India is on the track of rapid development, industrialization and urbanization. This needs a sharp focus on the simultaneous development of infrastructure which requires large investments. These cannot be met by the government budgetary sources alone, implying that private partnerships in various forms will have to be sought. In the light of the above, this article makes an attempt to look at the critical factors in a successful Public-Private Partnership (PPP). Cross-country experiences in the same exercise with special focus on China have been examined. The inferences drawn have facilitated the spelling out of a few policy conclusions.

The progress of industrialization and modernization resulted in a perceptible increase in incomes, domestic and external trade. The rapid urbanization which hence followed required large investment in infrastructure. P Chidambaram, Finance Minister of India, at the `Conference on Public Private Partnership in Infrastructure' wherein he referred to the resolution of the National Development Council (NDC) recently said, "recognizing that improvement in physical infrastructure has emerged as a common priority, an increased private participation has now become a necessity to mobilize the resources needed to achieve its expansion and upgradation. The NDC observed that successful promotion of private participation in infrastructure development requires a well-designed framework of policies in which investors have the assurance that standards of services and transparency in the concession awarded, will be maintained. It then directed the Central Government to work towards evolving such a framework, which could be adopted by the States."

A close look at this resolution throws up some very interesting findings, the most important being that there is a clear infrastructure gap in India. The rates of investment in infrastructure in India are lower in comparison with China and other Asian countries. Keeping this in mind the India Infrastructure Report 1996 estimated the need for increase in investment in infrastructure from the existing levels of under 5% to about 8% of GDP by 2005-06. On the contrary, the Gross Capital Formation in infrastructure as a proportion of GDP has remained around 4% of GDP during 1997-98 up to 2003-04. The Tenth Five-Year Plan initially projected Rs. 10,89,400 cr at 2001-02 prices, which was later revised to Rs. 11,08,800 cr in the mid-term review document.

The break-up in investments as stipulated by the Committee on Infrastructure is as Rs. 2,20,000 cr in the highway sector by 2012, Rs. 40,000 cr for airports by 2010 and Rs. 50,000 cr for the ports by 2012. In short it has been estimated that India has the potential to absorb $150 bn of investment in the coming few years in the infrastructure sector alone. This is indeed a daunting demand on budgetary sources and hence it is mandatory for the government to look for other sources of funds like partnerships with the private sector, private savings and other sources which are available in the market today. It has been further pointed out by the NDC report that this gap in the infrastructure availability is costing the country 1.5% to 2% of GDP growth every year. In the words of the Finance Minister P Chidambaram, there is a basic requirement for a set of well-designed policies which need to be shaped over a period of time. It is here that the Committee on Infrastructure and the Planning Commission can provide valuable guidance to States to put an Infrastructure policy in place.

Projects & Profits Magazine, Cross-Country Experiences, Public-Private Partnership, PPP, National Development Council , NDC, Gross domestic products, GDP, P Chidambaram, Build-Operate-Transfer, BOT, Infrastructure Development Finance Corporation, IDFC, Indian Infrastructure Finance Corporation, IIFC, Decision-Making Process, Political System.