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Availability of quality infrastructure is a pre-requisite to achieve broad based and inclusive growth on a sustained basis. Infrastructure is also critical for enhancing productivity and export competitiveness. The XII Five Year Plan (2012-2017) has an ambitious target of infrastructure investment and is envisaged at US $ 1 trillion. This projected investment is about twice the investment envisaged in the XI Plan and 27 per cent of the gross domestic savings.

Given the enormity of the investment requirements and the limited availability of public resources for investment in physical infrastructure, it is imperative to explore avenues for increasing investment in infrastructure through a combination of public investment, Public Private Partnerships (PPPs) and occasionally, exclusive private investment wherever feasible The use of PPP an as instrument of procurement for creation of infrastructure assets and delivery of public services has been recognized globally. Apart from bridging the deficit in financing of public projects, PPPs also brings new and cost effective technology for creation of infrastructure assets, managerial efficiency, competency for operation and maintenance of the created assets and the contractual accountability on the private party to ensure timely and quality infrastructure service to the end users.

As a result, private investment in infrastructure has picked up in recent years, encouraging the government to go for a more ambitious infrastructure creation drive through greater emphasis on PPP mode of execution. The private sector is expected to contribute at least half of the over $1 trillion dollar investment planned in infrastructure in the XII plan (2012-17).

Initiatives by Government of India for promoting PPPs
The Public Private Partnership (PPP) Cell is responsible for matters concerning Public Private Partnerships, including policy, schemes, programmes and capacity building and all other matters relating to mainstreaming PPPs.

  • Matters and proposals relating to clearance by Public Private Partnership Appraisal Committee (PPPAC)

  • Matters and proposals relating to the Scheme for Financial Support to Public Private Partnerships in Infrastructure- Viability Gap Funding (VGF) Scheme

  • Matters and proposals relating to the Scheme for India Infrastructure Project Development Fund

  • Policy matters related to Public Private Partnerships (including Model Concession Agreement)

  • Developing multi-pronged and innovative interventions and support mechanisms for facilitating PPPs in the country, including Technical Assistance programmes from bilateral and multilateral agencies on mainstreaming PPPs and support to State and local governments

  • Managing training programmes, strategies, exposures for capacity building for PPPs.

  • Subject of advocacy for greater acceptability towards PPPs Institution building for mainstreaming PPPs

  • Matters relating to management of PPP related information, including and

  • The Toolkit for the use by PPP practitioners across India in both the public and private sectors,

  • Other policy/Parliament related matters concerning PPPs.

The Government of India is actively encouraging PPPs through several initiatives. The appraisal mechanism for the PPP projects has been streamlined to ensure speedy appraisal of projects, eliminate delays, adopt international best practices and have uniformity in appraisal mechanism and guidelines. The appraisal mechanism notified includes setting up of the Public Private Partnership Appraisal Committee (PPPAC) responsible for the appraisal of PPP projects in the Central Sector.

Standardized bidding and contractual documents have been notified. These include model Request for Qualification (RFQ); Request for Proposal (RFP) and RFP for technical consultants; Model Concession Agreements (MCAs) for different sectors including Highways (both National and State Highways), Ports, Urban Transport (Metro), Power sectors and Manuals of Standards & Specifications have been developed and standardized. Further, Project Sponsors are encouraged to award projects through a transparent open competitive bidding process, which leads to greater transparency and consistency to the bid process and terms of contract.

The Government has created a Viability Gap Funding Scheme for PPP projects. Infrastructure projects are often not commercially viable on account of having substantial sunk investment and low returns. However, they continue to be economically essential. Accordingly, the Viability Gap Funding Scheme has been formulated which provides financial support in the form of grants, one time or deferred, to infrastructure projects undertaken through public private partnerships with a view to make them commercially viable. The Scheme provides total Viability Gap Funding up to twenty percent of the total project. The Government or statutory entity that owns the project may, if it so decides, provides additional grants out of its budget up to further twenty percent of the total project cost. Viability Gap Funding under the Scheme is normally in the form of a capital grant at the stage of project construction.

The Government has also set up India Infrastructure Finance Company Limited (IIFCL) with the specific mandate to play a catalytic role in the Infrastructure sector by providing long-term debt for financing infrastructure projects. IIFCL funds viable infrastructure projects through Long Term Debt, Refinance to Banks and Financial Institutions for loans granted by them, with tenor exceeding 10 years or any other mode approved by the Government.

While quality advisory services are fundamental to developing well-structured, value-for-money PPPs, the costs of procuring PPPs, and particularly the costs of transaction advisors, are significant. Development of robust projects with a sound financial structure and optimal risk allocation is critical for evincing a market response in respect of the projects. The scheme for 'India Infrastructure Project Development Fund' (IIPDF) has been launched to finance the cost incurred towards development of PPP projects. The IIPDF supports up to 75 % of the project development expenses.

The Department of Economic Affairs is supporting Central Ministries, State Governments and Urban Local Bodies in structuring PPP Projects in challenging sectors. The object of the initiative is to develop robust PPP projects and successfully bid them to establish their replication potential in the sectors concerned. The pipeline of projects is across sectors and includes projects currently under bid process, projects where bid documents are ready for launch to the market and projects where we are in development/planning phase.

Sector specific PPP Toolkits covering five sectors available as a web-based resource that is designed to help improve decision-making for infrastructure PPPs in India. The Toolkit is for use by PPP practitioners across India in both the public and private sectors.

An infrastructure projects database ( was developed by DEA which will be a repository of infrastructure projects being implemented across the sectors in India. It will provide key information on the status of infrastructure projects being executed in India.

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