PPP in urban infrastructure is the trickiest

http://economictimes.indiatimes.com/ET_Features/The_Sunday_ET/Special_Report/PPP_in_urban_infrastructure_is_the_trickiest/articleshow/msid-2393882,curpg-1.cms
PPP in urban infrastructure is the trickiest
23 Sep, 2007, 0017 hrs IST,Vinayak Chatterjee,

Of the various components of infrastructure, PPP in urban infrastructure is clearly the trickiest. It is not a standalone lumpy investment like a power plant, port or airport. Viability is dependent on collecting user-pay charges from politically-sensitive constituents.

And it is dependent on long-term agreements and support from generally soulless urban local bodies. To add to the challenge, India has 5,545 urban agglomerations (UAs). Around 11.6% of these UAs, that have a population in excess of 1 lakh, are called ‘cities’. There are 643 cities.

Moreover, nobody quite has a fix on how much investment urban India needs. The best estimate I am aware of comes from Ramesh Ramanathan of Janaagraha, one of the finest minds our country has on urban rejuvenation issues.

He reckons that the appropriate thumb-rule is Rs 50,000 per capita of urban population. By this estimate, investments required for all our towns and cities put together is $348 billion, possibly over the next 15 years. So, a town like Dehradun (population – 5,28,000) will require Rs 2,640 crore and a city like Bangalore (population-56,87,000) will require Rs 28,435 crore till almost the first quarter of this century.

And where is all this money going to come from? Even with JNNURM (Jawaharlal Nehru National Urban Renewal Mission) nudging urban authorities to wake up to the realities, it is unlikely that more than 30% of the capital needed will come from PPP and private sources, as against an expectation of 20% for the infrastructure sector as a whole at the national level.

(snip)