Que. Adoption of the PPP model for infrastructure development of the country has not been free of criticism. Critically discuss pros and cons of the model. (200 words, 10 marks)

UPSC CSE : 2013

Answer: 

Approach:

Introduction

  • Define PPP and mention some fact showing how they are being increasingly adopted by countries.

Body

  • Mention few points why PPP is favoured.
  • Then focus on the criticisms of PPP model in India as it is the demand of the question.

Conclusion

  • Conclude stating that the criticisms of PPP are part of the evolution of this model in India. It should develop further by rectifying these issues.

Introduction:

Public-private partnerships (PPPs) are formally established agreements between public and private parties to share risks and benefits in the provision of public services and infrastructure. PPP is a model that has been widely adopted by governments around the world as a means of delivering infrastructure and public services more efficiently and effectively. fact showing share of ppp in total infrastructure of nation

Body:

Public Private Partnerships (PPP) is favoured in infrastructural projects because:

  • Private sector finance and expertise: PPPs provide a way for governments to access private sector financing to build complex infrastructural projects, while the private sector is assured of returns based on government guarantee.
  • Innovation: PPPs can provide an opportunity for the private sector to bring new technologies, approaches and innovations to the project which otherwise might not be possible with a traditional public approach.
  • Private sector is cost-effective: PPPs provide incentives for private sector companies to innovate and find cost-effective solutions and put to use their expertise in developing and maintaining infrastructure. It also ensures better quality of infrastructure.
  • Time-bound: While the public sector projects are often seen to be lagging on account of inefficiencies, private sector collaboration ensures that the projects are completed on time.
  • Government has complete control: The ownership of the project continues to be with the public sector and hence, there are no concerns of privatisation. At the same time, it helps the government transfer some of the construction and operational risks, reducing its overall risks.

But PPPs in India have not been free of criticism. Some of these criticisms are:

  • Lack of regulatory framework: India lacks a comprehensive and consistent regulatory framework for PPPs, which can lead to problems such as lack of transparency and accountability.
    • Vijay Kelkar Committee on PPP recommended setting up independent sector-wise regulators for PPP projects.
  • Limited participation of private sector: PPP projects in India have been criticized for the limited participation of the private sector, with many projects being dominated by state-owned enterprises and government- owned corporations. Even among the private sector, it is a handful of very large conglomerates who get the projects.
  • Insufficient risk transfer: Critics argue that PPP projects in India have not effectively transferred risks to the private sector, leaving the government liable for many of the risks associated with the project.
  • Lack of competition: PPP projects in India have been criticized for the lack of competition among private sector partners, resulting in higher costs and lower quality.
  • Lack of public consultation: PPP projects in India have not adequately involved the public in the decision-making process, leading to a lack of public support and understanding of the projects. This adds to delays in the project implementation.

Conclusion:

Although there are challenges like delays in land acquisition, non-availability of capital and regulatory hurdles, PPPs can help to address the challenges of financing, designing, constructing, and maintaining complex infrastructural projects for speeding up growth of the Indian economy.

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UDAAN PRELIMS WALLAH
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Designed as per recent trends of Prelims questions
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