PPP MODEL

 UPSC GS MAINS IMPORTANT QUESTIONS


Adoption of PPP Model for infrastructure development of the country has not been free of criticism. Critically discuss the pros and cons of the model. 









PPP means Public Private Partnership.

Infrastructure in India is poor when compared to similar developed nation. The Government of India identified public private partnership model as a way of developing country's infrastructure in the 1900's. In August 2012, the prime minister of India, Dr. Manmohan Singh, lifted the ban on the transfer of government owned land, relaxed land transfer policy and did away with the need for cabinet approval for PPP projects in order to accelerate the building of infrastructure.




PPP model or 3P model is a contract between government and private entity, with the goal of providing some public benefit.

Benefits of PPP model:

1. Better infrastructure solutions than an initiative which is either fully public or private .
2. Faster project completions and reduced delay on projects.
3. Risks are fully appraised early on to determine project feasibility and performance .





4. The operational and project execution risks are transferred from government to private player, which is generally more experienced in cost containment.
5. By increasing government's investment efficiency, it allows government fund to be redirected to other important socio economic areas.

Disadvantages of PPP model:

1. Every 3P involves risks for the private player, who reasonably expects to be compensated for accepting those risks. This may increase government  cost.
2. Profits of the project may vary.
3. Government do not show any risk, which may lack their enthusiasm in the completion of the project.
4. This model lacks last mile clearance issue.



5.Contract of the project is very rigid, which may decrease private player participation.
6. Infrastructure involves large investment and in 3P model, government ensures finances to private player but does not give money directly. Thus, it may result in higher tolls and taxes on public by private player.

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