In order to draw funding for the alluring capital-intensive infrastructure projects, the finance ministry plans to release a new PPP (public-private partnership) model architecture and a standard MCA (model concession agreement) framework for various sectors in the fiscal year 2024. The emphasis will be on reversing the fortunes of industries like urban infrastructure, roads, and railways, where private involvement is either still very limited or has not yet reached its full potential.
The finance ministry plans to release a new PPP (public-private partnership) model architecture
Similarly to that, the framework for the proposed Model Concession Agreement would act as a common reference guide for different infrastructure departments and state-run organisations. They will have sufficient freedom to appropriately incorporate clauses specific to their industries. An infrastructure project will immediately receive private funding and bank credit if it is deemed viable and bankable. According to officials, a lot of stress is being placed on structuring infrastructure projects so that they can stand on their own and make money.
According to the World Bank’s November 2020 report, India will need to invest 840 billion dollars, or an average of 55 billion dollars per year, in urban infrastructure alone over the next 15 years in order to successfully meet the needs of its rapidly expanding urban population. Together with the pertinent ministries and departments of the central government, the Department of economic affairs is strengthening the frameworks. Although an architecture based on incentives is unlikely to be used in the PPP framework, projects in some industries may receive some upfront government support to ensure their viability.
Some cities’ metro initiatives also include a portion of development real estate, which also produces consistent cash flow
For instance, different models, including those adopted by the authorities of Bangalore, Pune, and Hyderabad, are being examined for metro-rail projects. Some of these cities’ metro initiatives also include a portion of development real estate, which also produces consistent cash flow, in an effort to impress investors. For around 100 crores, the Bangalore Metro Rail Corporation gives investors a package of benefits, including naming and advertisement rights and room for commercial activities.
Similarly to this, in some industries, user adjustments may be imposed to improve the projects’ appeal to private financiers. Because of the user-charge paradigm, industries like ports, airports, and telecom must have been successful in luring private investors. In the wake of Covid, when the central government dramatically increased its capex to boost employment and stimulate economic growth, betting on its high-multiplier effect, this move to introduce a new approach to infrastructure development and funding was made. Until the fiscal year 2025, a government task group on the NIP (National Infrastructure Pipeline) anticipated making capital investments totalling Rs. 111 lakh cr.