The Allahabad High Court ruling directing the Noida Toll Bridge Co-- the concessionaire for the Noida DND flyway-- to stop levying a toll fee will be welcomed by thousands of commuters. The court in its ruling said that levy of the toll was “unfair and unjust.”
The project, one of the earliest to follow the PPP (public private partnership) model in transportation with the governments of Delhi, UP and IL&FS, was showcased as the way forward. But for the government, which has been trying to attract private investment, especially in the cash-starved infrastructure sector, the court order may prove somewhat damaging.
The story does not end with the 121-page ruling. It is obvious in this case that the matter will now be dragged to the next stage -- compensation. The PPP agreement will now be scrutinised with a fine toothcomb to pass on the blame game and accountability.
Depending on the fine print and if the concessionaire can manage to establish that nothing went wrong on its part, it is possible the government would have to bear the additional expenses to compensate.
India would require an investment of about $1.5 trillion in the infrastructure sector over the next 10 years. The government has also embarked on an ambitious project of connecting 700,000 villages with roads by 2019 as part of a massive modernisation plan. At this stage, such examples of intervention may not help the government’s plan in any way.
True, the courts always have the power to intervene in matters where public interest is at stake but what happens to the much-hyped PPP model that the government was depending on to develop the cash-starved infrastructure sector remains unanswered.
Such sudden interventions, arising out of public litigations, can become a headache for the government as well as the private sector and the uncertainty will linger on. In this year’s economic survey, chief economic adviser Arvind Subramanian underlined the need to redraw the PPP model to make it more effective. Undoubtedly, this must be done and design modifications to the contractual arrangements of the PPP model must be undertaken immediately. Certain PPP projects need to be revisited and revitalised.
This needs to be done through a well-thought-out mechanism. Halting a running project may not yield the desired results and knee-jerk reactions are no solution. Neither the Centre nor the states have the capacity to handle the scale and number of projects that are required in the infrastructure sector.