The frameworks emphasize the viability and bankability of such projects to make them financially attractive to private investors. Metro projects in cities like Bengaluru, Hyderabad and Pune, which bundle real estate with cash-generating potential, are being studied. User charges may be levied in sectors such as telecom, port and airports to make them more attractive to private investors.
The finance ministry plans to bring out a new public-private partnership (PPP) architecture and a standard model concession agreement (MCA) framework for various sectors in FY24 to burnish the allure of capital-intensive infrastructure projects, seeking to draw funds by stressing their ‘viability and bankability.’
The focus will be to turn the fortunes of sectors such as urban infrastructure, railways and roads, where private participation remains either minimal or far from reaching the true potential, a senior official told ET.
Similarly, the planned MCA framework would serve as a standard reference document for various infrastructure departments and state-run entities. It will offer enough flexibility to them to suitably build in clauses peculiar to their sectors.
“Private capital and bank credit will automatically flow in when an infrastructure project is considered viable and bankable,” said the official, who declined to be named. “So, much emphasis is being laid on structuring infrastructure projects in such a manner that they will stand on their own and generate money.”
According to a November 2022 World Bank report, India will have to invest $840 billion over the next 15 years-or an average of $55 billion per year-into urban infrastructure alone if it is to effectively meet the needs of its fast-growing urban population.
The department of economic affairs is coordinating with relevant central government ministries and departments in firming up the frameworks.
The PPP framework is unlikely to have an incentive-driven architecture but there could be some upfront government support in the initial stage of projects in select sectors to make them viable.
For instance, in Metro projects, various models – including those adopted by the authorities in Bengaluru, Hyderabad and Pune, – are being studied. To woo investors, Metro projects in some of these cities are clubbed with a certain amount of developed real estate, which, too, generates steady cash flow, said the official.
The Bangalore Metro Rail Corp. offers a set of privileges to investors, including naming and advertisement rights and space for commercial activities, for about ₹100 crore.
Similarly, in some sectors user charges could be levied to make the projects attractive to private investors. Sectors such as telecom, port and airports have succeeded in drawing private investors, thanks to the user-charge model, he said.
The move to bring in a fresh approach for infrastructure development and financing came in the aftermath of the pandemic when the Central government sharply raised its own capex outlay to spur employment and stimulate economic growth, betting on its high-multiplier effect. A government task force on the National Infrastructure Pipeline (NIP) had in April 2020 envisaged capital investments of ₹111 lakh crore until FY25.