question_answer

Explain the merits and demerits of public-private partnership.

Answer:

Ans.     Public private partnership also called PPP or p3 is a contract between government and private business firms for the provision of public assets and/or public services.

Merits

(a) Inflow of private investment: PPP attracts private investment which is of utmost importance to undertake such essential projects.

(b) Increased efficiency: Involvement of private sector will bring efficiency in implementation of projects and cut down cost and time.

(c) Innovation: It helps in bringing innovative design and constructive practices.

(d) Better economic viability: Involvement of experienced and creditworthy sponsors and commercial lenders can increase economic viability of the projects.

(e) Risk sharing: The structuring of a PPP project allocates the risks to the agency which can handle it most suitably.

Demerits

(a) Increased cost: Cost of production increases for the government as private sector also demands its profit share for the money it invests.

(b) Control gets divided: Control gets divided between private and public sector. Government remains involved in all stages and private sector, is responsible for more commercial functions like project design, construction, finance and operations.