Ministry of Finance creates three-year Public Private Partnership (PPP) project pipeline | Current Affairs | Vision IAS
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In Summary

  • The Public Private Partnership (PPP) pipeline includes 852 projects worth over ₹17 lakh crore to boost infrastructure development.
  • PPP involves long-term contracts between government and private entities for public infrastructure or services, with models like BOT, DBFO, EPC, and HAM.
  • Initiatives like Viability Gap Funding (VGF) and FDI promotion are used to bridge India's infrastructure financing gap and reduce the fiscal burden on the government.

In Summary

The pipeline provides early visibility of potential PPP projects to enable investors, developers, and other stakeholders to undertake more informed planning and investment decisions.

  • The pipeline comprises 852 projects worth over ₹17 lakh crore to accelerate infrastructure development across sectors.

About the Public Private Partnership (PPP)

  • PPP is a long-term contractual arrangement between a government or public authority and a private sector entity for the provision of public infrastructure or services.
  • Key PPP Models
    • Build Operate Transfer (BOT): Private entity finances, designs, build, and operate a facility for a set period (earning via user fees) before transferring ownership to the public sector.
    • Design Build Finance Operate (DBFO): Private party handles the entire lifecycle from design to operation. The government retains ownership throughout, paying the private party via service fees or collected user tolls.
    • Engineering Procurement and Construction (EPC): The government funds the project and retains management. The private entity is strictly a contractor responsible for design and construction.
    • Hybrid Annuity Model (HAM): A mix of EPC and BOT. The government pays 40% of the cost in milestone-linked installments; the developer raises the remaining 60% and recovers it through annuities.

Need for PPP

  • Bridging the Infrastructure Financing Gap:  India will require an estimated $4.5 trillion in infrastructure investment by 2030.
  • Reducing Fiscal Burden on Government: Frees up public tax revenue for social welfare (healthcare and education) by shifting the burden of physical asset creation to the private sector
  • Access to Advanced Technology and Innovation: Integrates cutting-edge private-sector expertise and global best practices.
  • Other: Improving Efficiency and Timely Project Delivery, etc. 

Initiative taken to Promote PPP

  • Viability Gap Funding Scheme (VGF)
  • India Infrastructure Project Development Fund (IIPDF) and India Infrastructure Finance Company Limited
  • Foreign Direct Investment (FDI) (allowed 100% FDI in equity of SPVs in the PPP sector is allowed on the automatic route for most sectors)
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RELATED TERMS

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Foreign Direct Investment (FDI)

An investment made by a firm or individual in one country into business interests located in another country. It involves establishing or acquiring control of a business in a foreign country.

India Infrastructure Project Development Fund (IIPDF)

A fund established to provide financial assistance for the preparation of infrastructure projects, aiming to improve their bankability and attract private investment.

Viability Gap Funding Scheme (VGF)

A scheme that provides financial support from the government to make infrastructure projects viable, particularly those that are economically essential but financially unremunerative, thereby encouraging private investment.

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