Moody's bats for PPP matching infra deficit

The enhanced focus on PPP model is a way forward to build India's huge infrastructure deficit as the move could help attract more private sector investment from domestic and global players to build infrastructure projects, Vice President and Senior Analyst, Abhishek Tyagi said, adding that the historical under-investment and rapid economic growth are straining India's existing infrastructure. While the country's PPP model has seen reasonable success in some sectors over the last 20 years, PPP activity has been low in the last four fiscal years due to challenges with the PPP model. As such, India's PPP framework will benefit, if it is developed further to address key issues regarding (1) improved risk allocation, (2) the ability to renegotiate unpredictable factors in the bid documents, and (3) a move away from project awards based on one metric, he insisted. He further added that there has been a large decline in private investments in PPP projects in recent years for a number of reasons, including delays in project approvals and land purchases by government, complicated dispute resolution mechanisms in concession agreements and lower than expected revenues due to aggressive assumptions. These bottlenecks have resulted in cost overruns and revenue losses to private concession owners and subsequently impacted the financial viability of some projects and their ability to service debt, the rating agency added.