Public Private Partnerships

PUBLIC PRIVATE PARTNERSHIP IN INDIAN CONTEXT WITH SPECIAL REFERENCE TO AEROSPACE AND DEFENCE SECTOR

Rajiv Bhargava 4/30/2011

A short paper on the concept of Public Private Partnership in India

2 PUBLIC PRIVATE PARTNERSHIP IN INDIAN CONTEXT WITH SPECIAL REFERENCE TO AEROSPACE AND DEFENCE SECTOR

INTRODUCTION

India, with its market economy is the largest democracy in the world and the government and the private sector are both stake holders in the well being of the country. For long the government planners have been influenced by the Soviet system of planning, with an emphasis on the role of the government in the development of the economy. These planners have traditionally been sceptical of the ‘For Profit’ motivation of the private industry and their attitude towards the private sector has been adversarial. This has resulted in the regime of imposing regulations, in which government imposes requirement about how to behave on an unwilling private sector1. This ‘Licence Raj’, had strangulated the progress of the economy. However, post 1991, this attitude has undergone a sea change and the government is adopting a collaborative approach towards the private sector in the economic development of the country. One such approach has been ‘Public Private Policy’ or PPP in short. A public-private partnership (PPP) is an institutional arrangement that embodies this type of collaborative approach; it is a joint venture between the government and one or more private sector entities.2 The key differentiator in this system is that of attitude. The government is a collaborator and facilitator in the relationship and not a deterrent as hither-to-fore. The model of regulation implied is not one of hierarchy, in which the state imposes regulations on private sector from above; instead it is a model in which regulators and regulated entities cooperate to achieve common objectives, share information, and negotiate deals.3 The voluntary participation of both entities is...