Infrastructure | srei
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The Need for A Novel Solution in Infrastructure Finance (Part 2)

Benefits of public private partnerships (PPPs) over traditional procurement process arise from (potential) efficiency gains associated with the private sector managing the construction and operation of the infrastructure asset. The main issue concerning the PPP model relates to its inflexibility. This lack of flexibility is necessary in order to mitigate the time-inconsistency problem, but can be a constraint, especially when projects involve very uncertain prospects over the long term.

The Need for a ‘Novel Solution’ in Infrastructure Finance

We have held this view that governments are the best financers funders and builders of infrastructure. This model simply isn’t feasible anymore because the needs of infrastructure far outstretch the government’s ability to finance them. This does mean that the government is not needed as there is a lot of risk involved and most of these industries are natural monopolies.  Market failures result in the private sector not being able to cover the investment requirement itself.

The Future Of Infrastructure In India

For any country, its infrastructure is a matter of pride. From roadways, railways to airports and other smart-city initiatives, the last few years have witnessed a phenomenal change in the sector, leading to world-class facilities coming up across various parts in the country. Infrastructure Industry  in India has been experiencing rapid growth in its different sectors with the development of urbanization and increasing involvement of foreign investments in this field.