Creating an enabling environment for public-private partnerships in India : lessons learned and policy recommendations from the European perspective

Abstract

India is currently experiencing a promising boom in infrastructure building across various sectors. Enormous amounts of capital investments are needed for greenfield development and the upgrade of existing systems in order to meet future demands, emerging mainly from the pressure to sustain economic growth and to respond to urbanization and climate change threats. It is evident, that the lack of appropriate infrastructure introduces severe inefficiencies and is therefore hindering substantially economic growth and social progress. The current situation in India falls very short of the needs of a modern economy of the type that India thrives to become. It is well reported that Indian infrastructure is alarmingly poor by almost any standards and comparisons. Substantial funds have been dedicated recently by the Indian government for infrastructure development, but financial resources are still falling short of meeting the entire demand. In this respect, the model of "public-private patnerships (PPP)" appears to be a very attractive mechanism in India for bridging the financing gap and efficiently delivering infrastructure services. However, the current PPP environment in India is still lacking attractiveness for private firms to engage with the public sector for business purposes. Furthermore, governmental authorities and public authorities often do not possess the capacities and skills to manage and implement large-scale PPP projects. The here presented work examines on a strategic policy level the main lessons to be learned for India from experiences and successes of advanced economies - and in particular Europe - in attracting the private sector towards infrastructure investment by means of publicprivate partnership models. From the pool of collected information and data comparing the PPP environment in India and Europe, clear recommendations helping India in creating an enabling environment for PPP projects in the future have been formulated. This analytical work is thus targeted towards governmental institutions and other public authorities in India, that are engaged in PPP affairs for infrastructure delivery. Besides concentrating on issues related to the current political, institutional, legal, financial and economic framework in India, certain attention has also been given to the intercultural differences between India and Europe that are of relevance for public-private sector collaborations.

India is currently experiencing a promising boom in infrastructure building across various sectors. Enormous amounts of capital investments are needed for greenfield development and the upgrade of existing systems in order to meet future demands, emerging mainly from the pressure to sustain economic growth and to respond to urbanization and climate change threats. It is evident, that the lack of appropriate infrastructure introduces severe inefficiencies and is therefore hindering substantially economic growth and social progress. The current situation in India falls very short of the needs of a modern economy of the type that India thrives to become. It is well reported that Indian infrastructure is alarmingly poor by almost any standards and comparisons. Substantial funds have been dedicated recently by the Indian government for infrastructure development, but financial resources are still falling short of meeting the entire demand. In this respect, the model of "public-private patnerships (PPP)" appears to be a very attractive mechanism in India for bridging the financing gap and efficiently delivering infrastructure services. However, the current PPP environment in India is still lacking attractiveness for private firms to engage with the public sector for business purposes. Furthermore, governmental authorities and public authorities often do not possess the capacities and skills to manage and implement large-scale PPP projects. The here presented work examines on a strategic policy level the main lessons to be learned for India from experiences and successes of advanced economies - and in particular Europe - in attracting the private sector towards infrastructure investment by means of publicprivate partnership models. From the pool of collected information and data comparing the PPP environment in India and Europe, clear recommendations helping India in creating an enabling environment for PPP projects in