No single model for urban PPPs

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: PPP. Grants available under JNNURM could be structured so that they operate as capital subsidies for the purpose of attracting PPP. Multi-year payment mechanisms or annuities could also be structured using the fund so that commercial risks may be more equitably shared between government and private sector during the time user tariffs are low.

It is known that our system of providing subsidies through low user charges results in ineffective targeting, as those that are not poor tend to garner a large part of the subsidised service. A start could be made to give more directed subsidies to the poor and let others pay a price that reflects the true economic costs.

Many of these will start to show results over the long term. The focus of PPP in the urban sector over the short term should be on efficiency improvement projects, which have a low payback period and do not rely on direct user charges. These projects are a win-win proposition for the private sector and the ULB as they result in cash savings, which can be shared between the stakeholders.

Projects such as energy-efficient street lighting, treatment of municipal waste and generation of electricity, treatment plants for water and wastewater, and transportation of municipal waste are some examples. They are also not dependent on user charges for financial viability and hence and less likely to face political hurdles.