A joint study conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) and EY has pointed out the need to resolve multiple issues dampening the private sector interest and slowing rate of private investment in the transport sector. The study titled ‘Revival of PPP momentum in the transport sector’ calls for key interventions to remove the roadblocks to the public private partnership (PPP) model, besides suggesting an acceleration of such projects. These interventions would include policy actions, regulatory changes and pushing reforms agenda, all of which would create a conducive environment for bringing investments into the sector.
The main recommendations of the study include: Strengthening of lending institutions, Greater participation of insurance and pension funds, Establishment of Infrastructure PPP Project Review Committee (IPRC) and the Infrastructure PPP Adjudicatory Tribunal (IPAT), Setting up of 3P India as proposed in the Union Budget for 2014-15, Mechanism to keep a check on aggressive bidding , Need for independent regulators, Passing and enactment of pending Bills, Strong emphasis on performance-based contracts, Better preparation of DPR and Revisiting the Viability Gap Funding (VGF) Scheme.
A FICCI-EY study noted that companies need access to long-term funds for infrastructure projects with long gestation periods. There is an urgent need in India to tap such markets to fund its infrastructure requirement. The study recommended that the government should promote and issue rupee denominated Zero Coupon Bonds (ZCB). This will also help promote the general bond market in the country and attract investments from certain categories of investors such as pension funds and insurance companies. It also urged the government to put in place a mechanism to check aggressive bidding in projects. It added that aggressive bidding is a major cause of concern in PPP projects.
