Public-Private Partnership (PPP):

1. Public-private partnership is a new arrangement initiated by Indian government between public and private enterprises.
2. In 1991, the Indian government adopted the policy of liberalization, privatization and globalization. Owing to the policy of globalization many foreign companies entered into Indian market. They brought several products and services which were earlier not available in India.

3. International companies were invited to make investment in India, set-up factories and establish market. However, India did not have modern and sufficient infrastructure to give proper platform to these companies. For example, India did not have very good roads, good connectivity within various regions through roads ahd communication, airports, bridges, dams, electricity, etc. Unless these infrastructural facilities are raised, foreign countries cannot be lured to India.

4. Generating such infrastructure in the country required massive investment. For example, for providing air services we need airport and other allied services. For new and modern foreign cars to be introduced in Indian market a good roads are must. For all these infrastructural development, government needed massive investments which was not possible for the government.

5. It was possible that private sector which was capable of such high investments be given the task of raising the required infrastructure in the country. But at the same time governments feared the private sector would become economically very strong and dominate the country. Hence, the India government thought of a middle way out. It proposed a new arrangement of Public-Private Partnership.

6. Under the PPP arrangement government combined public i.e. government sector with private sector for together raising infrastructure in the country. For example, government (public sector) gave land to private enterprise for developing infrastructure. The private enterprise would then put its own money raise the infrastructure as per government’s specifications. To recover its investment, the private enterprise would be allowed to collect fee from the beneficiaries of that services for a fixed duration. For example, Ahmedabad-Vadodara express highway is built under PPP arrangement. The private enterprise built it and now it collects a toll fee from the passers. Once the investment is recovered the private enterprise will take away its stake from the express highway.