Kelkar Committee suggests easier funding and separate law to boost PPP
Updated: Dec 29, 2015 12:07:43pm
New Delhi, Dec 29 (KNN) The country is going through the lack of basic infrastructure which is choking the economic growth of the country, whereas the high level Kelkar Committee has come up with recommendations and suggested easier funding of projects under the Public Private Partnership (PPP). The committee also suggested that separate laws should be passed for such ventures in health and urban transport and a dispute resolution tribunal.
The eight member Kelkar Committee also recommends review of the model concession agreements, allowing fund raising through zero coupon bonds and setting up of independent sectoral regulators.
It also suggested setting up of an Infrastructure PPP Project Review Committee (IPRC) to deal with the problems being faced by such projects.
The report which was made public by the finance ministry said "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,"
The report was submitted by Kelkar to Finance Minister Arun Jaitley last month.
On stuck PPP projects, the report said: "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."
The report said there should be a better identification and allocations of risks between the stakeholders and contracts for the PPP projects should focus more on service delivery instead of fiscal benefits.
The committee also proposed to set up an Infrastructure PPP Adjudication Tribunal (IPAT) chaired by a judicial member (former SC Judge or HC Chief Justice) with a technical and financial member.
Suggesting on the funding of PPP projects, it said "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".
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.
The report also underlined the need for review the Model Concession Agreement (MCA) and ensure speedier resolution of disputes.
The Kelkar committee said regulators of domestic pension, insurance and long-term funds may be encouraged to allow investment in PPP SPVs with a lower than 'AA' rating if developers access credit guarantee instruments.
Noting that some countries have a legal framework for PPPs, the committee recommended an assessment of whether enactment of PPP law will facilitate expansion of PPP into sectors including health, urban transport and other social sectors.
The Economic Survey 2014-15 had said that at the end of December 2014, the value of all projects, mostly in the infrastructure sector, that have been stalled, stood at Rs 8.8 lakh crore (7 per cent of GDP). (KNN Bureau)
The eight member Kelkar Committee also recommends review of the model concession agreements, allowing fund raising through zero coupon bonds and setting up of independent sectoral regulators.
It also suggested setting up of an Infrastructure PPP Project Review Committee (IPRC) to deal with the problems being faced by such projects.
The report which was made public by the finance ministry said "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,"
The report was submitted by Kelkar to Finance Minister Arun Jaitley last month.
On stuck PPP projects, the report said: "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."
The report said there should be a better identification and allocations of risks between the stakeholders and contracts for the PPP projects should focus more on service delivery instead of fiscal benefits.
The committee also proposed to set up an Infrastructure PPP Adjudication Tribunal (IPAT) chaired by a judicial member (former SC Judge or HC Chief Justice) with a technical and financial member.
Suggesting on the funding of PPP projects, it said "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".
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.
The report also underlined the need for review the Model Concession Agreement (MCA) and ensure speedier resolution of disputes.
The Kelkar committee said regulators of domestic pension, insurance and long-term funds may be encouraged to allow investment in PPP SPVs with a lower than 'AA' rating if developers access credit guarantee instruments.
Noting that some countries have a legal framework for PPPs, the committee recommended an assessment of whether enactment of PPP law will facilitate expansion of PPP into sectors including health, urban transport and other social sectors.
The Economic Survey 2014-15 had said that at the end of December 2014, the value of all projects, mostly in the infrastructure sector, that have been stalled, stood at Rs 8.8 lakh crore (7 per cent of GDP). (KNN Bureau)
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