Restructuring the PPP model may inject life-blood to Infrastructure projects
The National Democratic Alliance (NDA) government is trying to restructure the infrastructure investment so that the failure of contracting parties in meeting their contractual obligations can be prevented.
Lower-than-expected demand for services and a sharp rise in input costs were cited as the main reasons behind the inability of contracting parties to meet their obligations under the public-private partnership (PPP) agreements.
The new government first Economic Survey, which was tabled in parliament as a pre-budget exposure, also mentioned that the infrastructure gap has widened over the past few years. The ability of PPPs to become an efficient means of delivering public services depend on intention and spirit of all contractual parties to honour their respective commitments. If that is not done, then the projects suffer and the tax payers’ money goes down the drain.
The report also stated that besides, a model that depends on private capital might be difficult to implement if the companies executing infrastructure projects are financially stressed and not in a position to raise more funds. Hence there is a strong need for radical restructuring and better exit policies. The execution, operation and maintenance capacities of implementing agencies also need to be assessed and strengthened, and since these components are not fixed for any company, if a company fails to maintain the standard, the immediately the change of management should be made by awarding the project to a better player.
Source- Business Standard
National Democratic Alliance
National Democratic Alliance, Public private partnership (PPP), public-private partnership model, Public-Private Partnership projects
