A Detailed Study of Environmental Constraints Faced by Public Private Partnership (PPP) in India and the Road to a Framework for Successful Implementation of PPP Projects

Infrastructure development is the key to sustainable growth in India. It makes India globally competitive, raises standard of living, enhances profits for government, bridges rural-urban divide and increases level of employment. The most significant criteria for a continued growth rate of an economy rests on the provision of a quality infrastructure. According to the Planning Commission, an approximation of 8 percent of the Gross Domestic Product needs to be invested in infrastructure in India. In order to meet such demands, various Public Private Partnerships or PPPs are being promoted for implementation of infrastructure projects. Upgradation of transport (roads, railways, airports, and ports), power, and urban infrastructure is therefore seen as critical for sustaining India's economic growth, along with improved quality of life, increase in employment opportunities, and progress towards the elimination of poverty. However, infrastructure projects are complex, capital intensive, long gestation projects that involve multiple and often unique risks to project financiers. Infrastructure projects are characterized by non-recourse or limited recourse financing, i.e., lenders can only be repaid from the revenues generated by the project. The scale and complexity of an infrastructure project makes financing a tough challenge. This challenge is further compounded by a combination of high capital costs and low operating costs which implies that initial financing costs are a very large proportion of the total costs. Infrastructure project financing calls for a complex and varied mix of financial and contractual arrangements amongst multiple parties including the project sponsors, commercial banks, domestic and international financial institutions (FIs), and government agencies. Infrastructure projects involve a variety of environmental constraints which includes financial, regulatory, institutional and fiscal constraints.These constraints need to be addressed by the central and state governments through a proper regulatory framework, guidelines and policies and taking measures to overcome the various constraints faced by PPP's at present if India has to become a developed country through consistent economic growth supported by robust infrastructure system