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Transcript

Hello!!! friends in this we will be discussing about Public private partnership. So what exactly this Public private partnership means. So there are two institutions coming together which are extreme in nature. One group of institutions that is public institutions that is owned by the government and the other institutions which are having the sole motive of profit earning from the societies so that is another group of institutions. And both these things are joining the hands for the benefit of public so that is what is the concept of public private partnership.

The definition of the public private partnership goes like this the public sector agencies when they join hands with private sector entities and enter into a business relationship to attain commonly shared goal that also achieves the objectives of the individual partners. Government has the responsibility of social welfare, but to what extent they can take up this particular job so that is up to the government that is in power. And at the same time the private organizations or the corporate organizations are having the primary motive of earning that is profit maximization. So both are extreme corners that we can think of. But the social welfare when we combine it with profit motive so ultimately there is going to be a social good and that is what both the institutions that is the public and private institutions are coming together and entering into the process of making some welfare activities for the public.

The types of users that we come across is the contracting with the private company especially to renovate the old establishments or construct new establishments or operation of the existing establishments or maintenance of the establishments or management of a facility or system which a government is not able to. In these entire situations so a private participation is solicited because government is ultimately the owner. The public institutions are ultimately the owners of each and every property of a particular country. So if anything that is abandoned if that needs innovation but for some one or the other reasons if the government is not able to take up that particular thing that renovation job can be assigned to private organization so that w can give appropriate shape to that and we have good number of examples in that sector. Similarly, government needs to construct good number of infrastructural facilities but for one or the other reasons it becomes very difficult for the government to take up that job and hence we need intervention of the private user and the list continues.

Why we need to go for that? One case that I have already explained you and in addition to that it is public private partnership is basically a tool that can help the government to meet the demands of the government of modern and efficient facilities infrastructure and services while providing value for the tax payers. The common citizen who is paying tax is asking for some facilities out of the money that he has already paid. But for one or the other reasons government is not able to do that so that is how this becomes one of the important tool so that we can accomplish the need.

The benefits of public private partnership include the timely and expedited project completion otherwise procedurally government takes longer period of time and that is how if the private involvement is there we can finish it as per the schedule. Then the project cost saving because the earlier it was only the government which was investing but now there is another partner who is also sharing certain amounts so that is how the cost saving is also there. Then improvement in the quality with the previous experience we can say that the private firms are more efficient in providing services with best quality inputs and that is how we are emphasizing on the quality improvement also. Then use of the private sources otherwise if the public agencies are not coming forward the private will also coming forward and that is how we can buy public institutions by coming forward to join hands with the private firms we can make use of the private resources also to provide benefits to the society. And access to new sources of private capital because they are also equally providing their capital for this particular process.

The basic characteristic of public private partnership include: number one Shared goals I have already explained this. And the shared resources – the resources are the time, money, expertise and the people. Time is one of the important resources and in the language of management it is said that time is money. If a project if it is taking one year and if I can complete it by 6 months it means I am saving the time of 6 months and that can be translated into money through many means. So that is what the importance of time is. And at the same time the money is also being shared by public as well as the private institutions and that is how both are in win situation. They are also sharing the risk because there is every possibility that a private firms project can be brought into the legal framework at any point of time but when they themselves are also party to that so the risks of such events are going to be reduced that is how it is shared risk. And ultimately they are going to share the benefits also.

The typical funding source for the public private partnership includes the Tolls. And this is an excellent example that we can take it for our understanding as far as the public private partnership is considered. Many times while you are travelling on the National Highways and the roads have an excellent infrastructure and your vehicles moves at the speed of 100 or 120 or more than that, that depends on the vehicle why and how it is being possible. It is because of the public private partnership. What is the role of the public institution here? Providing land resource because government is the owner of the land and private investment is all the construction cost, technology, resources everything that is made use by the private institution and ultimately the road is ready. And the private has invested but how it is going to take back its profit and the best example for that thing is the tolls. You are paying the toll fee over a period of time it is going to recover its all expenditure and in the mean time government is also getting its share by sharing the land resources and ultimately both are in a win win situation and as an user, as a common man I am having access to the facilities the best infrastructural facilities possible and this is what is the most typical example that I can take it. Then the second one is the fees that the government is going to charge on various commodities and the government can also give grants that depends on the projects or it can take the loan not only from the national agencies from the international agencies also and it can release equity bonds that again the public participation will be also there people can also be participate in this. In most of the infrastructural project or the irrigation project that we find the government is releasing the equity bonds so that even a common man who is maybe contributing Rs 1000 or Rs 100 or Rs 10000 that becomes a big amount when the large number of people joining their hands and that becomes capital for taking up the public private initiatives.

So coming to the area of agriculture what are the opportunities that we can find as far as public private partnership in agriculture is considered. Number one is the infrastructural development which is very very essential. In many of our previous discussion we have observed that infrastructure inadequacy, lack of infrastructure, various of things that keep on coming for a period of time that can be overcome it is an opportunity as far as the agricultural sector is considered. The research and development in my earlier discussion I have already said that in case of Indian context the public investment is comparatively less then the private investment as far as the research is considered but when both these institutions join hand and together as far as research and development is considered the shape of Indian agriculture is going to be a totally different one and that is what is in a pipeline. And as education is considered I can say that in agriculture sectors we have private participation also. The private participation is coming up as far as the agriculture education is considered and many states like Maharashtra and Karnataka are also in the process of opening up this area of agriculture education for the private partners. And apart from that the extension service is one of the potential area of public private partnership. The government of Madhya Pradesh has already conducted some experiments by taking ICICI bank as partner for providing the extension services. High-tech agriculture where we need to have the higher amounts of investments that is another opportunity for public private partnership. Contract farming we have already discussed about this, that is another opportunity. Agro- based industries, agro-processing industry, mechanization industry, input industry. We are going to elaborate this input industry immediately after this lecture and the agro service sector and youth power and skill development so these are some of the areas wherein we can invite the private participation so that we can change the scenario in case of agriculture as far as the Indian context is considered. There are certain challenges as far as the Public private partnership in agriculture is considered. The first challenge that we come across is agriculture is a declining industry this is what is the general perception. But can we really say that agriculture is  declining industry. We can leave without the electronic gadgets for many maybe days or weeks or years or months. But can we live even a single day without food. How can it become a declining industry? So this is a general perception but it is not so but the perception is also creating as a challenge. The natural resource decline, yes, obviously and because of that we can see good number of climate changes also and that is another important issue. Food and nutritional security because earlier we were talking of food security almost we have reached the food security and every Indian is having access to food, sufficient food but now the problem we are facing is the nutritional security. There is imbalance as far as nutrition is considered. Maybe imbalance of proteins and carbohydrates and various other nutrients that we are facing and that is another challenge wherein we can anticipate the participation of the private institutions to take care of. Then the diversified situations that we have in our own country starting from temperate to the tropical. So these are the extreme situations that we come across and that are another challenge and it can become an opportunity also. In the language of entrepreneurship we say that every problem what we have he is having a hidden opportunity in this. But how we perceive that opportunity that depends on the entrepreneur. The moment he pursues an opportunity there so then its going to be a game changer. Then along with these the unskilled human resources, Investment and profitability and risk and uncertainties associated with agriculture. So these are some of the challenges as far as the Public private partnership in agriculture is considered.

So now coming to some models of the public private partnership. Wherein the first model that we can take up is the design build finance and operate. In this particular model the government is only providing them the land resources. The rest of the things and the investment will be made by the private institutions only and the will be taking up and ultimately the profits are shared. Then operations and management contracts generally the abandoned buildings or where we renovation and all those things such public entities will be handed over to the private players. The will be taking up the initiatives and they will be managing those things. Then lease contracts are there because the property which government cannot manage on its own so some part of that will be leased for certain period of time and out of that government is earning some revenue. Then the last model which is very popular that we can give good number of examples as far as Build Operate transfer model is, all the construction of the highways or the construction of some parts of the airports or such infrastructure facilities are adopting this particular model of building, operating and transferring because they are investing on the building and they are operating it and they will be getting back their investment and at the end they will transfer it to the agency that is the government. So with this brief background so there are certain fundamentals of good public private participation that includes the productive public private partnership require the formation of a platform which to assemble the relevant partners which are those potential and prominent partners and promising partners who can take part in this and identify incentive to compatibility of profit sharing and agree on mutual objectives, assigning the roles and responsibilities there should be appropriate division and protect and agree on how to exploit intellectual property (IP) which is emerging out of partnership. There may be certain issues that needs to be resolved in the beginning itself and the partners benefit in a win-win situation. So this is what we have also observed in case of the contract farming also and the similar situation that we can develop in case of Public private partnership also wherein both the parties the governmental initiatives as well as the private players are going to be witness the win-win situation and that is how we can come out with good number of projects, so that we can overcome the problem of infrastructural inadequacy. With this we will be closing our discussion on public private partnership and in the next class will be having discussion on the agricultural input scenario.

Thank You