4.1 While progress has been made, both by having a substantial number of PPPs now in operation, and by putting in place legislative and institutional frameworks for PPPs in some states, scaling-up the use of PPPs will require addressing the gaps identified in the previous section. Many PPPs will be for services which are state, and, in some cases municipal subjects, and capacities have to be developed at this level, where service responsibilities lie. However, there are roles the center could play in developing capacities at the sub-national level, in addition to developing capacities at the central level.
4.2 Both experience to date in India, and internationally, shows that there is no unique formula for developing a sound PPP framework. However, successful programs are characterized by clear policy and legal frameworks for PPPs, competent and enabled institutions that can appropriately identify, procure and monitor PPPs, and efficient oversight and dispute resolution procedures. We look at the following main steps that will be critical to scaling up the PPP program in India and assess the actions that could be taken by the center in the following areas:
♦ Strengthening the monitoring of their fiscal costs;
♦ Policy and legislative frameworks;
♦ Information dissemination;
♦ The development of guidance material;
♦ Setting up a PPP unit to serve as a pool of expertise;
♦ Project development funds for the preparation of PPPs; and
♦ Funding for PPP payments made by state governments.
4.3 The center's role in developing capacities for sub-national PPPs needs careful consideration taking into account the size of the country, center-state fiscal and other relations and the variety of experiences so far, with some states having made considerable strides and others having made very little progress. Its role also depends on the extent to which the center wishes to proactively catalyze the increased use of PPPs by states and municipalities. Information dissemination and guidance efforts can be expected to lead to results. However, a catalytic role by the center is likely to be needed to expand the usage of PPPs, particularly in states and sectors where they have been less used so far. This would consist, in addition to information dissemination and guidance, of resources to develop PPP projects and frameworks, and to fund government commitments under PPPs. This would help address important constraints to further development of PPPs in the country - namely, weak capacities to identify realistic PPPs and bring them to the market; a lack of willingness to pay for project development; and a lack of creditworthiness on the part of states to provide their financial contribution to PPPs. However, there are considerably more risks in this catalytic role than in more limited information dissemination and guidance roles.