Approaches that recognize the specific kind of market failure/s, in the policy and design of infrastructure, greatly reduce the financing costs and improve the ability of to attract finance in the private provisioning of infrastructure. This is particularly so in the case where there are dual market failures arising out of both the natural monopoly and the appropriability failure aspect. Thus, sewerage and water, city roads, multimodal facilities, solid waste, public health care and the challenges have proven beyond the current ability of the state. Debilities in the financial markets stem from the weaknesses of the public sector banks. Risk shifting on to them by private players have been common. Policy must move to internalizing interest rate change risk in all PPPs. It must also tighten the conditions under which renegotiation is possible so that the state is not pushed to bearing the downsides of privately provided infrastructure. The heightened private brownfield investments (when greenfield decline rapidly), today, are more a reflection of the government’s inability to come out with solutions while monetizing its creative effort-especially the NHDP—in the past.
Book Chapter in
Mani, Sunil (eds.), India's Economy and Society, Springer 2021.
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