FE Editorial : Road to responsibility

The finance ministry, it is obvious, will baulk at the idea considering its costs—and the demand to have it applied to other sectors as well—but this is missing the wood for the trees. If the government is to compensate firms for the losses its actions cause, this can only improve the investment climate and bring in more bidders for PPP projects. Indeed, if there’s a lesson here, it’s of how, with appropriate guarantees, the government can improve the investment climate. Take land records where, given the government doesn’t guarantee the accuracy of land records, people spend large sums doing due diligence on property sales. If, on the other hand, the government guaranteed to make good the losses investors suffered due to inaccurate records—the land X bought turns out to be Z’s though the records show it belongs to Y—the investment climate would improve, giving better returns to government. Inflation-indexed bonds, to

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