards.
  • The payments which are made to private sector under PPP projects usually are determined by how the private sector perform thus creating efficiency and thereby incentives.
  • In case of infrastructure sector, govt. may often face not only a challenge but a difficulty in fulfilling infrastructure demand and its services. PPP comes here to play the role to increase as well as improve the infrastructure facilities. Thus PPP can promise a better design, technology, construction, operation and service delivery.

PPP in Health Care Sector

There has immense change in the healthcare requirements along with the growth of Indian economy and changing demographics. With ever increasing population in India, a pressure as well as challenge has been faced by government to provide better quality service and access to the people of the country. It is quite obvious that government alone cannot reach out to every corner of the country. Associated efforts of both public and private healthcare sector can only provide a better healthcare system in the country. It is the initiative of CII National Committee on Healthcare which constituted Healthcare subcommittee which brought forward the PPP in Indian healthcare industry. The government has surely diagnosed the significance of PPP in healthcare sector as it is of such a partnership that ‘both social objectives of universal healthcare access and the business objective of running a profitable healthcare facility’ (Policy paper prepared by CII in collaboration with KPMG) can be achieved. The following are the key on the basis of which PPP in healthcare is of urgent requirement:

  • Infrastructure development
  • Management and operations
  • Financing Mechanism
  • Capacity building & training
  • IT Infrastructure
  • Materials management

PPP in Power Sector

The power sector has also showed great achievements with public private partnerships. PPP in power sector has improved the ground situation and has produced excellent results. The Ministry of Power (MoP) has developed a framework even for promoting private sector participation to develop transmission infrastructure.

  • Tata Power entered into a 51:49 joint venture company with Power Grid Corporation of India for 1200 km Tata Transmission project. Maithon Power Limited is a joint venture company formed between Tata Power and
  • Damodar Valley Corporation (DVC) and is executing 1050 (2 X 525) MW Maithon Right Bank Thermal Power Plant. Ultra Mega Power Projects (UMPP) is another PPP project at Mundra being set up by
  • Tata Power and is progressing well.

PPPs in Railways

Indian Railways is one of the largest networks running across the length and breadth of the country providing the solid base for transport. In order to meet the freight and passenger traffic challenges, Indian railways had to go for PPP in order to build, redevelop, improve and boost the rail infrastructure thus providing smooth and comfortable transportation. Rail Vikas Nigam was set up in January, 2003 to supervise the implementation of National Rail Vikas Yojna. A thorough up gradation and expansion of Indian railways was essentially required as it is through railways that inclusive growth of economy can take place. For such a purpose Indian Railways have taken up four projects on PPP mode through SPVs namely, Pipav Rail Corporation (PRCL), Viramgam Mehesana Private Limited (VMPL), Hassan Mangalore Rail Development (HMRD) and Kutch Railway Company Limited (KRCL). The Mumbai Metro which is operated by Mumbai Metro One Pvt. Ltd. (MMOPL), a PPP between RIL and Mumbai Metropolitan Region Development Authority (MMDA), the Hyderabad Metro Rail Project, Bangalore High speed rail project, east west Metro railway project in Kolkata are also being structured on PPP mode. This year, railway minister, has announced to set up 400 model stations across the country under PPP mode.

In view of the current state in our economy, it is very important to go for such public private partnership that would enhance our economic development. Even some noteworthy evidence shows that more the PPP projects launched in a country higher is the rate of GDP growth. It is through PPP that key sectors in our economy have shown improvement and innovation thus contributing immensely to the public benefit. PPP are becoming private finance initiative where the government avails advantage of the skills, expertise, ideas and knowledge of private sector management by giving long term franchises which clearly mention the responsibility and accountability of private sector partner. History itself has frequently shown that PPP can improve urban living though collaboration that combine innovative efforts from the private sector, forward thinking policies from government and support from nonprofit organization.

Where government today are operating on razor thin budgets, PPP with its capital, technology and expertise to finance, develop and manage public sector infrastructure projects can become catalyst for economic growth. Thus a good deal of examples has shown that PPP s are one of the greatest solutions for strengthening infrastructure, securing public support and generating economic gain making it attractive for policy makers.

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