Financial Options for Funding of Road Infrastructure in Rajasthan | 23 Feb 2024

Why in News?

The Rajasthan government is examining some innovative financial options, including Public-Private Partnership (PPP), for securing increased funding for the expansion of road infrastructure.

Key Points

  • Rajasthan ranks seventh in terms of the State highways and second largest in terms of the national highways in the country.
  • The Rajasthan State Highways Authority has started adopting new measures to cater to the need for better connectivity and facilitate innovative investment and financing models.
  • A workshop was organised on “Financing models for road infrastructure development”, jointly by the Public Works department (PWD) and the India Infrastructure Finance Company Limited (IIFCL) Projects.
    • IIFCL is a leading public sector infrastructure finance institution, which has funded about 21% of the country’s national highway capacity, comprising nearly 30,000 km of roads.
  • The State government would work closely with the IIFCL Projects for strengthening its road network and bring it parallel with those in Tamil Nadu, Maharashtra and Gujarat.

Public-Private Partnership Model

  • PPP is an arrangement between government and private sector for the provision of public assets and/or public services. Public-private partnerships allow large-scale government projects, such as roads, bridges, or hospitals, to be completed with private funding.
    • In this type of partnership, investments are undertaken by the private sector entity, for a specified period of time.
    • These partnerships work well when private sector technology and innovation combine with public sector incentives to complete work on time and within budget.
    • As PPP involves full retention of responsibility by the government for providing the services, it doesn’t amount to privatization.
    • There is a well defined allocation of risk between the private sector and the public entity.
    • Private entity is chosen on the basis of open competitive bidding and receives performance linked payments.
    • The PPP route can be an alternative in developing countries where governments face various constraints on borrowing money for important projects.
    • It can also give required expertise in planning or executing large projects.