{"id":222640,"date":"2023-01-15T12:05:46","date_gmt":"2023-01-15T06:35:46","guid":{"rendered":"https:\/\/blog.forumias.com\/?page_id=222640"},"modified":"2023-01-15T12:05:46","modified_gmt":"2023-01-15T06:35:46","slug":"answered-the-shift-from-a-hybrid-annuity-scheme-for-infra-projects-to-a-low-debt-performance-linked-model-is-encouraging-govt-and-private-majors-to-pivot-to-the-business-in-a-bigger-way-comment","status":"publish","type":"page","link":"https:\/\/forumias.com\/blog\/answered-the-shift-from-a-hybrid-annuity-scheme-for-infra-projects-to-a-low-debt-performance-linked-model-is-encouraging-govt-and-private-majors-to-pivot-to-the-business-in-a-bigger-way-comment\/","title":{"rendered":"[Answered] The shift from a hybrid annuity scheme for infra projects to a low-debt, performance-linked model is encouraging govt and private majors to pivot to the business in a bigger way. Comment."},"content":{"rendered":"<table>\n<tbody>\n<tr>\n<td width=\"616\"><strong>Introduction:\u00a0<\/strong>Contextual introduction.<\/p>\n<p><strong>Body:\u00a0<\/strong>Explain some issues with hybrid annuity scheme. Also write some measures.<\/p>\n<p><strong>Conclusion<\/strong>: Write a way forward.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Infrastructure development involves huge investments, procedural delays and returns spread over a long period of time. HAM is a mix of the Engineering, Procurement and Construction (EPC) and Build, Operate, Transfer (BOT) models. HAM <strong>combines 40% EPC and 60% BOT<\/strong>-Annuity. Hybrid annuity means that payment is made in a fixed amount for a considerable period and then in a variable amount in the remaining period.<\/p>\n<p><strong>Issues with hybrid annuity scheme:<\/strong><\/p>\n<ul>\n<li>It does not take care of the cost and <strong>time overruns<\/strong> due to issues of administrative efficiency etc.<\/li>\n<li>The major risk for HAM is the <strong>prevailing low bank rates<\/strong> adversely affecting the overall project viability and returns. Such interest receipts account for around 45% of total inflows.<\/li>\n<li>The other problem is related to <strong>delayed and inadequate interest rate transmission<\/strong>\u2014there is a transmission lag\u00a0for the project loan (linked to MCLR of banks).<\/li>\n<li>With the increasing number of HAM projects, funding can be an important issue because in long term it could be <strong>challenging for the government to allot funds<\/strong> to all the projects in short span of time.<\/li>\n<\/ul>\n<p>The following measures are required to pivot to the business in a bigger way:<\/p>\n<ul>\n<li>Due to rising NPAs and owing to Covid-19, banks have developed cold feet with regard to financing various projects. Therefore, the government needs to either come up with a bond guarantee or <strong>enhance credit funds<\/strong> for the projects so that the bond market is rejuvenated to fulfil the financing requirements of the sector.<\/li>\n<li><strong>Technologies<\/strong> such as augmented reality (AR), UAV and drones, 3D printing, Internet of Things (IoT) and Building Information Modelling (BIM) come in handy when <strong>fast-tracking construction projects.<\/strong><\/li>\n<li>There is a need for a <strong>better regulatory environment and consistency in the tendering process.<\/strong> Lack of consistency and policy coherence across different government departments should be addressed as a priority.<\/li>\n<li><strong>User charges<\/strong> are crucial because in many areas, partly because of zero or very low user charges, there is over-use and wastage of the precious resources (for instance, groundwater).<\/li>\n<li>The model can be made better with steps such as <strong>efficient dispute redressal mechanism<\/strong>, faster environmental clearances etc.<\/li>\n<\/ul>\n<p>The development of India\u2019s infrastructure presents a huge task as well as a huge opportunity.\u00a0 The newly established <strong>Infrastructure Finance Secretariat<\/strong> is a step in the right direction.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Introduction:\u00a0Contextual introduction. Body:\u00a0Explain some issues with hybrid annuity scheme. Also write some measures. Conclusion: Write a way forward. Infrastructure development involves huge investments, procedural delays and returns spread over a long period of time. HAM is a mix of the Engineering, Procurement and Construction (EPC) and Build, Operate, Transfer (BOT) models. HAM combines 40% EPC&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/answered-the-shift-from-a-hybrid-annuity-scheme-for-infra-projects-to-a-low-debt-performance-linked-model-is-encouraging-govt-and-private-majors-to-pivot-to-the-business-in-a-bigger-way-comment\/\">Continue reading <span class=\"screen-reader-text\">[Answered] The shift from a hybrid annuity scheme for infra projects to a low-debt, performance-linked model is encouraging govt and private majors to pivot to the business in a bigger way. Comment.<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"class_list":["post-222640","page","type-page","status-publish","hentry","entry"],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/222640","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=222640"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/pages\/222640\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=222640"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}