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PPP panel urges govt to encourage infra funding
The committee on reviving the public-private partnership (PPP model) of infrastructure development has suggested that the government should encourage easier funding for projects with long gestation periods.
New Delhi : The committee on reviving the public-private partnership (PPP model) of infrastructure development has suggested that the government should encourage easier funding for projects with long gestation periods.
"PPPs are an important policy instrument that will enable India to compress time in this journey towards economic growth and development. A successful and growing stream of PPPs in infrastructure will go a long way in accelerating the country's development process," said the report by the Vijay Kelkar Committee, which was released by the finance ministry on Monday.
"The finance ministry should allow banks and financial institutions to issue zero coupon bonds, which will also help to achieve soft lending for user charges in infrastructure sector", it said. According to the report, the government "must move the PPP model to the next level of maturity and sophistication" and foster trust between private and public sector partners in implementing PPP projects.
It also suggested that there should be provision for monetisation of viable projects which have stable revenue flows after engineering, procurement and construction delivery. The other suggestions include restrictions on number of banks in a consortium, building up of risk assessment and appraisal capabilities by banks and specific RBI guidelines to lenders for encashment of bank guarantees.
"There is an urgent need to evolve a suitable mechanism that evaluates and addresses actionable stress. Sector specific institutional frameworks should be developed to address these stalled infrastructure projects," it said. The report also underlined the need for reviewing the Model Concession Agreement (MCA) and ensure speedier resolution of disputes.
