February 8, 2013

Why the public-private partnership model has failed in India

Indian policymakers had been daydreaming all along that the public-private partnership (PPP) model could solve all the infrastructural deficiencies of India – a clear case of vision that had turned into wishful thinking. In reality, the supposedly resounding thrust on PPP has backfired and has even choked the prospects of this model. It is true that there is promise in the model, which had raised the hopes of the nation, especially in the areas of mega-infrastructural development projects. The entire nation had started to envision our metros becoming the equivalents of Shanghai or New York in the years to come. And why not? The drumbeats and glitter associated with the PPP model have been quite profound. If we compare the beaming airports of Delhi or Hyderabad (built through the PPP model) to the shoddy government achievements showcased in the quite ordinary looking Chennai and Kolkata airports, the point does gets proved.

Against India’s poor infrastructural backdrop, PPP had been exponentially scaled up in the last ten years under a blind faith that it would produce nothing short of a miracle. Private participation has been consequently rising in PPPs in sync with government’s mission and policy. In the 11th Five Year Plan for example, the government’s estimation of investment on the country’s infrastructure between 2007 and 2012 was pegged at $320 billion. In this context, the World Bank had earlier assessed that as much as 20 per cent of this could be sourced through PPPs. Astonishingly, the figure rose to 37 per cent with the major contribution coming in the telecom sector.

On hindsight, everything may seem good; but then, a deeper scrutiny reveals how PPP projects are getting stalled and delayed. What get missed in the larger picture are the latent problems that are getting accumulated beneath the surface. No doubt, the PPP model has constructed numerous state-of-the-art infrastructure projects, but they are still inferior in comparison to the output that developed nations have been achieving through the same model. The inherent curse of red-tapism and power struggle between different agencies as well as between the private sector and government are looming threats for the prospects of the Indian PPP model. Add to this, the inevitable scenario of corruption and resultant artificial price hike of the resources that are gradually making PPP an unviable business model.

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10 comments:

james said...

I would like to thank you for the efforts which you have made in writing this article. Nice to such useful and informative article.
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Vijay Singh RY said...

I was not aware of this issue and wanna thank you sir for giving us such a nice and useful article.

Rajesh Sharma said...

Our govenment needs to take more powerful steps to improve our country.

sonu kumar said...

I don't understand why we ccan't even achieve already existed successful project from other countries

Nutan Xalxo said...

Talk about any field,from power companies to telecom giants, wherever there is involvement of private companies,corruption is there.

Aryan said...

All the projects failed in Indian due to corruption,we need to remove corruption....

Pankaj kumar said...


Our nation is epitome of corruption,and cannot come out easily from this.

john corner said...

Very nice blog and impressively written, you can also find more information about Indian Economy around the world

Sangeeta Raipuria said...

When these corrupt politicians think about our Country instead of thier own individual growth,none of the project fails in future.

Arunav Chowdhury said...

Arindam, follow this blog, you will like it!
http://www.mediacrooks.com/

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