[Model Answer QP2022 GS3] Why is Public Private Partnership (PPP) required in infrastructure projects? Examine the role of the PPP model in the development of Railway Stations in India.

United Nations defines public private partnerships as “innovative methods used by the public sector to contract with the private sector who bring their capital and their ability to deliver projects on time and to budget, while the public sector retains the responsibility to provide these services to the public in a way that benefits the public and delivers economic development and improvement in the quality of life”.
In simple words, Public-private partnerships involve collaboration between a government agency and a private-sector company that can be used to finance, build, and operate projects, such as public transportation networks, parks, and convention centers. 
Financing a project through a public-private partnership can allow a project to be completed sooner or make it a possibility in the first place.

Public-private partnerships often involve concessions of tax or other operating revenue, protection from liability, or partial ownership rights over nominally public services and property to private sector, for-profit entities.

Importance of PPP in Infrastructure projects

  1. PPP as a way of introducing private sector technology and innovation in providing better public services through improved operational efficiency.
  2. To deliver projects on time and within budget.
  3. Imposing budgetary certainty by setting present and the future costs of infrastructure projects over time.
  4. Utilising PPPs as a way of developing local private sector capabilities through joint ventures with large international firms.
  5. Extracting long-term value-for-money through appropriate risk transfer to the private sector over the life of the project – from design/ construction to operations/ maintenance
  6. Using PPPs as a way of gradually exposing state owned enterprises and government to increasing levels of private sector participation (especially foreign) and structuring PPPs in a way so as to ensure transfer of skills leading to national champions that can run their own operations professionally and eventually export their competencies by bidding for projects/ joint ventures.
  7. Supplementing limited public sector capacities to meet the growing demand for infrastructure development.

 The role of the PPP model in the development of Railway Stations in India

  1.  India boasts among the largest rail systems under single management in the world. Taking cognizance of its significance in overall infrastructural development, the NIP envisages the investment in Indian Railways worth Rs 11.43 lakh crore till 2024-25.
  2. RLDA (Rail Land Development Authority (RLDA) is spearheading the redevelopment of 60 railway stations across India on a PPP Model.
  3. The station redevelopment comprises two components
    1. Mandatory station redevelopment: The mandatory station redevelopment will make travel smooth and hassle-free without diluting the historical significance of these stations.
    2. Station Estate (Commercial) development: Commercial development will enable developers to tap several revenue streams to ensure the viability of the entire project.
  4. These redeveloped stations will be endowed with state-of-the-art amenities such as segregation of arrival and departure, excellent road connectivity with multi-modal transport integration, security and surveillance systems to enhance the travel experience.
  5. It will augment the tourism potential, boost real estate, encourage employment generation and lead to a cascading effect on the local economy.
The Indian Railways is just an example of realizing the benefits of PPP to accelerate infrastructural development. Fostering innovation and incorporating learning from across the world will be the key to unlocking its plethora of benefits and realizing the dream of the 5 trillion dollar economy by 2024.

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