An Introduction
to
Infrastructure
1. MEANING
2. TYPES
3. ROLE OF PPP
4. FINANCING
5. VARIOUS STAKEHOLDERS AND STAGES
6. FDI
Meaning
It’s a framework of facilities through which various goods and
services are provided to the public (Jetli, Sethi; 2007)
The basic physical systems of a business or nation. Transportation,
communication, sewage, water and electric systems are all
examples of infrastructure (Investopedia, last accessed 02/01/15 at
11.30 p.m.)
Infrastructure is the foundation on which the fort of economic
success is built. It is like mother to any economy which not only
ensures the evolution of it but also ensures consistency in its growth.
India, which has risen to the "economic realities" recently, is trying to
attain "economic nirvana" through consistent focus on Infrastructure
growth
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Reserve Bank of India has defined infrastructure sector as:
i. Power
ii. Telecommunications
iii. Railways
iv. Roads including bridges
v. Sea port and air port
vi. Industrial parks
vii. Urban infrastructure (water supply, sanitation and sewage projects)
viii. Mining, exploration and refining, and
ix. Cold storage and cold room facility, including for farm level pre-cooling
for preservation or storage of agricultural and allied produce, marine
products and meat.
(RBI Master Circular No.12/2012‐13 dated July 02, 2012)
Types
Economic Women welfare
Energy Empowerment of
disadvantaged groups
Transport
Telecommunications
Special economic zones
Urban infrastructure
Rural infrastructure
Social
Human development
Poverty
Health
Education
Labour
PPP in Infrastructure
Scope is widened as it’s a shift from the traditional outlook to a
modern outlook
Government gets an important ally to improve upon the quality and
the efficiency of the services and the products
It also brings with itself various technological advancements and
improvements
Privatisation is the new way forward as they have the following
advantages:
Investment requirement has to be kept in mind
Business like efficiency rather than having an obligatory approach
Making the projects globally competitive and efficient in terms of
financing
Technological developments make it better to have commercialization
of the infrastructure development
Various Models of PPP
These are some of the popular models followed in PPP across the
globe:
BOT
BOO
BTO
BT
BTO
BLT
ROO
LROT
Infrastructure Infrastructure
Development Development
Project - Various Project - Various
Stages Stakeholders
Development Government
and Gestation Sponsors and
Stage lenders
Construction Investors
and Start-up Contractors
stage Project
Vehicle
Operational Users/Consu
Stage mers
Termination Regulators
Stage Other bodies
FDI Policy and Infrastructure
Requires an investment of US$ 1.7 trillion in infrastructure (Goldman Sachs Report, 2012)
PPP seen mostly in airports, power, roads and highways
Present challenges:
Political influence, labour unrest, hostile measures of acquiring land
resistance for a foreign player to invest in infrastructure due to the delay in completion of projects
Capital flow not proper.
Majority or players
Wish to be an FII in infrastructure and reality sector than have FDI.
To Do:
Open the bidding stage to as many investors as possible to have a competitive bidding or
auctioning process
identification of priority infrastructural projects
Create a pipeline for pre-assumed, commercially attractive projects that can be actively promoted
Single window clearance and prevention of regulatory lapses and risks being undertaken
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