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Indian Economic Policy

Notes infrastructure services (with large externalities), by increasing the accountability of the private sector
as a service provider.”
But it is not an automatic or easy task. Economic Survey further says, “A key pre-requisite is to lay
down a policy, legal and regulatory framework that assures a fair return for investors, protects the
interests of users, especially the poor, and assures quality supply at reasonable cost. For this purpose,
it is important that issues related to the adopted, procurement strategies and templates to be employed
and mechanisms for financial structuring to be considered, are clearly outlined ab initio at the level
of the sponsoring agencies, including State Governments.”
Sector wise description of PPP both at state and central level projects is given in Table 9.

Table 9 : Sector-wise PPP project
Sector Number Below `` `` ` Between More than Value of
250 crore ` ` ` ` ` 251 to ` ` ` ` ` 500 contacts
500 crore crore (in crore)

Airports 5 0 303 18,808 19,111
Energy 24 734 2,669 13,708 17,111
Ports 43 1,066 2,440 62,993 66,499
Roads 271 8,689 32,862 60,454 102,005
Urban Development 73 2,753 2,404 10,132 15,288
Other sectors 34 1,613 905 1,644 4,162

Economic Survey, 2009-10
Infrastructure in the 11 Plan : An Overview
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The Planning Commission has openly accepted the fact that lack of infrastructure is a major constraint in
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India’s economic performance. The development of rural infrastructure is a high priority in the 11 Plan
with critical targets for irrigation, rural road connectivity, rural drinking water etc. There are huge gaps in
general infrastructure encompassing power, roads, railways, ports, airports, telecommunications and the
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11 Plan has proposed to address these vigorously. The 11 Plan, for instance, will raise total expenditure
on infrastructure to 9.0 percent of GDP as against 4.5 percent in the Tenth Plan. Consistent with the above
projection, the investment in physical infrastructure alone during the Eleventh Five Year Plan has been
estimated to about ` 2,002 thousand crores (at 2006-07 prices) which is equivalent to about US $ 500
billion. Of this amount, the share of the Central government is estimated to be 37 percent, of the state
governments to be about 33 percent and that of the private sector to be 30 percent. Obviously, the
Government has adopted the strategy of public private partnership in the infrastructure structure.
The power sector is critical for industrial growth and the real problem is the distribution system,
which in the hands of State Governments. Top priority should therefore, be given, to improve the
performance distribution companies.
Finally, PPPs have become the preferred mode construction and operation of infrastructure service such
as highways, airports, ports etc. They offer significant advantages in attracting private capital in construction
of public infrastructures as well as in improving efficiencies in the provision of services to users.
During recent years, the UPA Government at the Centre has adopted such an approach in the
construction of roads, ports, airports and in railways. Naturally, the people would expect state
governments too to adopt similarly transparent approach to ensure that the projects succeed.
However, public private partnership can some times run into controversy if the private sector partner
seen to have received unduly favourable treatment. In essential that the general public is convinced
that PPP are in the public interest. This can be done by ensure that :
(a) the terms of concession agreements are transparent and protective of public interest; and
(b) there is robust competition in bidding for the project so that least cost options are chosen.

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