Question 1GS3GS3

Discuss the Hybrid Annuity model of Public-Private Infrastructure and its effectiveness in resolving the PPP model issues. Evaluate the role of EPC and BOT components in the cost allocation framework.

Main Body

2Responsibility of land acquisition and documentation on the government. 3) Freedom from the risks of profitability analysis of BOT model. eg Delhi-Airport express line was less making for Reliance 4) Better engagement between the government and private party 5) Adoption of Model Concession agreement 6) Private party retains ownership for better credit availability from banks. 7) Adoption of Model Concession agreement 8) INVITS can be leveraged alongwith private capital. Challenge in the Approach Way forward: 1) Adoption of model concession agreement 2) Better usage of PPP cell and PPP investment authority 3) NABFID can have a supporting role in finance - 1 lakh cr fund 4) Deepening of corporate bonds for PPP 5) LH.R. Shen committee PPP-HAM model was praised by Minister of Road Transport and it has shown the capability to reform the contract regime.

— Aditya Talwar · AIR 270

137 words1 paragraphs

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Topper

Aditya Talwar

AIR 2702025

Subject & Paper

GS3GS3

Topic

Infrastructure

PPP

Hybrid Annuity Model challenges and way forward

Writing Stats

137

Total words

Paragraphs

formal analytical

Tone

Linked PYQ

Rajesh Kumar, a senior public servant known for honesty and forthrightness, heads the Budget Division in the Finance Ministry, busy organizing budgetary support to states — four going to polls within the financial year. The annual budget allotted Rs. 7,830 crores for the National Housing Scheme (NHS), a centrally sponsored social housing scheme for weaker sections; Rs. 775 crores drawn till June. The Commerce Ministry long pursued a Special Economic Zone in a southern state; after two years of Centre-State discussion the Union Cabinet approved it in August and land acquisition began. Eighteen months ago a leading PSU projected a large natural gas processing plant in a northern state for the regional gas grid (land already with the PSU, essential for national energy security); after three global bidding rounds it went to MNC M/s XYZ Hydrocarbons, first payment due in December. The Finance Ministry was asked for timely additional allocation of Rs. 6,000 crores for these two developmental projects — decided to be re-appropriated entirely from the NHS allocation; the file reached the Budget Department. Rajesh Kumar realizes re-appropriation may inordinately delay the much-publicized NHS, while fund denial would cause SEZ financial loss and national embarrassment over delayed international payment. Seniors convey the politically sensitive situation needs immediate processing; diversion could raise difficult parliamentary questions. Discuss: (1) ethical issues in re-appropriating funds from a welfare project to developmental projects; (2) given proper utilization of public funds, options available to Rajesh Kumar; (3) is resigning a worthy option?

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