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Breaking News in the Project Management World
Wednesday, March 19, 2008
Indian Government promotes PPP route for social sector
Reported by Raju Rao in Chennai
The use of PPP (Public private partnership) in promoting infrastructure development in India is attracting a lot of attention. However this is more or less restricted to areas like Transport ( Roads / Airports etc ) and Power . The Central government as part of its effort to promote this concept now provides interest - free loans to state governments to prepare viable PPP projects, in addition to meeting a fifth of project cost through a viability gap fund.
The recent announcement of using the PPP route for schools and hospitals may be finance minister P Chidambaram’s most ambitious exercise to unlock the government’s brand value and channelise private investment to where the country needs it most i.e. education and healthcare. The finance ministry would soon come out with a special scheme to let the private sector run government schools and hospitals, besides setting up new ones.
At present private sector initiatives have been successful for hospitals as well primary and secondary school education. However this has not been used by the public at large as the private facilities are unaffordable to many. The current scheme would be designed to offer decent returns on investment for the private sector as the government acknowledges that corporate houses can’t be expected to do philanthropy at the national level. The terms have to be attractive to rope in private sector as a solution to the country’s poor healthcare and education sectors.
Roping in the private sector will also ensure leakages are limited as the private party would be accountable for the funds it receives from the government as well as the amount it raises using state assets. This is a significant advantage for use of the PPP route as most social sector projects and fund allocations suffer from serious credibility on whether the benefits at all reach the consumer. A notable example is the Golden quadrilateral project implemented by the Government where vested interests were stronger than whistle blowing action.
The use of PPP in social sector could take quite some time to get accepted as Indian business and government are still not familiar with these models especially in the primary and secondary school sector. Other countries for e.g the U.K has successfully deployed it for social sector projects like schools and hospitals and therefore could serve as excellent examples in reducing the learning curve.
Source: India Brand Equity Foundation www.ibef.org.
The use of PPP (Public private partnership) in promoting infrastructure development in India is attracting a lot of attention. However this is more or less restricted to areas like Transport ( Roads / Airports etc ) and Power . The Central government as part of its effort to promote this concept now provides interest - free loans to state governments to prepare viable PPP projects, in addition to meeting a fifth of project cost through a viability gap fund.
The recent announcement of using the PPP route for schools and hospitals may be finance minister P Chidambaram’s most ambitious exercise to unlock the government’s brand value and channelise private investment to where the country needs it most i.e. education and healthcare. The finance ministry would soon come out with a special scheme to let the private sector run government schools and hospitals, besides setting up new ones.
At present private sector initiatives have been successful for hospitals as well primary and secondary school education. However this has not been used by the public at large as the private facilities are unaffordable to many. The current scheme would be designed to offer decent returns on investment for the private sector as the government acknowledges that corporate houses can’t be expected to do philanthropy at the national level. The terms have to be attractive to rope in private sector as a solution to the country’s poor healthcare and education sectors.
Roping in the private sector will also ensure leakages are limited as the private party would be accountable for the funds it receives from the government as well as the amount it raises using state assets. This is a significant advantage for use of the PPP route as most social sector projects and fund allocations suffer from serious credibility on whether the benefits at all reach the consumer. A notable example is the Golden quadrilateral project implemented by the Government where vested interests were stronger than whistle blowing action.
The use of PPP in social sector could take quite some time to get accepted as Indian business and government are still not familiar with these models especially in the primary and secondary school sector. Other countries for e.g the U.K has successfully deployed it for social sector projects like schools and hospitals and therefore could serve as excellent examples in reducing the learning curve.
Source: India Brand Equity Foundation www.ibef.org.
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