Governments in the past have been involved in creation of infrastructure facilities. This trend has been reversed recently with infrastructure projects being implemented with private sector participation. India has adopted this route in the post-liberalization era. Most of the private sector investment has happened in green-field projects under BOT format. The international best practice is in the form of a series of events starting from issue of Notice Inviting Tender (NIT) to ending with the final signing of project agreements. There are no clear-cut guidelines and strategies in view of the complexity of the process, project and participants. Governments in India have been winding their way through this process and some of them have been successful in awarding the project to private participants, while others have languished midway. This paper is a brief exposition on the various practices adopted by the governments in India in their endeavor to attract private sector investment into infrastructure projects.
The availability of adequate infrastructure facilities is indispensable for the overall economic development of any country. It helps determine success in diversifying production, expanding trade, coping with population growth, reducing poverty and improving environmental condition. Though there is no clear-cut answer whether infrastructure investment causes growth or does growth cause infrastructure investment, there is a strong association between availability of infrastructure and per capita GDP.
Historically the Government-both in developed and developing countrieshas largely made investment in creation of infrastructure facilities. However, in the past few decades, this trend has been reversed and the Governments have been transferring to the private sector, the operating or construction risk or both. Such projects are being implemented under a range of schemes: (a) Service contracts; (b) management contracts; (c) leasing arrangements; (d) concessions; (e) BOTs like BOO, BOT, BOOT etc., (for green-field facilities) and (f) total divestitures. |
