Indian policymakers had been daydreaming all along that the public-private partnership (PPP) model could solve all the infrastructural deficiencies of India – a clear case of vision that had turned into wishful thinking. In reality, the supposedly resounding thrust on PPP has backfired and has even choked the prospects of this model. It is true that there is promise in the model, which had raised the hopes of the nation, especially in the areas of mega-infrastructural development projects. The entire nation had started to envision our metros becoming the equivalents of Shanghai or New York in the years to come. And why not? The drumbeats and glitter associated with the PPP model have been quite profound. If we compare the beaming airports of Delhi or Hyderabad (built through the PPP model) to the shoddy government achievements showcased in the quite ordinary looking Chennai and Kolkata airports, the point does gets proved.

Against India’s poor infrastructural backdrop, PPP had been exponentially scaled up in the last ten years under a blind faith that it would produce nothing short of a miracle. Private participation has been consequently rising in PPPs in sync with government’s mission and policy. In the 11th Five Year Plan for example, the government’s estimation of investment on the country’s infrastructure between 2007 and 2012 was pegged at $320 billion. In this context, the World Bank had earlier assessed that as much as 20 per cent of this could be sourced through PPPs. Astonishingly, the figure rose to 37 per cent with the major contribution coming in the telecom sector.

On hindsight, everything may seem good; but then, a deeper scrutiny reveals how PPP projects are getting stalled and delayed. What get missed in the larger picture are the latent problems that are getting accumulated beneath the surface. No doubt, the PPP model has constructed numerous state-of-the-art infrastructure projects, but they are still inferior in comparison to the output that developed nations have been achieving through the same model. The inherent curse of red-tapism and power struggle between different agencies as well as between the private sector and government are looming threats for the prospects of the Indian PPP model. Add to this, the inevitable scenario of corruption and resultant artificial price hike of the resources that are gradually making PPP an unviable business model.  Read More....

An Initiative of IIPM, Malay Chaudhuri and Arindam Chaudhuri (Renowned Management Guru and Economist).

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