Private sector favours Kelkar panel report to boost PPP in infrastructure

NEW DELHI: Easy financing for infrastructure projects, a push to the government expenditure, and implementation of the Kelkar Committee report that talked about the revival of public-private partnership (PPP), top the list of measures the government must look to revive private investment in the infrastructure sector in India.

The sector, largely driven by government expenditure, has seen private players shying away owing to a number of regulatory loopholes, including land constraints, delayed project approvals, among others.



The contours of public private partnership (PPP), one of the best suited means to invite private players into the infrastructure sector, need to be revisited in tandem with the Kelkar Committee report issued in 2015, industry watchers told ET.

“All of us in the private sector feel that the Kelkar Committee report is probably the best compendium of actions to be taken to revive PPP. So, we would strongly recommend that the government take a hard look over there,” said Vinayak Chatterjee, chairman, Feedback Infra.

Former finance secretary Vijay Kelkar had in his report suggested that the government develop a national PPP policy, a PPP law and changes to contractual arrangements of PPP.

Industry wants the PPP framework to change to make it attractive for them to invest.

"Risk factor in PPP is more on the private sector,” said Arun Maheshwari, joint MD and CEO of JSW Infrastructure. “The Kelkar Committee report will make sense only once it is implemented in totality,” said Maheshwari.

With projections of India becoming a $10 trillion economy over the next decade or so, the industry has gauged the prospect of growth and is looking to capitalize on it, said Maheshwari.

The success of the toll-operate-transfer (TOT) model -- where investors make a one-time lump-sum payment in return for long-term toll collection rights -- is exemplary of the private sector’s interest in the infrastructure sector in India.

“There are a lot of long-term foreign institutional investors like pension funds, provident funds which are extremely keen on investing in brownfield assets. Many public-owned assets -- both at the central and state levels -- can be put up for asset recycling. That is also a way of bringing private investment back in the Indian infrastructure sector,” Chatterjee said.

The first round of TOT auctions held in 2018 fetched the government over Rs 9,000 crore. However, the second round, expected to garner Rs 5,362 crore, was cancelled earlier this year following tepid response from investors resulting in low bid price.

While easy financing for infrastructure remains a concern, re-establishing lenders’ confidence in the sector is critical to reviving private investment to a large scale, said Manish Agarwal, leader - capital projects and infrastructure, PwC India.

“As financing becomes more difficult, it is important for us to have vibrant Development Finance Institution. Therefore, the entire charter of the India Infrastructure Finance Company Limited has to be completely revisited and reshaped,” Chatterjee said.