Question 15GS3GS3

What are the major factors impeding private participation in infrastructure development in India? What steps have been taken by the government to attract private investment. (Answer in 250 words)

Main Body

According to the Vejay Kelkar Committee recommendation, public-private partnership agreement can bring in best of both worlds to bridge the capital deficit in India. PPP models for infrastructure include: Build Operate Transfer BOT, Engineering Procurement EPC, Hybrid annuity model, INVIT.

Factors impeding private participation: (1) Large turnaround time in infrastructure investment. Eg: Large toll payment timelines of 60 years. (2) Improper rules and regulations and lack of uniformity - centre and states. (3) Lengthy and delayed conflict resolution in courts. Eg: Amongst commercial dispute takes 30 years for resolution. (4) Frequent change in design demand implementation standard of projects hampering quality of functionality. (5) Lack of computer and minimal number of domestic players in certain sectors. Eg: Drophely along with government in airport management sector. (6) Use of Swiss Challenge model seen as unfairly hampering foreign investment.

— Aditya Narayan H · AIR 68

137 words1 paragraphs

Conclusion

Steps taken by government: (1) National infrastructure investment fund: To attract funds from private players by investing in basic infrastructure [Blended lending-in]. (2) PPP Gatekeepers: To ensure timely and prompt execution. (3) Institution of investment tests for infrastructure - INVIT as alternate investment funds. (4) Used the hybrid annuity model over Swiss challenge attracting investment. (5) National monetization pipeline to monetise public facilities by leasing out to private players. Hence the government is looking forward to increasing private investment for a $5 trillion economy by 2047.

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Topper

Aditya Narayan H

AIR 68

Subject & Paper

GS3GS3

Topic

Land Reforms, Liberalization, Infrastructure & Investment

Investment Models

PPP models and private participation

Writing Stats

223

Total words

Paragraphs

Linked PYQ

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