Public-private partnership (PPP) is a cooperative arrangement between public and private sectors for the provision of public goods or services. PPP is required in infrastructural projects because of the following reasons:
To bridge the gap between demand and supply of infrastructure: The public sector alone cannot meet the huge demand for infrastructure investment and service delivery in a developing country like India⁴. PPP can mobilize additional resources and expertise from the private sector to supplement the public sector efforts.
To improve efficiency and quality of infrastructure: The private sector can bring in innovation, technology, management skills and performance incentives to improve the efficiency and quality of infrastructure projects. PPP can also reduce the cost and time overruns that often plague public sector projects.
To share risks and responsibilities: PPP can distribute the risks and responsibilities of infrastructure projects among the public and private partners according to their comparative advantages. This can reduce the burden on the public sector and enhance the accountability and transparency of the project outcomes.
The role of PPP model in the redevelopment of railway stations in India is to transform them into world-class hubs of passenger amenities, commerce and tourism. The PPP model involves the following aspects:
Station redevelopment: The private partner is responsible for redeveloping the station building, platforms, circulating area, etc. to provide modern facilities and services to the passengers. The private partner also gets the right to commercially exploit the station estate for a lease period of 60 years.
Station estate development: The private partner is allowed to develop and utilize the vacant land parcels around the station for commercial purposes such as retail, hospitality, office, etc. The private partner gets the lease rights for 99 years for residential development and 60 years for non-residential development.
Revenue sharing: The private partner pays an upfront premium to the Indian Railways for getting the lease rights for station redevelopment and estate development. The private partner also shares a percentage of revenue from station user charges and non-fare revenue with the Indian Railways.
The PPP model in railway station redevelopment aims to generate value for all stakeholders including passengers, local communities, private developers and Indian Railways. It also seeks to enhance the image and brand value of Indian Railways as a modern and efficient service provider.