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Sector: State Highway  |  Module 1: PPP Background

Overview of PPP in India

Framework for PPPs in India

The Constitution of India divides the responsibility of legislation between the National Parliament and State legislature bodies. The Seventh Schedule of the Constitution of India contains a Union List, a State List and a Concurrent List. The Indian Parliament is competent to make laws on matters enumerated in the Union List. State Legislatures are competent to make laws on matters enumerated in the State List. While both the Union and the States have power to legislate on matters enumerated in the Concurrent List, only Parliament has power to make laws on matters not included in any list.

The key areas that have been included in the Union List are ports, airports, railways, national highways, inland water transport, telecommunications, oilfields and mineral resources.

The key areas that have been included in the State List are police services, prisons and corrective facilities, regulation of local governments, public health and sanitation, state highways, city roads, water supply and irrigation. 

There are sectoral legislations at the national level in certain areas covered in the Union List, such as the in the sectors of airports, national highways, major ports, power and cable TV. These legislations provide the legal framework for infrastructure projects including private participation in the key infrastructure sectors. In addition to these sectoral legislations, at the central level, the legal framework consists of a set of administrative controls, programmes and policies. 

At the State level, some key states of India like Gujarat, Punjab, Karnataka, and Andhra Pradesh have developed legal frameworks for private participation in infrastructure, specifically in areas in the jurisdiction of the State legislature and the State government. As each State has the right to promulgate legislations in the areas covered in the State List, the situation in each State is different in the context of infrastructure development. The following table provides a list of States and the key features of the legal framework put in place by them for private investment in infrastructure.

State actions in creating a framework for PPP in India

State Framework for PPP
Andhra Pradesh The Andhra Pradesh Infrastructure Development Enabling Act, 2001 is to facilitate greater private sector participation in infrastructure projects.
Assam The Assam Policy on Public Private Partnership in Infrastructure development proposes to bring in private sector investment with the PPP mode as the preferred approach for infrastructure projects.
Bihar The Bihar Infrastructure Development Enabling Act, 2006 is for the rapid Development of Physical and Social infrastructure in the State and to attract private sector participation in the designing, financing, construction, operation and maintenance of infrastructure projects in the State and provide a comprehensive legislation for reducing administrative and procedural delays, identifying generic project risks.
Goa The Goa Policy on Public Private Partnership applies to all PPP projects sponsored by the Government or PSUs or Statutory Authorities.
Gujarat Gujarat Infrastructure Development Act (1999) amended in 2006 to facilitate greater private sector participation in financing, construction, maintenance and operation of infrastructure projects.
Karnataka The Karnataka Infrastructure Policy, 2007 has been evolved with a view to augment and expedite infrastructure development through active private sector participation.
Orissa The Orissa PPP Policy, 2007 is to create a conducive environment to utilise the efficiencies, innovativeness and flexibility of the private sector to provide better infrastructure and service at an optimal cost.
Punjab The Punjab Infrastructure Development and Regulation Act, 2002 provides for the partnership of private sector and public sector, in the development, operation and maintenance of infrastructure facilities and development and maintenance of infrastructure facilities through financial sources other than those provided by the State budget.
Rajasthan Has set up the Rajasthan Infrastructure Development Fund with an initial corpus of US $ 500,000, contributed by the financial institutions and the State government.
West Bengal The West Bengal Policy on Infrastructure Development through Public Private Partnership, 2003 was notified to address the need to mobilize private sector investment in infrastructure development and evolve policy guidelines for the purpose.

See also https://www.pppinindia.gov.in/pdf/state_ppp_initiatieves_compendium.pdf for more information

In 1992, the Constitution (74th Amendment) Act was promulgated to decentralise the responsibilities of the State governments and clearly define the responsibilities of the urban local bodies in India. This amendment decentralised the responsibility for the provision of urban infrastructure to a substantial extent to the urban local bodies.

The decentralised responsibilities included water supply, urban roads and bridges, public health and sanitation, solid waste management and other public amenities.

However, the implementation of the provisions of the 74th amendment is not uniform across the country. As a result, there are several models of sharing of responsibilities of providing urban infrastructure between the State governments and the respective urban local bodies. Urban local bodies have been increasingly developing PPP projects in States where there is a higher delegation of responsibilities.

 

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