Financing Green and Brownfield Private Infrastructure in India

Approaches that recognize the specific kind of market failure/sMarket failure, in the policyPolicy and design of infrastructureInfrastructure, greatly reduce the financing costs and improve the ability of to attract finance in the private provisioning of infrastructureInfrastructure. This is particularly so in the case where there are dual market failuresMarket failure arising out of both the natural monopolyNatural monopoly and the appropriability failure aspect. Thus, sewerage and water, city roads, multimodal facilities, solid waste, public health care and the challenges have proven beyond the current ability of the state. Debilities in the financial marketsMarket stem from the weaknesses of the public sector banksPublic sector banks. RiskRisk shifting on to them by private players have been common. PolicyPolicy must move to internalizing interest rateInterest rate change risk in all PPPsPublic private partnership. It must also tighten the conditions under which renegotiation is possible so that the state is not pushed to bearing the downsides of privately provided infrastructureInfrastructure. The heightened private brownfield investmentsInvestment (when greenfield decline rapidly), today, are more a reflection of the government’sGovernment inability to come out with solutions while monetizing its creative effort-especially the NHDPNational Highway Development Programme—in the past.