Now smart Cities for unsmart people
Palash Biswas
Reforms to boost infrastructure! Reforms to help pumping in private investment in private public partnership. No politician has ever dared to oppose, not even FDI crusaders like Ms Mamata Banerjee!The government has given more time to as many as 18 SEZ developers, including Tata Consultancy and G P Realtors to execute their projects.The Finance Ministry will soon finalise the Cabinet note to put in place the Infrastructure Debt Fund (IDF) with a view to accelerating flow of long-term funds for infrastructure projects. The IDF, which was proposed in the Union Budget for 2011-12 fiscal, is aimed at accelerating and enhancing flow of long term debt for funding the ambitious programme of infrastructure development in the country. The requirement of infrastructure fund in the 12th Plan (2012-17) has been pegged at USD 1 trillion. The IDF will help in meeting the funding requirement of infrastructure sector wherein banks are constrained by their exposure limit to a company or a project. According to sources the IDF would be based on a tripartite agreement between developer, lender (bank) and the IDF. The loans by the banks would be refinanced by the IDF so that banks have free funds for more lending.An IDF may be set up either as a trust or company... A trust based IDF (Mutual Fund) would be regulated by Sebi, while an IDF set up as a company (NBFC) would be regulated by the RBI.
Now smart Cities for unsmart people as without infrastructure, an economy cannot grow! Industry and services cannot expand without highways, electricity, ports and airports, rail links and pipelines. The 12th Plan (2012-17) projects infrastructure investment of a trillion dollars. That is why,Government is planning to develop two "smart" cities with a host of modern features like intelligent transport and carbon neutral status in each of the states in the second phase of the Jawaharlal Nehru National Urban Renewal mission. The government claims India is a global leader in public-private partnerships in infrastructure. The private sector financed 36% of infrastructure in the 11th Plan (2007-12), and is expected to finance fully 50% in the 12th Plan. This is now a pie in the sky. Corporations that charged into this sector have suffered heavy losses. They expected a gold mine, but found only quicksand. They have been hit by financially disastrous time and cost overruns. Master Plan 2021 is proposed to be amended for allowing development of influence zones spread over 500 metres on either side of the Metro corridors and all transport corridors. Easing of coverage and height restrictions that will allow Delhi Metro Rail Corporation to build properties with enhanced floor area ratio (FAR) has also been proposed. The influence zone is aimed at carving out a mix of residential, commercial and public utilities along an MRTS corridor.
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What about your anti corruption camapign as airports-to-power conglomerate GMR Group has warned that bringing public-private partnership (PPP) projects under the ambit of the Comptroller and Auditor General of India and the Right to Information law could spell the death knell for private investments into infrastructure projects!Sidharath Kapur, chief financial officer (airports) at the GMR Group, said the current policy environment makes it difficult for the private sector to chip in with half of India's $1-trillion target for infrastructure investments over the next five years.
Unfazed by the strong opposition to allowing FDI in retail even from some allies, the government today made it clear that the decision will not be rolled back as it is in the interest of farmers and consumers.Addressing a group of farmers in New Delhi, Commerce and Industry Minister Anand Sharma said foreign direct investment (FDI) in multi-brand retail trading will help farmers in getting good price for their produce besides creating lakhs of jobs.
"This decision is final. This decision will not be rolled-back. We are not afraid of anything. This decision is taken in the interest of the farmers and consumers," he told the farmers at the Congress headquarters.
A panel headed by tax expert Parthasarathi Shome has suggested interest and penalty should be waived in all cases where tax is collected, citing the controversial retrospective amendment of Section 9 of the Income Tax Act, boosting hopes of a settlement between Vodafone Plc and the tax authorities.The committee, which submitted a draft report to finance minister P Chidambaram on Monday, has also recommended exempting listed companies and internal restructuring of unlisted companies from the law's ambit, people familiar with the report's contents said.Chidambaram told ET in an interview published on Monday that the dispute with Vodafone had to be settled and he was waiting for the Shome committee's recommendations. "Do we resolve it through a settlement or through arbitration or litigation is a matter to be considered," he had said.American and Global Depositary Receipts, securities traded on overseas exchanges with Indian shares as the underlying asset, would be exempt from tax as would be participatory notes (PN), according to people familiar with the draft report. PNs are derivative instruments issued by foreign portfolio investors to overseas clients, again with Indian equities as the underlying. The amendment, part of the union budget, sought to tax so-called indirect transfers, essentially deals executed overseas in which substantial Indian assets change hands. The wide wording of the law - by some interpretations even sales of ADRs/GDRs could have come within its ambit, had alarmed investors.Economic Times reports.
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http://economictimes.indiatimes.com/news/economy/finance/shome-panels-suggestions-pave-way-for-settlement-in-vodafone-tax-issue/articleshow/16633512.cms
The BSE benchmark index Sensex is is likely to touch the crucial 20,000-mark in the near future with return of overseas investors and increased liquidity in global markets, according to a study by Assocham. Having witnessed a 7 per cent rise in September, the benchmark index is likely to rally in October, backed by strong liquidity flows and rupee appreciation. Second quarter earnings, reform push from the UPA government and declining crude oil prices will give a further boost to the markets, say analysts.
The study by the industry body expects banking, IT and FMCG to be frontline stocks. Real estate, automobile and consumer durables, which are sensitive to interest rates, would take some time to make a comeback, the study said.
The big uncertainty would, however, remain around infrastructure stocks since it would still take some time before the policy issues are thrashed out in power, road, ports and airports segments.
The USD 1 trillion infra story is yet to take off and the government needs to give a big push before any tangible results are seen, Assocham said.
Foreign institutional investors (FIIs) have poured in more than Rs 19,000 crore (USD 3.5 billion) in Indian stock markets last month, the highest monthly inflow in seven months.
The the Sensex closed at 18,823.91 level in the last trading session.
The recent initiatives by the government coincided with the quantitative easing of liquidity by the central banks in the US and Europe have aided strong capital inflows.
"On the other hand, the re-infusion of confidence by the domestic and foreign investors in the Indian economy was needed desperately in India which was coming under pressure from sharp depreciation of rupee and increasing current account deficit," Assocham President Rajkumar Dhoot said.
The study said as compared to other classes of assets -- gold and property-- the stock market has been a bad performer in last three years.
"While we often do this mistake of treating the stock market gains or losses notional, the setback in the market in the past three years had made life difficult not only for the retail and institutional investors but also the India Inc, which had to heavily depend on debt rather than equity.
"The situation seems to be improving for this class of assets as well, if the Indian government continues with reforms," the chamber said.
Infrastructure was historically funded almost entirely by the government. Cost overruns were endemic, averaging a phenomenal 61% back in 1991. These were financed by grabbing more taxes from the public or by printing money.However, these options are not available to corporations. Infrastructure requires heavy loans, often twice as much as equity. Such loans have a fixed repayment schedule. If a project is completed on time, revenue from the project will finance the repayments. But if there are delays of months or years, the project is squeezed badly. It's even worse if projects are unable to operate (such as 30,000 MW of power projects stranded without fuel) or suffer from sudden changes in environmental regulations (as in Hindustan Construction's Lavasa township) or from outright cancellations (as in the scam-ridden 2G telecom case).Times of india reports.Five years ago, investors were pouring money into infrastructure companies, and their share prices skyrocketed. Everybody thought these companies were entering a golden period. This included politicians, who demanded huge kickbacks (the 2G scam is only the tip of the iceberg). The companies paid up, confident that their returns would justify kickbacks. Today they are in financial straits, and their stock market prices have crashed. GMR InfrastructureBSE 0.40 % (which runs Delhi and Hyderabad airports, apart from many power plants) is down from a peak price of Rs 131 to just Rs 24. It lost Rs 94 crore in the April-June quarter. The CAG believes that GMR has been gifted enormous sums by a sweetheart deal for the Delhi Airport, but there is no sign of this in its accounts.
The Union Finance Minister, in the Budget speech for the year 2011-12 has announced that It is our endeavor to come up with a comprehensive policy that can be used by the Centre and the State Governments in further developing Public-Private Partnerships.Pursuant to this announcement, Department of Economic Affairs, Ministry of Finance has prepared the draft National PPP Policy and solicits views / suggestions from all stakeholders by 15th October, 2011.
"We have an urban renewal mission which means that the central government funds the cities and one of our programmes is that we propose to have two smart cities in every state," Urban Development minister Kamal Nath told reporters here today.
The minister said medium sized cities with half a million to one million population will be developed as smart cities and expertise of Austrian Institute of Technology had been sought for the purpose.
Nath was speaking after meeting a delegation led by Austrian minister of Transport, Innovation and Technology Doris Bures here.
"Now how do we define these smart cities, what will it cover....right from broadband, intelligent transport to carbon neutral (features), these are so many components...that is what we propose to collaborate with the Austrian Institute of Technology," he said.
"We want to seek assistance from the Institute on what kind of model smart cities we should look at," he added.
Nath also said that medium sized cities like Ujjain or Jabalpur would be considered for the proposal to create smart cities.
"We cannot take on very large cities for smart cities at this stage, we must recognise that. We have to take our medium sized ones, so we want to look at cities with half a million population to one million population instead of trying to take on cities with ten million population," he said.
"We have discussed the possibility of collaboration between the Austrian Institute of Technology and the National Institute of Urban Affairs which comes under the ministry of Urban Development," Nath said.
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| No land acquisition for PPP townships: Jairam Ramesh |
| Interview with Union Rural Development Minister |
| Sreelatha Menon / New Delhi Oct 02, 2012, 00:16 IST |
It’s felt even by industry that acquisition of land for all PPP (public-private partnership) projects under the present version of the Land Acquisition Bill could create more conflict and distrust...
Township development is not included in the definition of infrastructure. Hence, this Act cannot be invoked for acquiring land for township development under PPP.
The Bill has a sliding scale for compensation for land owners. It gives twice the market rate when the land is 50 km from a town. But in the earlier version of the Bill, all rural areas were promised four times the market rate. Why has the compensation amount been reduced?
There is no change in the multiplier factor. It’s actually two times the market value and with 100 per cent solatium, it becomes four times for rural areas (on sliding scale).
By the sliding scale, for land within 10 km, only the market rate is payable. It is 1.2 times the market rate for 10-20 km, 1.4 times for 20-30 km and two times for land 50 km from a city...
The multiplier of two (which, of course, becomes four with solatium) is now on a sliding scale of zero to two. Which means lands closer to urban areas (within 10 km) will not have multiplier, whereas the farway land will get two multiplier. The rationale is that circle rates for lands closer to urban centres are likely to be close to market value, when compared to lands situated in interior, where the circle rates are notoriously lower than the market value. However, in the case of land within the radiou of 10 km, with solatium at 100 per cent, the land owner will get two times the market value.
The new version of the Bill does not provide a grievance redressal authority. People would still have to take to the streets to get grievances resolved.
The Right to Grievance Redressal Bill, which is under the consideration of Parliament, is expected to provide institutional mechanisms for redressing grievances. Therefore, there is no necessity for every legislation to create its own grievance redressal machinery.
What kind of redressal mechanism is available in the Bill?
The Bill provides many forums for redressing grievances. They are rehabilitation and resettlement committee at project level under Section 41, state monitoring committee for rehabilitation and resettlement under Section 44 and land acquisition, and resettlement authority under Section 45.
http://business-standard.com/india/news/no-land-acquisition-for-ppp-townships-jairam-ramesh/488261/
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Govt to speed up projects worth `3.3 lakh cr to revive growth - 11 Sep 2012 - Financial ChroniclePublished On :2012-09-12 14:43:00
*** Includes pending PSU proposals in roads and petroleum sectors *** Government would fast track infrastructure projects of Rs 3.3 lakh crore to revive the slowing economy. These would include projects pending with public sector undertakings along with those stuck in roads and petroleum sectors. Besides, it will shortly come up with a framework on public-private-partnership for setting up warehouses in the country along with government tempering with buffer food stock to ensure that food prices do not go beyond comfort level. This is part of the five priority areas that the government has identified to boost investor confidence in the economy in a time bound manner. “Government has identified problems that are delaying several big projects in roads and petroleum sector where the estimated investments locked up is to the tune of Rs 1,50,000 crore. Finance minister wants to take this up at the cabinet level for decision that would be taken in a time bound manner,” economic affairs secretary Arvind Mayaramsaid while addressing the national executive committee meeting of Ficci. As per Mayaram, finance minister will also meet heads of nine identified public sector under takings that are sitting on large cash reserves of Rs 1,80,000 crore, on Wednesday to put in place a timeline for beginning the projects that have been put on hold. The economic growth rate in the country has fallen consistently every quarter since last year and stood at 5.5 per cent in the April-June quarter of this financial year on the back of poor performance of manufacturing, mining and farm sectors against growth of 8 per cent in the first quarter of 2011-12. This is far less than the GDO growth projections of 6.7 per cent by the prime minister’s economic advisory council.
Odisha approves 37 projects on PPP mode in three years - 10 Sep 2012 - Business StandardPublished On :2012-09-12 14:42:00
Odisha has approved 37 projects on the public private partnership (PPP) modebetween April 2009 and March 2012. The approved projects are in sectors like ports, real estate, food processing and tourism. The state government has approved the establishment of a minor port at Astaranga in Puri district by Hyderabad-based Navyug Engineering Ltd. The initial port capacity is 25 million tonnes per annum (mtpa) with the project cost pegged at Rs 7417 crore. The port capacity will be eventually scaled up to 70 mtpa. It may be noted that the state government had entered into a Memorandum of Understanding (MoU) with the company on December 22, 2008. A concession agreement was signed on November 22, 2010 according to which the port developer will share five per cent of its gross income during the first five years, eight per cent from fifth to the 10th year, 10 per cent from 11th to 15th year and 12 per cent from the 16th year to the end of the lease period.
KPT invites global bids for new oil jetty - 24 Aug 2012 - Business StandardPublished On :2012-08-27 14:18:00India's largest port, Kandla Port Trust (KPT) has invited global tenders for development of oil jetty to handle liquid cargo and ship bunkering terminal at old Kandla. The entire project is estimated to cost Rs 233 crore and will be developed on build, operate, transfer (BOT) basis under public private partnership (PPP) mode. The proposed oil jetty will have the handling capacity of 3.4 million tonnes (MT) of liquid cargo per annum (PA). "With this project, our liquid cargo handling capacity will get a sharp increase from the current 1.5 MTPA. Also, this will be the first instance in India, where a ship bunkering terminal is also being developed along with an oil jetty through a PPP mode," said a senior official of KPT. KPT operates four oil jetties, while two oil jetties located at KPT are operated by IFFCO and Indian Oil Corporation (IOC) respectively.
‘Public-private partnership key to growth’ - 24 Aug 2012 - The HinduPublished On :2012-08-27 14:16:00Public-private partnership is the key to growth in sectors including railways, power and ports, said Union Minister of State for Urban Development Saugata Roy on Thursday. The Minister said building a reservoir of skilled manpower through PPP model is the need of the hour and its important that all stakeholders come forward to attain the desired pace of infrastructure development. The Minister was speaking at the inauguration of the Conference on Infrastructure Management, organised by the Confederation of Indian Industry (CIINR) here. Mr Roy invited industry to join hands with the Government in this area and also shared the success stories of various PPP projects like DIAL and Kolkata airports. “The infrastructure development in India continues to be the focus for the Government,” he said.
PPP a success in channelising pvt investment in infra: Govt - 23 Aug 2012 - Hindustan TimesPublished On :2012-08-27 14:15:00
The Public-Private Partnership (PPP) has been a success in channelising private investment in infrastructure, though public sector will continue to play a dominant role in building infrastructure, government said on Thursday. "The PPP has been quite successful in India in channelising private investment in infrastructure sector," the minister of state for planning Ashwani Kumar said in a written reply to Rajya Sabha. "During the 11th Plan the private investment in infrastructure is anticipated at 37% of the total investment against 22% achieved in the 10th Plan," he added. He, however, said: "The public sector will continue to play a dominant role in building infrastructure." He said the government is increasingly using PPP mainly in infrastructure projects. Kumar said the total resources to meet the infrastructure deficit exceed capacity of the public sector. So it is necessary to attract private investment through appropriate forms of PPP to meet the overall investment requirement, he added. "In sectors such as highways, airports, ports, railways and urban transit systems, PPPs are increasingly becoming the preferred mode of project implementation," Kumar said. |
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The most significant criteria for a continued growth rate of an economy is rests on the provision of a quality infrastructure. According to the Planning Commission, an approximation of 8 percent of the Gross Domestic Product or GDP needs to be invested. This would help in acquiring a prospective economy as stated in the 11th Five Year Plan. Fund investment of over US $ 494 billion has been conceived of according to the 11th Five Year Plan with effective from 2007 to 2012. The investment sectors under consideration are inclusive of telecommunications, electric power, water transport, road, rail, air, water supply as well as irrigation amounts to about Rs. 20,27,169 crore according to 2006-07 prices. In order to meet such demands, various Public Private Partnerships or PPPs are being promoted for implementation of infrastructure projects. PPP is often described as a private business investment where 2 parties comprising government as well as a private sector undertaking form a partnership. The deficit can be overcome by ensuring much more private capital investment. Expert guidance is the only way out for enabling efficiency through subsequent reduction in cost. Promotion of PPP is therefore necessary since its the most preferred mode. Despite of its benefits, there are some constraints too which can be summarized as:
Several initiatives have been undertaken by Government of India to enable a greater PPP framework in order to eradicate the above mentioned constraints. Various foreign as well as private investments by waving off charges are encouraged. Framing of standardized contractual documents for laying down the terminologies related to risks, liabilities and performance standards have been devised. Approval schemes for PPPs in the central sector has been streamlined through Public Private Partnership Appraisal Committee or PPPAC. A website has been launched for the purpose of virtual PPP market serves as an online database for PPP projects.  PPPs can only be mainstreamed by continuous response to the varying goal of people and economy in general. The boundary domains of PPPs should be increased in order to prosper the infrastructure development of India. |
http://www.pppinindia.com/overview.php
Public–private partnership
From Wikipedia, the free encyclopedia
Public–private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. These schemes are sometimes referred to as PPP, P3 or P3.
PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project. In some types of PPP, the cost of using the service is borne exclusively by the users of the service and not by the taxpayer. In other types (notably the private finance initiative), capital investment is made by the private sector on the strength of a contract with government to provide agreed services and the cost of providing the service is borne wholly or in part by the government. Government contributions to a PPP may also be in kind (notably the transfer of existing assets). In projects that are aimed at creating public goods like in the infrastructure sector, the government may provide a capital subsidy in the form of a one-time grant, so as to make it more attractive to the private investors. In some other cases, the government may support the project by providing revenue subsidies, including tax breaks or by providing guaranteed annual revenues for a fixed period.
Typically, a private sector consortium forms a special company called a "special purpose vehicle" (SPV) to develop, build, maintain and operate the asset for the contracted period[1]. In cases where the government has invested in the project, it is typically (but not always) allotted an equity share in the SPV.[2] The consortium is usually made up of a building contractor, a maintenance company and bank lender(s). It is the SPV that signs the contract with the government and with subcontractors to build the facility and then maintain it. In the infrastructure sector, complex arrangements and contracts that guarantee and secure the cash flows
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