Public-private partnerships (PPPs) involve agreements between public and private sectors to deliver public infrastructure and services. They allow governments to utilize private sector resources and expertise while maintaining public sector control over service provision. PPPs can take various forms, with costs borne by users, taxpayers, or a mix. They aim to provide value for money, but also carry risks like potentially higher costs and reduced public sector flexibility and control.

1. Public Private Partnership (PPP)
• Public–private partnership (PPP) refers to an arrangement between the
public and private sectors with clear agreement on shared objectives for
the delivery of public infrastructure and/or public services.
• It is an approach that public authorities adopt to increase private sector
involvement in the delivery of public services. In many countries, PPPs are
now a central feature of ongoing efforts to modernise public services and
infrastructure.
• In some types of PPP, the cost of using the service is borne exclusively by
the users of the service and not by the taxpayer. In other types (notably
the private finance initiative), capital investment is made by the private
sector on the strength of a contract with government to provide agreed
services and the cost of providing the service is borne wholly or in part by
the government. Government contributions to a PPP may also be in kind
(notably the transfer of existing assets).

2. • In projects that are aimed at creating public goods like in the
infrastructure sector, the government may provide a capital subsidy in the
form of a one-time grant, so as to make it more attractive to the private
investors. In some other cases, the government may support the project
by providing revenue subsidies, including tax breaks or by providing
guaranteed annual revenues for a fixed period.
• A typical PPP example would be a hospital building financed and
constructed by a private developer and then leased to the hospital
authority. The private developer then acts as landlord, providing
housekeeping and other non-medical services while the hospital itself
provides medical services.
• In India, public-private partnerships have been extremely successful in
developing infrastructure, particularly road assets under the National
Highway Authority of India.

3. Strengths Of PPP :
• The major strength of PPPs is their ability to deliver value for money in
public service procurement and operation.
• By utilizing the differing skills, resources and experience of each party,
they allow the public and private sectors to complement each other – the
public sector provides its expertise in identifying public needs, service
requirements and desired outcomes, and the private sector brings its
capacity to effectively utilize assets and manage the construction and
operation of services.
• At the outset of the PPP relationship, the desired quality of service to be
achieved from the development of the infrastructural asset is clearly
specified, and the expectation is that high standards will be maintained
throughout the duration of the project.

4. Weaknesses (and risks) Of PPP :
• Firstly, there is the possibility that the public sector may lose managerial
control of its services. Under PPPs, the management of outputs is
transferred to the private sector, meaning that the public sector has very
limited ability to intervene, as long as services are being delivered & the
public body has no day-to-day control over the management of the
project.
• Secondly, the process of PPP procurement can be time consuming and
expensive.
• Thirdly, there is the problem of the higher cost of finance in the private
sector.

5. • Fourthly, PPPs can sometimes prove to be rather inflexible instruments –
especially given the long term nature of most PPP contracts. Under PPP
arrangements, there is limited potential for modifying services or flexible
spending.
• Fifthly, in some areas of public service provision there may be greater
public demand for accountability and responsiveness than in others. This
may give rise to public criticism or even hostility towards PPP
arrangements. In these circumstances, there may be a need for greater
government involvement in the relationship, to ensure compliance and
responsiveness to public concerns.
• Several initiatives have been undertaken by Government of India to
enable a greater PPP framework in order to eradicate the above
mentioned weakness. For Ex. : Public Private Partnership Appraisal
Committee or PPPAC was setup by the Government.

6. Misconceptions About PPP:
• A few of the most common misconceptions about PPPs are addressed
below:
 They are the same as privatization.
 Public authorities lose control over service provision.
 PPPs only apply to infrastructural projects.
 The principal reason to follow a PPP route is to avoid public sector debt.
 Service quality will decline.
 Public sector staff will lose out.
 The cost of the service will increase to facilitate private profit.
 The public sector can finance services at a lower cost than the private sector.