Monday, 30 June 2014

Public Private Partnerships: The Road Ahead

The debate on public-private partnerships has largely evoked partisan views. As many developed nations now look at public private partnerships to fund major infrastructure projects, there has been a renewed interest in PPPs not only in India but also worldwide. A public-private partnership offers a wide scope for project financing and innovative delivery approaches through access to capital markets, implementation of new technologies, expedition of project delivery in time-bound phased manners, operations and maintenance in cost-effective ways.
India’s experiment with PPP has been around for roughly 20 years where the focus has been predominantly on asset creation. There is no surprise that most of the PPP concessions have been given to development of national highways and ports. The World Bank cited in its 2011 report that private participation was highly concentrated only in India. It ranks India as the largest market for PPP in the developing world, accounting for over half of the total investments in new PPP projects mapped across developing countries when it implemented 43 projects which attracted a total investment of $20 billion.
The general drivers for interest in PPPs are the use of private finance to provide investment that the public sector otherwise cannot afford, maximising value-for-money through appropriate risk allocations between the private and public sector, attaining greater efficiency, lower costs, higher quality and faster delivery of public infrastructure projects, building capacity of the private sector and promotion of innovation not only in technical and operational matters but also in financial and commercial arrangements.
The country’s first PPP project in railways was the Reliance Infrastructure-led concessionaire Airport Express Line of the Delhi Metro. The Delhi Metro Rail Corporation (DMRC) had built the basic civil infrastructure and took over operations upon Reliance’s withdrawal. The project had been deep in controversies like failed safety clearances and technical glitches which led to a turf war between Reliance Infrastructure and DMRC on the issue of penalty for delays.
One of the key elements of successful PPP projects is a clear understanding of the proposed asset and prudent risk sharing and rewards associated with the project. Due to inaccuracies in these, risk-sharing and mitigation measures prove inadequate and inappropriate. Better preparation before the bidding process for a PPP project is the key point. It is a known fact that technical data availability and its quality has been a constraint in the way PPP projects are planned across India. Another reason can also be that consultants who are often ill-equipped are selected through the lowest bids.
Public-private partnerships in India fail mainly due to poor preparations, flawed risk sharing, inappropriate business models and poor fiscal uncertainties which are often linked to vested interests thus leading to the rise of a skewed qualification criteria. The solution, therefore, lies in clear understanding of the proposed asset and a careful sharing of risks and rewards associated with the asset to ensure key elements to ensuring a successful PPP project. It is not appropriate to dismiss an entire concept of PPP on the basis of a few failures as each project and the demand it brings forward is different in each sector.
The road ahead for PPP projects in India is proper integration wherein the lesson to learn is that designs and construction should be taken care on the life cycle basis. Better preparation before the process of bidding and transparency with regard to dissemination of technical data and its quality and the elimination of ill-equipped consultants will go a long way to revive investor confidence. Ensuring clearances especially for projects that have led to a slowdown due to delays in decision making. The new government at the helm of affairs in Delhi should mend the problem of delayed decision making and implement projects which have been stuck due to slowdowns even more aggressively.
The time is ripe for initiating adequate safeguards and strict regulatory supervision. Indian cities must draw lessons from the failures of the Delhi Airport Express Line and the subsequent PPP projects like Manila and Kuala Lumpur and must follow it up with effective monitoring and safeguards such that it does not place high-cost public transport projects at risk. 
P.S.: This post was originally written for Centre Right India, a policy research think-tank.  This post was originally published on June 28. You might want to read this post in its unabridged avatar here

Wednesday, 4 June 2014

Gopinath Munde (1949-2014)

One of the best known faces of Maharashtra politics and former deputy chief minister, Gopinath Munde died early Tuesday morning following a road accident in Delhi. Munde, a senior politician from Maharashtra, was sworn in as the Union Minister for Panchayati Raj, Rural Development and Drinking Water and Sanitation on May 26. He was also until recently in the reckoning for the position of Maharashtra Chief Minister. His sudden and untimely demise is a rude shock to the turbulence prevailing in Maharashtra politics.
Being an astute politician and a master strategist, he rose from the ranks leaving his imprints on every position he occupied in public life. Credited with the near-impossible task of neutralising the NCP Chief Sharad Pawar, Munde won the 2014 Lok Sabha elections by a margin of 1.4 lakh votes from the Beed constituency after defeating NCP’s Suresh Dhas. Known for his organisational skills, his career in public life has been characterised by hard work and his ability to retain touch with the masses at the grassroots levels.
As a member of the Maharashtra Legislative Assembly from 1980 to 2009, he was no doubt the most prominent leader of the BJP in Maharashtra along with his brother-in-law Pramod Mahajan. Widely regarded as the architect of social engineering, Munde had been instrumental in stitching up the grand “Mahayuti” alliance of the Republican Party of India, Swabhimani Shetkari Paksh and Rashtriya Samaj Paksh along with the Shiv Sena-BJP alliance in the state, which won 42 of the 48 Lok Sabha seats in the state in the recently concluded General Elections.
Gopinath Munde, who was expected to lead the BJP in the upcoming Assembly polls in Maharashtra, was known as a consensus builder and was expected to meet state leaders and smoothen the rough creases with its long-term ally, the Shiv Sena. Since the death of the Sena supremo Bal Thackeray in 2012, Munde had emerged as the axis of the state’s political affairs.
His sudden death revives the turbulence already prevailing in Maharashtra politics and the void he leaves with is irreparable. In the changed political scenario, the equations with the Sena will need to be redefined and the state's BJP unit will no longer remain the same without his presence.

P.S.: This post was originally written for Centre Right India, a policy research think-tank. This post was published on June 3, 2014. You may want to read the original piece here

Tuesday, 3 June 2014

The Missing Faces

The swearing-in of a Prime Minister holds the promise of a new growth cycle as much as it illustrates how transfer of power can happen peacefully. May 26, 2014 too heralded the arrival of a new government helmed by Narendra Modi. As curtains fell on the world’s largest democratic elections, the swearing in of Narendra Modi as the Prime Minister of India brought forward the possibility of renewal of ties with representatives of SAARC countries. While the event was attended by the who’s who of Indian politics, there were some omissions who did not make it to the swearing in:
J. Jayalalithaa: The Tamil Nadu CM, J. Jayalalithaa, had hoped that the new Government would be sensitive towards the Tamilians. The CM refused to attend the swearing-in due to the invitation extended to the Sri Lankan President, Mahinda Rajapakse, who allegedly oversaw the genocide in Sri Lanka and remained President while innocent Tamilians were killed in the crossfire.
Siddharamaiah: Siddharamaiah, the Chief Minister of Karnataka, did not attend the swearing in as he considered the induction of B.S. Yeddyurappa and his party’s subsequent merger with the BJP as a classic example of double speak on the issue of corruption.
Oommen Chandy: Though Oommen Chandy has personally not launched an all-out attack or taken barbs at Modi, the Kerala CM too did not attend the swearing in as he is most likely aware of the grim situation he faces back home due to his name cropping up in the solar scam. Secondly, Modi is still considered a "communal" figure in Kerala. Many Malayalam newspapers too vehemently condemned his meeting with the Prime Minister designate before elections.
Mamata Banerjee: The election campaign witnessed some steady and high-pitched barbs by Narendra Modi at the West Bengal CM who even dubbed him as a butcher. Her attempt to consolidate and protect her secular image also witnessed her slamming doors for a possible alliance. However, two MPs Mukul Roy and Sougata Roy from the TMC attended the swearing in.
Mayawati: Given the massive drubbings of the BSP at the hustings, the Bahujan Samaj Party supremo Mayawati did not attend the swearing in thus reiterating her intense dislike for "communal forces". On the day of the results (May 16), she even went on to term the BJP-led NDA's landslide victory as "the rise of communal forces". 

P.S.: This post was originally written for Centre Right India, a policy research think-tank. It was published on June 3, 2014. You may want to read the original piece here