The Uttar Pradesh government is drawing up a unique proposal to attract big time players to invest in the ambitious public-private partnership projects in the state. The state government would offer investors the guarantee that if any PPP project goes haywire, the state would compensate half of the loss that the investor incurs. By doing so, the government has agreed to become an equal partner in any risk factor associated with setting up a PPP project in the state.
Taking a serious view on the government?s inability to attract investment to boost development in the state, despite it offering many incentives to the private investors, the government is seriously thinking of changing the provisions and policies of the public-private partnership policy so as to mitigate the fears of the private sector regarding investing in the state and also to make a firm commitment that the state government is serious in its resolve to support the private sector.
According to informed sources, this policy change, which is being given final shape, is being mulled after reviewing the fact that there is total disenchantment and lack of confidence among investors regarding investing in UP. ?While reviewing the low level of interest among investors in the state, it was found that the risk of their money getting stuck up was the major deterrent for the private sector.
?As a result, the state government is seriously thinking of changing the provisions, wherein if any risk is faced in a project, the state government will be an equal partner in the loss and would compensate as much as 50% of the loss to the private company,? a senior government official said on condition of anonymity.
While the private sector seemed exultant on the proposed move, which is being seen as a positive signal to boost investment, none in the government wished to comment on it or confirm it yet. Welcoming the government?s move, industry chambers said that this was a positive signal from the government and the private sector would definite feel more reassured when investing in UP. ?It is a clear cut signal from the Uttar Pradesh Government that it is ready to support the private sector in taking the risks and sharing the risk coverage. This will go a long way in quelling the lack of confidence that the industry was gripped with so far,? said Anil Shukla, head Confederation of Indian Industries (CII) in Uttar Pradesh.
However, another leading industrialist felt that this move is an indication of the fact that the government is in a fire-fighting mode and lack of investment was actually making the government shaky. ?The economy of the state is in dire shape and the constant complaints regarding obstructions and delays while executing projects in the state is taking a toll on the financial health of the state. The government is now direly seeking to get investment at any cost, since its own resources are is complete disarray,? he said.
It may be mentioned that the inability to garner investment despite various efforts, has been rattling the state government for a while. After having finally realized that private investment is necessary for the development of the state, the government machinery went into an overdrive on building a brand image of the state so as to make it an attractive investment destination. It also offered tax, fee and levy exemptions for setting up industry.
However, when all these efforts failed to garner the kind of results that were expected, a harried administration came up with the idea of opening up its coffers to the private sector in order to lure them.
