PPPs in India

In a recent post, Filip talked about the role of EPEC in promoting Public-Private Partnerships (PPPs) in the EU. Filip’s post highlighted some of the problems facing PPPs, such as a lack of adequate finance and insufficient capacity within the public sector to define, manage and/or implement its PPP policies and programs in accordance with market best practice. The EU is not the only one facing these kinds of challenges. Below, I report on the problems faced by PPPs in India, suggesting that the concerns raised by Filip have a broader implication for developing countries.

The Economic Survey of India (2008-09)—an annual publication of the Ministry of Finance, Government of India—was recently tabled in the Indian Parliament. The Survey discusses at length the need for greater public-private partnership in key areas such as infrastructure but also cautions against a number of problems confronting the PPPs. In particular, the Survey notes the following 6 key hurdles faced by PPPs:

• Policy and regulatory gaps, specially relating to specific sector policies and regulations.
• Inadequate availability of long-term finance (10 year plus tenor)—both equity and debt.
• Inadequate capacity in public institutions and public officials to manage PPP processes.
• Inadequate capacity in the private sector—both in the form of developer/investor and technical manpower.
• Inadequate shelf of bankable infrastructure projects that can be bid out to the private sector.
• Inadequate advocacy to create greater acceptance of PPPs by the stakeholders.

Much like EPEC, the Government of India has initiated a number of measures to address the above problems. I hope to discuss these measures and related issues in a future post.