We are all aware of the fact that India, as a nation, is moving towards privatizing public sectors or disinvesting in the public sector in order to deal with the economic downfall. But there are underlying issues involved here which are overlooked as a majority of the population is still dependent on the public sector even today.
Let me put it in simple words to clarify why this is problematic. For instance, I own a stationary shop and sell notebooks from various brands available in the market ranging at different prices. A customer can buy whatever suits his budget because I have all the options in my shop.
But because one person bought all the brands and merged them into one, launched his single product, the availability of alternatives completely vanishes. Now, whether rich or poor, both will have to buy the same product because there is no other option. Hence, the poor won’t be able to afford it, and opportunity from them is taken away.
This is exactly what happened when Jio entered the telecom industry. It was free until it took over the majority of the sector. But we all know what happened when they became the king. Now we are paying for incoming calls too. This is how economic growth works; if we want socio-economic development and not just development, we need to understand the difference between the two and focus on various options.
Wealth distribution plays a big role in this particular scenario, and it’s problematic in our nation. Therefore, the gap between the rich and poor is rising every day. As per the Oxfam India report, India’s richest 10% control more than 74% of the national wealth. An anonymous report launched by a non-government organization said that the top 1% holds more than four times the wealth held by 953 million Indians, who make up the poorest 70% of the population.
There are talks and debates trending on this particular issue, but I would like to highlight the one which has the highest potential according to me.
Public-Private Partnership (PPP) For India
PPP is an arrangement between the government and the private sector for the provision of public assets and/or public services. Public-private partnerships allow large-scale government projects, such as roads, bridges, or hospitals to be completed with private funding. India has a large potential to grow economically with the help of this model. The need of the hour and the ultimate solution to deal with the economic crisis is the PPP model.
It’s a fact that most of the time, the government faces issues in funding a particular project, and public funding is not enough to bridge the gap between the infrastructure need and available funds. In this respect, infrastructure development has to rely increasingly on private markets to leverage and mobilize capital.
The private sector is also considered to be more proficient in resource acquisition and utilities deliverance than the government, and therefore, it’s further bolstering the government’s good fortune to impart the related risks to the private segment. PPPs can help in the optimum allocation of public resources for the development of infrastructure.
Though conventional models of public acquisition concentrate on accomplishing the most reduced forthright expenses in conveying infrastructural ventures and infrastructural projects, PPPs concentrate on delivering cost-effectiveness over the duration.
Development is another imperative idea that the private segment can convey to public utilities. As a rule, people in the public sector may not be as inventive similar to the private area. Private companies are always looking for opportunities to save costs but expand their reach, which is a plus point for both public and private segments.
To the private sector participants, PPP provides access to public sector markets. If priced accurately and costs managed effectively, the projects can provide reasonable profits and investment returns on a long-term basis.
Scope for investment by the private sector in infrastructure will also provide opportunities to foreign investors to participate, and the financial crunch can be meted out easily. The better infrastructure is also a major boost to Foreign Direct Investment (FDI).
But not to forget the most important factor that PPP must not be used only to save money or bridge fiscal gaps, but it should focus more on improving service quality and bringing efficient changes. India is a diverse country where a single policy can’t work for the whole nation, but for just a small part of it. Every area of our country calls for a different policy.