Answer: 

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. During the year 2020-2021, India appraised a total of 125 PPP projects costing INR 1.72 lakh crore between the central and state projects.

Enroll now for UPSC Online Course

Body:

Public Private Partnerships (PPP) is required in infrastructure 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.
• 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 privatization.

The Indian government has promoted PPPs as a key model for the redevelopment of railway stations as seen in the case of Rani Kamlapati Station in Bhopal. The Kelkar Committee on PPP had recommended using the PPP model for airport, port and railway projects. In the case of the redevelopment of railway stations in India, PPPs can play a particularly important role because:

• Developing railways is a costly affair: The development of railway infrastructure is costly while the railway sector in India faces a shortage of funds along with a backlog of maintenance and modernization projects. PPPs can help by providing access to private sector capital and technology.
• Improve operating ratio: Currently Indian Railways suffers from a very poor operating ratio of about 98. The PPP model can bring opportunities for investment to improve operating efficiency by introducing modern and clean technology along with management expertise.
• Increased revenue source: PPP railway projects provide for shared use of rail tracks. This would lead to efficiency and an increased revenue source for states and reduced cost basis for private investors.
• Better services: Stations would be equipped with services like Wifi, well maintained restrooms, lounges, etc. This would act as a revenue source to private players while people get the benefit of quality service.
• Increased competition: Entry of private sector would introduce competition in a sector that was earlier a monopoly. This would improve the service and allow for modernization of railway infrastructure.

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, such as rail and transportation systems.