Govt mulls setting up entity for PPP projects

The government is considering creation of a company for handling public-private partnership (PPP) projects.

A senior finance ministry official told Business Standard the idea was for the company to handle issues from appraisal to funding, with an entity on the lines of the National Skill Development Corporation (NSDC).

The company, which may be named PPP India, is among the steps contemplated to drive infrastructure investments, said the official.

The step may be announced by Finance Minister Pranab Mukherjee in Budget 2012-13.

NSDC is a PPP aiming to catalyse creation of large, quality, for-profit vocational institutions. A company on these lines for handling PPP projects is likely to streamline the approval and funding mechanism for these projects.

Considering the huge projected investment required during the 12th Plan (2012-17), the government is paying special attention to promoting PPP projects, said the official.

According to a preliminary assessment by the Planning Commission, quoted in the Economic Survey this year, the projected investment requirement would be Rs 40,99,240 crore ($1,025 billion). It is projected that at least half this investment would have to come from the private sector, against a little more than a third of the total anticipated in the 11th Plan.

The survey had said the financing of infrastructure would be a big challenge in the coming years and to meet the challenge, some innovative ideas and new models of financing would be required.

“Channelling domestic and foreign financial savings of this scale into infrastructure requires a judicious mix of policy interventions, which balances the growth and stability objectives,” it said.

Given the enormity of the investment requirements and limited availability of public resources for investment in physical infrastructure, it is imperative for the government to explore avenues to increase investment in infrastructure through a combination of public investment, PPPs and, occasionally, exclusive private investment wherever feasible.