Public Private Partnership in India

A Public–private partnership (PPP or 3P) is a commercial legal relationship defined by the Government of India as "a partnership between a public sector entity (the sponsoring authority) and a private sector entity where fifty-one percent or more of equity is with the private entity."

The purpose of the relationship is the construction and management of infrastructure for public use over a specified period of time. The private entity is selected in a transparent way.[1] Foreign Direct Investments in 3P projects receive a one hundred percent tax benefit. In the 2000s, India experienced rapid economic growth and 3P relationships became important in infrastructure, power, irrigation, telecommunications, water supply and airports.[2]

Infrastructure

In 2011, infrastructure in India was poor when compared to similarly developed nations.[3] Construction of infrastructure in India requires large capital outlays and there is a deficit in supply. Over fifty percent of major infrastructure development projects in Maharashtra state are based on 3P. Projects using the 3P model have also proceeded in Karnataka, Madhya Pradesh, Gujrat, and Tamil Nadu state.

In August 2012, the Prime Minister of India, Manmohan Singh, lifted the ban on the transfer of government-owned land, relaxed land transfer policy and did away with the need for Cabinet approval for 3P projects in order to accelerate the building of infrastructure.[4]

Roads

Sixty percent of 3P projects are for road building and they represent forty-five percent of 3P monetary value. They are a part of the National Highways Development Project (NHDP).[5] Examples of 3P road building projects are the Golden Quadrilateral and the North–South and East–West Corridor. About 14,000 km (8,700 mi) of India's national highways are being converted to four-lane highways.[6]

Ports

Port building projects account for ten percent of projects and thirty percent of the value of 3P.[3] As of 2011, India had twelve major seaports and 185 minor seaports along its coast line of 7,517 km (4,671 mi). Seaports constructed via the 3P model increased the handling of cargo in India by ten percent between 2008 and 2011. [7] Examples of port building projects include the Jawaharlal Nehru Port Trust (JNPT) in Mumbai and Chennai port in association with P&O. The Indian government expects the National Maritime Development Programme (NMDP) to be a 3P stakeholder.

Drawbacks

The major drawbacks encountered in 3P projects in India include poorly drafted contracts and lack of understanding of contracts, inadequate resources, lack of managerial experience, breaches of contract, failures in team building, lack of performance measures, corruption and political interference.

References

  1. ↑ Public Private Partnership in India. Department of Economic Affairs, Ministry of Finance, Government of India, 2007.
  2. ↑ PPP. PPPin India.php
  3. 1 2 Raju S. A successful Indian model The Hindu, Survey of Indian Industry 2011.
  4. ↑ PM eases land transfer to speed up PPP projects. The Hindu, National news articles, 3 August 2012.
  5. ↑ Phase IIIA. NHAI.org.
  6. ↑ Road network. NHAI.org
  7. ↑ Report on Indian Ports. Projectsmonitor.com Accessed 12 October 2011.
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