Home Blog Welcome PPP only when it creates win-win situation

Welcome PPP only when it creates win-win situation

In the past investment in urban infrastructure by the private parties has been low due to relative lack of appreciation of heavy investment needs of urban infra. For example, according to government’s estimation in 12th Five Year Plan, investment in urban transport alone needed more than Rs 2,00,000 crore. In addition to this, urban road infrastructure needed another Rs 1,65,000 crore. Transport is just one of the requirement of the cities and there are other demands too like, water, power, sanitation, health, etc. The investment in urban infrastructure as estimated by the High Power Expert Committee set up by the Ministry of Urban Development, Government of India for the period 2012 – 2031 also indicates a huge requirement of Rs 39,20,000 crore. Naturally, it would be an uphill task for the local bodies and the government at the state and centre to shoulder the entire burden and roping in the private partners is one of the ways to lessen the burden on government’s exchequer.

In order to address resources gap, the government is planning to leverage investments from private sector through Public Private Partnership (PPP) and has emphasised this in the Smart Cities Mission, Atal Mission for Transformation and Urban Rejuvenation (AMRUT) as well as the National Urban Transport Policy (NUTP). Though the objective has been a noble one, so far the result has been a disappointing. Till now government’s efforts to rope in private parties haven’t had any desired results and on the other hand, private parties have been getting lucrative orders of all these programmes. The way things are moving it appears that the private sector likes to see its role just as EPC contractor rather than a private investor.

One thing is sure the private sector is not finding the opportunities available on urban development front not lucrative enough to block its funds for fairly longer duration. Reasons for private sector’s lukewarm response to participate in urban development projects are many. We don’t have many successful stories to give as examples to attract more investment. We neither have a stable long term policy nor are the returns on such investment lucrative enough to attract investors. At the same time it should also be borne in mind that the cities cannot be run as entrepreneurs where various urban infrastructure facilities are considered as business units, and the right investor cannot be selected through competitive bidding.

The government should always remember that cities cannot be run by privatising the them by allowing big technology giants to operate and manage the affairs, and, then believe that these technological solutions will make the cities a better place to live, and make them inclusive and sustainable. There are doubts over such a belief and handing over the city resources to mega technological giants is not going to help the cites to come out of its real problems.

Its wrong to blame the government alone for the failure of PPP to flourish in urban development programmes. Experience suggests that there is hardly any investment in the cities have been made by the private sector and that this sector has mainly been interested in smart city solutions like internet of things, etc.

There is no doubt that the market for digital innovation is a very big and large companies seem to be eyeing cities as potential spaces for maximising their profits through their interventions. It can come in the form of smart city projects, smart control command centre, putting cities under complete surveillance through the use of smart cameras, etc.

PPP is always welcome when it creates win-win situation to all the stakeholders including citizens who are users of the facilities. However, it should be discarded outright if it results in acceleration  of the growth of inequality in our societies by brining increased convenience and services to the wealthy few at the cost of the public as a whole.

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