The Union Minister of State for Urban Development, Mr Saugata Roy, said PPP approach is best suited for infrastructure sector. It supplements scarce resources, creates a more competitive environment and helps improve efficiencies and reduce costs. He was addressing a conference on “Rejuvenating Urban Infrastructure: Challenges & Opportunities for PPP, organized by the PHD Chamber here on Tuesday.

He said India has the second largest urban population in the world (about 350 million) and is likely to see significant urban population growth (7-10 million persons on an average annually) over the next two decades. Ensuring quality urban services to this large, growing population would be crucial to realizing India’s vision of “livable, inclusive, bankable and competitive” cities.

The infrastructure development at this scale would require huge resources. It is not feasible for the Government to fund the total required infrastructure investment. Hence, it is imperative that we explore avenues for increasing investment in infrastructure through a combination of public investment, PPPs and exclusive private investment wherever feasible, the minister added.

However, urban infrastructure sector has witnessed least amount of progress as far as PPPs are concerned. Urban infrastructure consists of multiple sectors such as water supply, sewerage, sanitation, solid waste management etc. It is not feasible that a single model that may be applicable for one sector can be replicated to others, the Minister said.

PPPs are useful only if they ensure quality supply at reasonable cost. This may require the establishment of independent regulatory bodies with an appeal mechanism. An alternative could be regulation through contracts (the Model Concession Agreement route being followed by NHAI in highways development) which transparently detail s the rights and obligations of all parties and rely on robust competitive bidding for award of concessions.

Under Jawaharlal Nehru National Urban Renewal Mission (JNNURM), the cities have undertaken comprehensive efforts to draw up their infrastructure requirements. The Mission Directorate has also undertaken credit rating of cities for the first time to estimate the future investment plans of many of the urban local bodies (ULBs ), which would requires 2 to 5 times more investment than the past, he added

Giving examples of the Ministry’s 65 Mission cities, the Minister said it needs an investments of about Rs.335,000 crore, out of which a substantial portion has to come through debt / market based financing. The Ministry is also proposing to include 5 lac + cities under JNNUR. Hence, the local bodies will have to make a concerted effort towards promoting PPPs in their respective cities, so as to enable efficiency and investments in bridging this gap,

JNNURM strategy clearly marks PPP as an important mechanism in development, management and financing of urban infrastructure. With the launch of the reform-driven and part-grant financed JNNURM, both the macro-environment as well as project-level micro environment is becoming more and more congenial for PPPs in the urban sector, Mr Roy said. The Ministry is also working together with multi-lateral agencies to develop guidelines, toolkits and models and provide support to the states and cities on PPP.

Mr. Naveen Kumar, Secretary, Ministry of Urban Development, Government of India said India Infrastructure Development Fund (IIDF) will be used for promoting urban Infrastructure. The Ministry is planning to set up an urban infrastructure fund for development of urban projects both in public & PPP model. Pilot studies have been conducted in association with ADB to assess feasibility of water, sanitation & solid to waste energy projects for the purpose. As many as 68 PPP projects under JNNURM has been sanctioned for urban infrastructure in the areas of sewage, flyover, water supply, sanitation etc, he informed.

Prof. O P Mathur, Professor of Urban Economics and Finance, National Institute of Public Finance and Policy said the mid-term appraisal for urban infrastructure draft report says 1-3 lakh crore is required to develop basic infrastructure in our cities. Out of which, only Rs.25,000 to 30,000 crore is allocated for different municipalities for developing the urban infrastructure. To bridge this gap, PPP is of utmost importance and most viable option for urban infrastructure growth.