{"id":66313,"date":"2020-10-09T18:18:53","date_gmt":"2020-10-09T12:48:53","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=66313"},"modified":"2020-11-26T14:51:34","modified_gmt":"2020-11-26T09:21:34","slug":"redesign-policy-for-private-investment","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/redesign-policy-for-private-investment\/","title":{"rendered":"Redesign policy for private investment"},"content":{"rendered":"<p><strong>Source- <\/strong><a href=\"https:\/\/indianexpress.com\/article\/opinion\/columns\/public-private-partnerships-infrastructure-projects-coronavirus-nirmala-sitharaman-6716470\/\"><strong>The Indian Express<\/strong><\/a><\/p>\n<p><strong>Syllabus &#8211; GS 3- <\/strong>Investment models.<\/p>\n<p><strong>Context-<\/strong> Partnerships with various stakeholders in the private sector is required for sustainable infrastructure creation in India<\/p>\n<p><strong>What is PPP investment model? <\/strong><\/p>\n<p>Public Private Partnership is a cooperative arrangement between public and private sectors. The PPP model displays three essential characteristics:<\/p>\n<ul>\n<li>Long term contractual arrangement.<\/li>\n<li>A significant level of responsibility and risk that is transferred from public to private sector.<\/li>\n<li>Contractual arrangements are built around performance based outcomes.<\/li>\n<\/ul>\n<p><strong>What are the challenges on ramping up private investments in infrastructure?<\/strong><\/p>\n<ul>\n<li><strong>Policy reforms<\/strong>&#8211; Refreshing institutions and policies for channeling financing.<\/li>\n<li><strong>Stable ecosystem<\/strong>&#8211; Providing a stable, durable, and empowering ecosystem for private players to partner with government entities in the task of infrastructure-creation.<\/li>\n<\/ul>\n<p><strong>What are the recommendations of Vijay Kelkar Committee on Revisiting and Revitalizing PPP Model? <\/strong><\/p>\n<p>Vijay Kelkar Committee Finance Minister in the Union Budget 2015-16 announced that the PPP mode of infrastructure development has to be revisited and revitalized. Committee had put out a timely, practical, and balanced report on overhauling the PPP ecosystem.<\/p>\n<p><strong>Key recommendations of the committee<\/strong>&#8211;<\/p>\n<ol>\n<li>Contracts need to focus more on\u00a0service delivery instead of fiscal benefits.<\/li>\n<li>Better identification and\u00a0allocation of risks\u00a0between stakeholders.<\/li>\n<li>Prudent utilization of\u00a0viability gap funds\u00a0where user charges cannot guarantee a robust revenue stream.<\/li>\n<li>Improved fiscal reporting\u00a0practices and careful monitoring of performance.<\/li>\n<li>Report also included governance reform, institutional redesign, and capacity-building.<\/li>\n<\/ol>\n<p><strong>How government can redesign the PPP model?<\/strong><\/p>\n<ol>\n<li><strong>Redesign ecosystem<\/strong>&#8211;<\/li>\n<\/ol>\n<ul>\n<li>Overhaul the culture and attitude towards the conjoining of government entities and private partners for creating specific pieces of infrastructure.<\/li>\n<li><strong>Plug and play<\/strong>&#8211; There needs to be an approach of give and take, instead of government interlocutors trying to adopt a purely transactional approach without adequate focus on outcomes.<\/li>\n<li><strong>Minimizing risk<\/strong>&#8211; Passing on uncertain elements in a project like the land acquisition risk to the private partner.<\/li>\n<li><strong>Incentives<\/strong>&#8211; The private partners also need to be incentivized to focus on project outcomes, with guard-rails in place to discourage rent-seeking behaviour.<\/li>\n<\/ul>\n<ol start=\"2\">\n<li><strong>Regulatory front- <\/strong><\/li>\n<\/ol>\n<ul>\n<li><strong>Secure legislation<\/strong>&#8211; Promulgate a PPP legislation which can provide a robust legal ecosystem and procedural comfort to the various actors and stakeholders.<\/li>\n<li><strong>Revenue flow assurance-<\/strong> The key to a successful PPP is to provide stable revenue flow assurances and a settled ecosystem to investors over long periods by means of policy stability, assurances possibly secured by law.<\/li>\n<li>Government partners in PPP arrangements need to ensure that open-ended arrangements that might entail unforeseeable risk are minimized for the private investor, including aspects such as land availability and community acceptance.<\/li>\n<\/ul>\n<p><strong>Way forward- <\/strong><\/p>\n<p>In a post COVID era, a focus area for public policy has to be the creation of a modern-day, sustainable and resilient infrastructure. Government needs to design a fresh approach and create a stable policy environment that provides comfort and incentives to private investors.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source- The Indian Express Syllabus &#8211; GS 3- Investment models. Context- Partnerships with various stakeholders in the private sector is required for sustainable infrastructure creation in India What is PPP investment model? Public Private Partnership is a cooperative arrangement between public and private sectors. The PPP model displays three essential characteristics: Long term contractual arrangement.&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/redesign-policy-for-private-investment\/\">Continue reading <span class=\"screen-reader-text\">Redesign policy for private investment<\/span><\/a><\/p>\n","protected":false},"author":10308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,27],"tags":[1400,1404],"class_list":["post-66313","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-featured-editorials","tag-eco_10","tag-eco_102","entry"],"jetpack_featured_media_url":"","views":{"total":86,"cached_at":""},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66313","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10308"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=66313"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/66313\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=66313"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=66313"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=66313"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}