Public Private Partnership for Infrastructure Development: A Case of Indian Punjab

Public Private Partnership for Infrastructure Development: A Case of Indian Punjab

Upinder Sawhney (Panjab University, Chandigarh, India)
DOI: 10.4018/978-1-4666-4639-1.ch009
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Abstract

Public-Private Partnerships (PPPs) are an absolute necessity in India as all levels of the government in the country (i.e., federal, state, and local) are facing budgetary deficits. PPPs in various spheres of economic activity can bridge the gap between the capacity of the state to grow and the factors which are pulling it behind. In a successful PPP model, all the stakeholders (i.e., the government, the people, and the private partners) pose a disciplinary mechanism to each other. The present chapter seeks to study the policy for PPPs in the Indian state of Punjab as also the institutional framework for the same. It also seeks to examine the feasibility of using PPP model for the much-needed development of the agriculture sector in the state. The fiscal situation of the state and its indebtedness along with the populist policies of the government do not leave any room for either the maintenance or the creation of any new infrastructure in the state. Both rural and urban infrastructure in Punjab can be strengthened through the PPP route. The chapter focuses on the problems of Punjab economy and the role of PPPs in fixing the same.
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Introduction

Indian economy has undergone a paradigm shift in its economic policies since the mid-1980s.Successive reforms and reduction of state intervention and control over economic activity have moved the economy towards deregulation, decontrol, dereservation and a market-based system. The rate of growth of the economy which was 2-3 percent since Independence up to the end of the 1970s went up to nearly 9 percent by 2009-10. Liberalization in economic policy has had an impact on most aspects of public policy including industrial and trade policies, foreign investment policy, fiscal policy, financial market reforms and the public sector restructuring. The emphasis and outcomes of each of these sectors have been different but the areas which have been liberalized more have responded favourably in terms of their growth. The target of the government to attain 10 per cent growth of Gross Domestic Product (GDP) is achievable if reforms continue. The future reform agenda must focus on a number of key areas that have the potential to boost economic growth, while making growth more inclusive.

The Indian economy has to surmount a number of challenges posed by globalization as well as some of its domestic compulsions like lack of good governance if it has to keep the pace of its development effort. Given the recent global challenges of slow growth in OECD countries, domestic inflation, and the weakening rupee, the attainment of 10 per cent rate of growth seems rather difficult. The reform programme needs to be strengthened further to sustain the current momentum of growth in the economy. India has been able to reduce poverty during the last 20 years but is far from meeting one of the Millennium Development Goals (MDGs) of halving the poverty by 2015. For this further structural reforms are required. The key challenges that India faces are the following:

  • 1.

    Reforms at the sub-national level are woefully slow and differ in pace and pattern across the Indian states.

  • 2.

    Labour market reforms are far from implementation even after one and a half decades of economic reforms.

  • 3.

    Strengthening the enforcement of competition law and facilitating market exit of unproductive firms and entry of new firms.

  • 4.

    Restructuring of public enterprises both at the central and state levels through privatization and better management in the case of those which are not privatized.

  • 5.

    Further deregulation and strengthening of financial markets.

  • 6.

    Reforms and up gradation of infrastructure with special emphasis on agri-infrastructure.

  • 7.

    Expenditure reforms aimed at reducing non- developmental/frivolous public spending.

  • 8.

    More autonomy to local bodies for providing high quality public service.

  • 9.

    Improvement in the delivery system across sectors, especially, education, health, sanitation, infrastructure and general public services.

  • 10.

    Governance reforms eliciting faith of the public in the government and the polity.

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