The large budgetary support in general of plan and investment should bring cheers to the producers, investors and financers of infrastructural equipment and services on roads, urban services and power equipment. Given the large rises on doles under the NREGA, Bharat Nirman, Adarsh Gram, though their efficiency would be poor, and much of the spending may not even reach the poor, the diversion and misspending would do the job of demand creation. These programmes are a significant improvement over the earlier sop programmes that the Indian poor lived with over the last 35 years. Most significant, though, are the plans to make for transparent subsidisation and direct subsidies. If these can be done through endowments, defined and coded on chip cards, and tradability is allowed, then the entire petroleum and electricity sectors (not to speak of fertiliser and food) can be liberated for private investments and the inefficiency of the state owned enterprises in delivery/production, and the very large distortions in use that waste as much as 6% of GDP can be pulled in. The emphasis on Public Private Partnerships (PPPs) is in the right direction, so is the emphasis on take out financing for long gestation. The IIFCL (India Infrastructure Finance Company Ltd) and IDFC (Infrastructure Development Finance Company) which pioneered take out financing should not a have a problem in financing private projects. However, the loose ends for rent seeking, discord and dispute are large. The right way to go forward will be to set up an institutional mechanism to whet project ideas and structuring strategies by a neutral and expert body where skills in project development, financing, cost benefit analysis, regulation and public policy are combined and available for referral, before signing and closure. That would also be a boon to the honest civil servant wanting to take PPPs forward.
The Emphasis On PPP Model Is In The Right Direction
Author : Sebastian Morris