Monday, 28 October 2013

PUBLIC PRIVATE PARTNERSHIP AT GLANCE

In the last couple of decades, the 3P model of development has emerged as a new instrument of social, economic and infrastructural development all over the world but there are many dimensions, problems and prospects to it. No doubt, it is paradigmatic shift in the conventional models and approaches to development but at the same time, it has caused and created many heartburns and problems as well. Some of these 3P approaches are marred by corruption, nepotism, favouritism and other controversies. 
Problems related to land acquisition, protest of farmers and encouragement to chrony capitalism are common allegations against the 3P model. It is also stated that it allows private sector to loot openly national and natural resources at the cost of environment and ecological balance. Big business houses and large multinationals try to deceive people and the government in the name of development. Is there anyway out of this crisis? Are these allegations concrete and true in their substances and spirit? Is it not one of the best alternatives available for development at present? Can government alone afford to bear the cost of social and economic infrastructural development on its own? Can we match international standard and expertise and State-of-art technology without 3P model. 
These are some mind boggling questions which need urgent answers.  The paper tries to look into the reality and rhetoric of 3P model. It is neither absolute boon or bane for present day society. No doubt, it is the need of the hour. Ever increasing demand and need for development cannot be fulfilled by state alone. We need partners in development. Peoples’ participation, role of civil society and media can help 3P model. Transparency, openness and accountability can provide solution to many of its problems faced by the 3P model. 
There are fantastic examples in the world which show that how the 3P model can create wonders and miracles if implemented in a proper and just way. PPPs represent a paradigm shift in mobilizing both resources and expertise for expanding and improving public services through well-conceived infrastructure projects. There are several alternatives available but the one that is, broadly speaking, adopted in the country is that where capital investment is made by the private sector on the strength of a contract with government to provide agreed services. The model can be based on a BOT, BOO or BOOT arrangement or an acceptable close variant of these. 
The risks are to a considerable extent transferred to the private partner who is expected to manage these better on the basis of his experience, capabilities and flexibilities available to him. Since infrastructure projects often do not generate commercial returns in the short or medium run, incentives have to be provided by the government to the private partner which may be in the form of capital subsidy. It may be a one time grant or annuity for a fixed span of time. This is termed as Viability Gap Filling. In some cases projects can be supported by providing revenue subsidies, tax breaks or even guaranteed revenues for a fixed period. Such projects involve massive investments and, therefore, have to be carefully designed to make these bankable entities.

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