Bookmark and Share

The Three Pillars of the PPP Policy to help boost the Growth

0 Comment

Mike Parker rightly said, “When you don’t invest in infrastructure, you are going to pay sooner or later.” Indian government after realizing the need of development of infrastructure passed a Public Private Partnership Policy which was regarded as a milestone in infrastructure development. Until lately with the lack of development and late completion of projects, the government is now working on a comprehensive policy framework for public private partnership (PPP). The new comprehensive policy will cater the building of physical infrastructure and will also focus on the social sector which includes health and education. The guideline for entry of private players will be laid down by the government and also the policy for implementation of projects for both the state and central level will be formulated in the new framework.

Read about India’s Major Construction/EPC/Infrastructure Companies.

The Three Pillars of the new PPP Policy

The new PPP policy would rest on three pillars. Following are the three pillars:

  • The first pillar of the policy will ensure security in legal framework while not becoming excessively prescriptive. The policy will ensure that it should focus on achieving outcomes. Also broad parameters will be designed so as to ensure that the partners designing the same can implement it during the project. Dense legislation will be implemented to manage the PPP process and will stifle innovations to meet the unique requirements of diverse sectors. Thus emphasis will e changed towards flexibility with simple well defined rule.
  • Second pillar of PPP policy would deal in codification of the vast array of initiatives that was already taken by the GoI in the past to promote PPP in country. It is suggested that all the initiatives will be taken together at one place so that informed decision can be facilitated while structuring new PPP project or program.
  • Third pillar of the policy will cater the establishment of processes that are required for second generation PPPs. The process will focus on appropriate public oversight and monitoring of PPP projects. The process will ensure that value for money rationale is adopted while adopting the projects during development.

The comprehensive policy must aim to establish a consistent framework to enable PPPs across sectors. This will help to enshrine the core principles of transparency be it in procurement, adequate competition, contracts sanctity, speedy resolution of dispute (if any) or any other issue pertaining to the processing of PPP. The framework will also help in finding resonance at the state level. It is expected that the number of PPP projects will see a steep rise soon. The current number of 700 projects in all the sectors likes roads, airports, metros and urban infrastructure will see a huge rise to cross the thousand mark if not more.

Read about Infrastructure Finance Companies in India.

The recent addition of modern post harvest storage facilities including cold storage chains, education, health etc. in the list of eligible sectors for gap funding has seen a stage of exploration the PPP route. Government’s intention currently is to address the key problem of regulation and financial aspect, which will impact the PPP projects largely. It is needless to say that these aspects have no ready-made solution and if any solution is desired to reach upon, it is necessary to cut across sectors. This will help in encompassing the reforms which includes land reforms, financial reforms, legal reforms, etc. Hence it is important to address these sectoral reforms through sector specific reforms parallel to the PPP policy so that the PPP projects are not hampered and face delay.


Creation of an infrastructure debt fund for promoting PPP is also under process, which is expected to give rise to the active participation for development of PPP project. At last we can say that it is most important that the new framework address the issue of delay during approval and implementation stage. A single agency should be mandated in the Central Government which will be responsible for all the policies and project advocacy. This will lead to better transparency, faster resolution and improved development. A single window time bound clearance mechanism under the policy will be a welcome step if implemented by the government.


Niraj Satnalika

Niraj is an MBA in International Business (Finance). Prior to this he completed B.Tech in Electronics and Instrumentation. He is currently working with Confederation of Indian Industry (CII), Kolkata in capacity of Consultant. Satnalika is actively involved with an NGO and works towards promoting education among the underprivileged.

No Responses so far | Have Your Say!