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Context:
In infrastructure projects the Economic Survey 2024-25 underlines the requirement of full acceptance of publicprivate partnerships (PPPs) in infrastructure projects to address unmet demands and push forward development in crucial sectors.
Requirement for Enhanced Private Sector Involvement
- The Survey calls for the strengthening of private participation in infrastructure through improved risk and revenue sharing mechanisms contract management and better project closure processes.
- The private sector confidence must be enhanced to increase higher involvement in the infrastructure space as it is currently less than what is expected.
Coordinated Approach to Infrastructure Development
- The necessary coordinated effort from all the stakeholders to really improve conceptualization and execution of infrastructure projects should come from a combined effort by governments players in the financial market experts in project management and the private sector.
- Problematic areas call for enhancement in sector specific strategies, risk management and contract management and conflict resolution.
Developing Infrastructure Investment
- The Survey reports that the capital expenditure on infrastructures is increasing but major unfulfilled demand persists in sectors like ports railways civil aviation and roads.
- As of November 2024 from the Survey data the percent capital expenditure spent compared to the budgeted are:
- Ports & Shipping: 76%
- Civil Aviation: 69%
- Railways: 67%
- Water & Sanitation: 57%
- Power: 54%
- Roads: 54%
- Housing & Urban Affairs: 49%
- Rural Development: 52%
Public Sector Limitations
- While the government undertakes initiatives, public sector investment cannot fully serve the infrastructure needs because of budgetary constraints on different levels of government.
- The Survey advocates for the intensification of private sector involvement in infrastructure projects particularly concerning financing construction and monetization.
Problems in PPPs and Infrastructure Development
- PPPs have been successful only in some sectors so far and private enterprise uptake is still limited in many core infrastructure sectors.
- Even after the National Infrastructure Pipeline and PM Gati Shakti private participation has been slow due to various challenges including political cycles and electoral pressures.