Renegotiation clause should be added in PPP: UD ministry

This is because it is difficult to make correct estimates at the time of award of contracts

To give a boost to the infrastructure sector, a renegotiation clause should be added in the public private projects (PPP) to make the projects succeed, according to a government official.

Anand Singh Bhal, Economic Adviser, Ministry of Urban Development in the CII Realty 2014, said adding a renegotiation clause would help remove some impediments to PPP projects.

It is difficult to make correct estimates at the time of award of contracts. The new government is giving a lot of emphasis on implementation and quick decision making, he said.

Bhal is also the Chairman of PPP Committee of urban development Ministry.

The Ministry is also in the process of preparing a list of features that need to be incorporated for development of '100 Smart Cities' announced in the Budget with an outlay of Rs 7,060 crore in this fiscal.

Finance Minister Arun Jaitley in Budget 2014-15 had announced developing 100 smart cities as satellite towns of larger cities and by modernising the existing mid-sized cities.

Bhal said discussions are on to make the policy for 100 smart cities, which will include the existing cities and new ones. "Smart city is a new buzz word. It's not possible to make 100 new smart cities as it will take 20-30 years to build. So, instead of building 100 new smart cities, a lot of emphasis will be on making a city smart.

The government will come up with a tangible and a broader definition, which will include not only IT solutions but other aspects that make cities livable. "There are four silos in our ministry -- built-up area (CPWD), urban transport, water supply-sanitation and town country and planning. All the four have been asked to work out what are the smart features that needed to be incorporated in cities and come up with a list," he said.

CBRE South Asia CMD Anshuman Magazine said the real estate sector faces challenges of fund scarcity and skill shortages.

However, he hoped that tax incentives for Real Estate Investment Trusts (REITs) and easing of FDI rules in Budget would boost domestic and foreign investment in the sector. "REITs have a potential to bring billions and billions of dollars. Large number of assets are owned by REITs outside India," Magazine said.