Advertisement

The Problem of Financing Private Infrastructure in India Today

  • Sebastian MorrisEmail author
Chapter

Abstract

Optimal approaches that recognize the specific kind of market failure/s, in the policy and design of infrastructure, greatly reduce the financing costs and improves the ability of to attract finance in the private provisioning of infrastructure. When state systems are weak organizationally it is first best to strengthen the state capacity so that it can minimally perform the roles of design, regulation, development of frameworks, and of monitoring, for the private provisioning of infrastructure. This is particularly so in the case where there are dual market failures arising out of both the natural monopoly and the appropriability failure aspect. The challenges in design and policy are large and with many false starts it is only now barely beginning to be considered in India. Thus infrastructure design rather than debilities in financial markets remain the key problem. The potential to use of foreign capital to finance infrastructure is often overstated. The forces leading to the current mess-up of the Indian banks and FIs in lending to infrastructure are brought in perspective. The key issues in developing state capacity, and the changes required for getting the design of infrastructure right, as also to bring functionality to the role of financial institutions in the private development of infrastructure are highlighted. Governance reforms that make for better development of infrastructure are highlighted.

References

  1. Aliber, R. Z. (1993). The multinational paradigm (edn. 1, vol. 1, number 0262511517), January. MIT Press Books.Google Scholar
  2. Barua, S. K. (2004). The disinvestment story, Chapter 4.1. In S. Morris (Ed.), India infrastructure report 2004—ensuring value for money. 3inetwork, Oxford University Press.Google Scholar
  3. Barua, S. K., & Madhavan, T. (2010). At the crossroads: Pipeline infrastructure for oil products. In S. Morris (Eds.).Google Scholar
  4. GOI. (2001). Report of the expert group on restructuring SEBs, Chaired by Dr. Montek Singh Ahluwalia, Government of India.Google Scholar
  5. GOI. (2002). Report of expert committee on state-specific reforms—structuring of APDRP, reform framework and principles of financial restructuring of SEBs, Ministry of Power, Government. of India, September. Government of India.Google Scholar
  6. Kindleberger, C. P. (1969). American business abroad. New Haven: Yale University Press.Google Scholar
  7. Morris, S. (1990, November 24). Cost and time overruns in public sector projects. Economic and Political Weekly, 25(47), M154–M168. https://www.jstor.org/stable/4397023.
  8. Morris, S. (1991, November 30). Holding companies, performance contracts, and task orientation in public sector. Economic and Political Weekly, M137–M144.Google Scholar
  9. Morris, S. (2002). The challenge to governance in India. In S. Morris & R. Shekhar (Eds.).Google Scholar
  10. Morris, S. (2003a). Public investments in India: Delays and cost overruns, Chapter 5.1. In S. Morris (Ed.).Google Scholar
  11. Morris, S. (2003b). Expenditure accountability in India—The interlinkages. In S. Morris (Ed.).Google Scholar
  12. Morris, S. (Ed.). (2003c). India infrastructure report 2003—Public expenditure allocation and accountability. 3iNetwork, Oxford University Press.Google Scholar
  13. Morris, S. (2005). Understanding export led growth and late industrialisation to explain the differences in the post reform performance of India and China, WP No 2005/03/02. March, Indian Institute of Management, Ahmedabad.Google Scholar
  14. Morris, S. (2012). In I. Hirway, A. S. Shah, & G. Shah (Ed.), Growth or development: Which way is Gujarat going? New Delhi: Oxford University Press.Google Scholar
  15. Morris, S. (2014). A comparative analysis of Gujarat’s economic growth, Chapter 2. In I. Hirway, A. Shah, & G. Shah (Eds.), Growth or development: Which way is Gujarat going. Oxford University Press.Google Scholar
  16. Morris, S., & Shekhar, R. (Eds.). (2002). India infrastructure report 2002—Governance issues for commercialisation. 3iNetwork, Oxford University Press.Google Scholar
  17. Pandey, A. (2003). Public procurement and the private sector. In S. Morris.Google Scholar
  18. Pandey, A. (2014). Adani Power Ltd (A, B and C): Renegotiating long term electricity contracts, IIMA/PSG0114 (A, B and C). Ahmedabad: Indian Institute of Management.Google Scholar
  19. Pandey, A., & Morris, S. (2009). Electricity reforms and regulation—A critical review of the last 10 years experience, March 25, Indian Institute of Management. (http://forumofregulators.gov.in/Data/Reports/FOR_IIMA_STUDY%20ON%20ELECTRICITY%20REFORMS%20AND%20REGULATIONS%20-%20A%20CRITICAL%20REVIEW%20OF%20LAST%2010%20YEARS%20EXPERIENCE-%2017.06.2009.pdf).
  20. Pandey, A., et al. (2010). Structuring PPPs in aviation sector: Case of Delhi and Mumbai airport privatization, W.P. No. 2010-11-03 November. Ahmedabad: Indian Institute of Management.Google Scholar
  21. RBI. (1999). Report of the technical committee on state government guarantees. Reserve Bank of India.Google Scholar
  22. Sarabhai, V. (1969). Control and management of public sector enterprises, mimeo Administrative Staff College of India, Hyderabad.Google Scholar
  23. Thomas White. (2010). Bric spotlight report—Toll roads in China: Speeding up growth, August. https://www.thomaswhite.com/pdf/bric-spotlight-report-china-toll-roads-expressways-august-10.pdf. Accessed January 28, 2019.
  24. Tilotia, A., & Pawar, S. (2004). Traffic-risk management—Derivatives in the transport sector, Chapter 11.6. In S. Morris (Ed.), India infrastructure report 2004—Ensuring value for money. 3iNetwork, Oxford University Press.Google Scholar
  25. Varma, J. R. (2001). Regulatory dilemmas in infrastructure financing, Chapter 4. In S. Morris (Ed.), India infrastructure report 2001—Issues in regulation and market structure. 3iNetwork, Oxford University Press.Google Scholar
  26. Varma, J. R. (2002). Private finance to private entrepreneurship, Chapter 6.1. In S. Morris, & R. Shekhar (Eds.), India infrastructure report 2002—Governance issues for commercialisation. 3iNetwork, Oxford University Press.Google Scholar
  27. Varma, J. R. (2003). Putting ‘Private’ finance back into private finance initiative, Chapter 7.1. In S. Morris (Ed.), India infrastructure report 2003—Public expenditure allocation and accountability. 3iNetwork, Oxford University Press.Google Scholar
  28. Varma, J. R. (2004). Development financial institutions and the development of financial markets, Chapter 6.1. In S. Morris (Ed.), India infrastructure report 2004—Ensuring value for money. 3iNetwork, Oxford University Press. Google Scholar

Copyright information

© Indian Council for Research on International Economic Relations (ICRIER) 2019

Authors and Affiliations

  1. 1.Indian Institute of Management AhmedabadAhmedabadIndia

Personalised recommendations