Discuss the Vijay Kelkar Committee on Revisiting and Revitalising the PPP model.
Published: March 17, 2016
Several infrastructure projects in India have been hit by various issues related to PPP model. It is in this context, the Vijay Kelkar panel recommended various measures for revival of PPP model.
It recommended for strengthening of 3 main pillars of the PPP framework viz. Governance, Institutions and Capacity.
Few of its suggestion/recommendations are as under:
The Prevention of Corruption Act, 1988 should be amended at the earliest to punish corrupt practices while saving those who made genuine mistakes in decision-making.
Swiss Challenge Method of awarding contracts should be avoided as it discourages transparency.
For sourcing long-term capital at low-cost, banks and financial institutions should be encouraged to issue deep discount bonds, also known as zero coupon bonds.
After successful completion of the projects, equity in the project may be offered to long-term investors including overseas institutional buyers.
The divestment amount would be utilized for new infrastructure projects.
Independent sectoral regulators should be set up as and when a new sector is declared to adopt PPP model.
Without the independent regulators, the projects would be subjected to bureaucratic and political pressure.
For rational allocation of risks among various stakeholders, the Model Concession Agreement (MCA) should be revisited.
The “One-size-fits-all” approach should be avoided and project-specific risk assessment should be undertaken.
Extension of PPP model into new sectors such as health, other social sectors and urban transport must be explored.
Private sector should be protected against any abrupt changes in the economic or policy environment.
Infrastructure PPP Project Review Committee (IPRC) should be set up for evaluating and sending recommendations in time-bound manner for a stress in projects under PPP model.
An Infrastructure PPP Adjudication Tribunal (IPAT) should be set up and its benches will be constituted by the Chairperson as per needs of the matter in question.
The state owned enterprises and public sector undertakings should not be allowed to bid for PPP projects.
A dispute resolution mechanism that is quick and flexible is needed to allow restructuring within the commercial and financial boundaries of the project.
PPP model is not recommended for small scale projects in view of the transaction costs involved.
Model Questions Category: 074 - Effects of Liberalization On Indian Economy