1. Building on the Foundation – The Future of Public-Private Partnerships in India A Discussion with Dr. Arvind Mayaram, Secretary, Government of India Moderated by Shyamala Shukla Senior Consultant Infrastructure, Regulation & PPP

2. India’s PPP Program: Some Successes Title of Presentation 2  Political support  Acceptance of the PPP mode by the public  An enthusiastic risk taking private sector  Rapid scaling up – a number of projects closed  Four prestigious airport projects achieved financial closure; port terminals  Large metro projects  Scores of road projects  Standardization?  IIPDF, VGF, IIFCL  Other policy measures

3. India’s PPP Program: Falling Private Investment and Bank Credit 3

4. 4 “ Combining the situation of Indian public sector banks and corporate balance sheets suggests that the expectation that the private sector will drive investment needs to be moderated. In this light, public investment may need to step in to ramp up capital formation and recreate an environment to crowd-in the private sector.” “The stock of stalled projects stands at about 7 percent of GDP, accounted for mostly by the private sector. Manufacturing and infrastructure account for most of the stalled projects. Changed market conditions and impeded regulatory clearances are the prominent reasons for stalling in private and public sectors, respectively.” Need for change?  Allocating demand risk to government  Emphasis on efficiency  Less dependence on market wisdom  VGF may not be right  Renegotiations should be accepted HIGHLIGHTING FAILURE  Economic downturn  Financing issues  Sector exposure limits  Single and group borrower limits  Constraints in external borrowing Currency depreciation Lack of affordable hedging instruments  Statutory requirements for banks  Recent developments  Governance issues:  Elections - 2014  Inefficient contract management  Land acquisition delays  Coal block allocation issues  The good projects are simply over?  New risk allocation strategies required?

5. Future of PPP in India… 5 Source: PPI Database, World Bank Group  Danger of over-emphasizing a few failures?  Danger of strait-jacketing?  Why not a case-by case approach?  No framework is right or wrong, it is how you apply it…  What should second generation reforms look like?