The project of Providing Urban-amenities in Rural Area (PURA), modeled by the Ministry of Rural Development, has potential to scale up rural infrastructure in India in a big way. Accounting for about Rs 20,000 per capita, the PURA project is expected to cover 2,50,000 panchayats in the next 5 to 8 years and provide superior municipal services in rural areas that are far superior than what is available in urban centres,” said Dr Arvind Mayaram, Additional Secretary and Financial Advisor, Ministry of Rural Development, Government of India. He announced that there are over ninety expressions of interests from major infrastructure players to participate in the ten-odd PURA pilot projects that are going to be awarded by the end of December, 2010.
Addressing a Plenary Session on “PPPs in Urban & Rural Infrastructure” at CII Suminfra 2010 on Thursday, Dr Mayaram said that the Ministry of Rural Development is spending Rs 1,00,000 crore for rural development every year. Though the government spending is huge, the major portion of allocation goes to capital expenditure and very little for maintenance. He emphasized the need for more synergy between various government schemes pertaining to roads, water treatment, power, etc, in order to make the rural development projects more effective.
He said that as opposed to the conventional model of rural development, PURA encourages PPP between gram panchayats and private sector based on competitive bidding. It strives for convergence of infrastructure development schemes, comes with built-in maintenance responsibility, and aims at creating economic activity and delivery of services on par with urban standards.
In his address Mr Ashish Chandak, Executive Director, Yes Bank, observed that many urban centres in India that contribute to 75% GDP and accounts for 50% of population are caught in the vicious cycle of un-sustainability comprising un-sustainable utilities, un-sustainable natural resources and increasing demand-supply gap. This vicious cycle affects urban development in e-governance, water, roads, transport, heritage and public space development, metro projects, among others. The consumers are not willing to pay for the services that are not sustainable, and as a result, the revenue of utilities gets reduced, making utilities not able to access finance from the market or institutions, he said.
Mr Chandak said that since the finance requirements of urban infrastructure projects are huge, the utilities can engage private in works and services contracts, management and maintenance contracts and operations and maintenance concessions to ensure that the services are available. “If services are provided without quality compromises, people will accept the pay-per-use mechanism gradually,” he said and added that from issuing taxable municipal bonds to tax-free bonds to JNNURM, India has come a long way in evolving financing models for infrastructure development. The way forward would be the creation of long term equity finance and development of debt markets.
Addressing the gathering, Mr Abhaya Agarwal, Executive Director, Ernst & Young Ltd, said high demand supply gap, lack of efficiency of government processes and low resource availability market mark the challenges in developing urban and rural infrastructure. Mr L Krishnan, CEO, IL&FS Infrastructure Managers, in his address, said that optimal design of projects that include the interests of all the three stakeholders of public, private and people is essential for making a PPP project successful. The PPP model is accelerating infrastructure development and ensures faster implementation of projects. However, the current requirement is ensuring a bankable framework and the change of role of government from that of providing all services to that of purchasing of services at the best economic value to the citizens.
Earlier, Mr J P Nayak, Chairman, Suminfra 2010 and President (O), Larsen & Toubro Ltd, provided introductory remarks.