Direct PPP to people who can't pay: FM

Finance Minister Pranab Mukherjee today said public-private-partnership (PPP) projects should also be directed to people who cannot pay for infrastructure services. He said PPP projects in sectors such as education, health, skill development, mass housing, rural infrastructure and job creation would ensure inclusive growth.

The finance minister said most of our PPPs seem to be directed towards people who can pay for the infrastructure services and he himself agreed that people who can afford to pay must be made to pay, as that leads to efficiency in usage.

“Yet, we must recognise that we are a country with a sizeable population who genuinely cannot afford to meet the full costs of service. If PPPs are good and efficient, why can we not harness them to provide better quality infrastructure services to this section of the citizenry also, especially in areas where we are willing to devote resources for inclusive growth?” Mukherjee said at the PPP conclave organised by the finance ministry with Asian Development Bank and the World Bank.

He said PPP models with appropriate safeguards would help to both accelerate inclusive growth and avoid the risk of over-commitment. So far, states have initiated bidding or completed construction or award of around 350 PPP projects with a total investment of nearly Rs 1,50,000 crore.

Mentioning that both the Planning Commission and the Ministry of Finance are making efforts to develop a variety of models as guidance material for PPPs, Mukherjee expressed hope that these models would help public sector functionaries and agencies who may not be fully conversant with the concept of PPP. He emphasised on the need for periodical review and revision of such guidance material, based on experience and new insights.

In the current plan period, from 2007-08 to 2009-10, the government has scaled up infrastructure investments as a percentage of GDP, to 7.1 per cent. The private sector, which contributed one-fifth of infrastructure investments in the Tenth Plan, is expected to increase its share to one-third in the current Plan period. The government is planning to double infrastructure investment to around $1 trillion in the XIIth Plan, with half of it coming from the private sector.

Mukherjee also said there are arguments for eschewing availability-based PPPs, like the annuity variant of build-own-transfer, as these might lead to making future commitments that are beyond our means. “A fair point, yes but, to my mind, this apprehension can be addressed relatively easily by self-discipline, and choosing only projects that we need and can afford,” he added.