In the 12 states and 3 central agencies surveyed there are at least 86 PPP projects in our sectors of focus for which a contract has been awarded and projects are underway (in the sense that the projects are either operational, have reached construction stage or at least construction/implementation is imminent).1 The estimated project cost of these PPPs is Rs 339.5 billion. There has been considerable innovation in the design of these, with different structures now being developed to attract private participation. But at the same time it is clear that this has been uneven - there are islands of progress, with some states having undertaken far more PPPs than others, and a much heavier use of PPPs in some sectors (roads by number of projects and ports by project size) than others. While there are a number of successful projects, there have also been a number of poorly conceptualized PPPs brought to the market that stood little chance of reaching financial closure.
Some states have made more attempts to develop a broad framework for PPPs, including cross-cutting legislation and the development of cross-sectoral units that play a role in the identification and preparation of PPPs. While progress to date has probably been driven as much by fundamentals such as political commitment, the lack of a cross-sectoral pool of knowledge makes it harder to transfer experiences across sectors.
Compared to other countries, some of the gaps in PPP frameworks and approaches in India are: the tendency for the policy rationale for PPPs to be limited to the use of PPPs as a source of investment capital when the public sector lacks funds; little systematic compilation and dissemination of information, even within the public sector, on PPPs implemented to date, including contractual approaches and their results; and not much use of rigorous ex-ante or ex-post assessments of the performance of PPPs versus traditional public options.
There is the potential for PPPs to play a greater role in the provision of infrastructure services in India. A number of issues have to be addressed, however, including basic questions such as the extent to which these projects will be paid for by taxpayers or by users, and if so whether the resources are available, and whether it will be possible, commercially and politically, to charge the required user fees. Improving capacities to identify potential PPPs will be critical, to bring them to the market properly structured, have them efficiently and competitively procured, and to monitor their performance and cost.
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1 The 5 infrastructure sectors of focus where PPP contracts have been awarded in the surveyed states and federal agencies are roads & bridges, ports, airports, rail, and urban (water & sanitation, solid waste management, bus terminals, light rail, ferries and a logistics hub - although for the last 3 sub-sectors there have been preparatory activities but no contract awarded yet). There also has been activity in health & education and e-governance, in addition to sectors not covered in this report such as power, tourism, and other construction (convention centres, industrial, IT & biotech parks, SEZs, and housing). See the tables in the Annex for more details.