11. Kelkar Committee Report: Revisiting & Revitalizing the PPP Model of Infrastructure Development

In the Union Budget 2015-16, the Finance Minister had announced that the PPP mode of infrastructure development has to be revisited and revitalised. In pursuance of this announcement, a Committee on Revisiting & Revitalising the PPP model of Infrastructure Development was set-up which was chaired by Dr. Vijay Kelkar. A few of its recommendations are:

♤ Governance, Institutions and Capacity, enumerated as the 3 pillars of the PPP framework, were essential for institutional capacity building activities, hence should be vitalized.

♤ Government may develop a PPP law with endorsement from Parliament. It gives an authoritative framework to implementing executives along with an oversight responsibility to legislature and regulatory agencies.

♤ For evaluating and sending recommendations in time-bound manner for a stress in projects under PPP model, Infrastructure PPP Project Review Committee (IPRC) is proposed.

♤ Swiss Challenge Method of awarding contracts should be avoided and encourage Unsolicited Proposals.

♤ For sourcing long-term capital at low-cost, banks and financial institutions should be encouraged to issue deep discount bonds, also known as zero coupon bonds.

♤ The Prevention of Corruption Act, 1988 should be amended at the earliest to punish corrupt practices while saving those who made genuine mistakes in decision-making.

♤ The “One-size-fits-all” approach should be avoided and project-specific risk Assessment should be undertaken (Model Concession Agreement).

The committee emphasizes on several other points including Re-balancing of Risk Sharing & Reinvigorating the various Sectors. 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.