Editorials/Opinions Analysis For UPSC 04 May 2023
- PPP project risks require a new approach
- India’s Hunger Paradox: Production Self-Sufficiency Doesn’t Guarantee Food Security
PPP Project Risks Require A New Approach
- The role of PPPs requires careful consideration as India strives to build over $100 trillion worth of infrastructure.
- The recent order from the Delhi High Court requiring the Delhi Metro Rail Corporation (DMRC) to pay Reliance Infrastructure Ltd. 8.009.38 crore opens discussions about the formation of public-private partnerships and how the risks involved should be shared.
- The size of the potential financial impact can be seen by noting that the amount ordered is several times the DMRC’s annual revenue from its Delhi operations. Years could pass before the effects fade.
GS Paper-3: Infrastructure: Energy, Ports, Roads, Airports, Railways etc, Investment models
The effective formulation of partner rules and the specification of a mitigation mechanism are necessary for risk management in PPP projects. Analyse. (150 words)
Public-private partnerships (PPPs): what are they?
- Public-private partnerships (PPPs) are agreements between public and private entities to provide infrastructure or services for the general public. These collaborations can take many different shapes, but they usually involve a private sector company working with a public sector organisation to finance, design, build, operate, or maintain a public facility or service.
- In a PPP, the public sector provides some level of funding or support, such as land, permits, or subsidies, while the private sector contributes expertise, capital, and resources. The project’s private sector partner assumes some of the risks involved and is motivated by the possibility of seeing a return on its investment.
- Access to Private Sector Resources: PPPs give the public sector access to the resources and expertise of the private sector, which can help to increase the effectiveness and quality of public services.
- Risk Sharing: Through PPPs, the public and private sectors can share risks, with each taking on the risks that suit them the best. This can ensure that the project is delivered on time and within budget and help to lower the project’s overall risk.
- Cost Savings: Because private sector partners might be able to complete projects more quickly and affordably than the public sector, PPPs can save the public sector money.
- Innovation: PPPs can encourage innovation because they provide incentives for private sector partners to create fresh, profitable methods for project delivery.
- Better Service Delivery: PPPs can result in better service delivery and better outcomes for citizens because private sector partners are frequently more concerned with satisfying end-user needs and providing excellent customer service.
- Faster Project Delivery: PPPs may lead to faster project delivery because private sector partners may be better equipped and have more resources to complete projects than the public sector.
PPPs do, however, carry some risks
- Political and regulatory risks: PPP projects are frequently vulnerable to political and regulatory risks, including modifications to governmental directives, laws, and regulations. These dangers may lead to delays, scope changes, and cost overruns.
- Financial risks: PPP projects call for a sizable upfront investment from the private sector partner, and there is always a chance that the project won’t bring in enough money to cover its costs. Other financial risks include variations in interest rates, currency exchange rates, and credit risks related to project financing.
- There are significant construction risks associated with PPP projects, including cost overruns, delays, and quality problems. Unexpected occurrences like natural disasters, labour disputes, or disruptions in the supply chain can lead to these risks.
- For instance, any cost overrun of 10-15% can result in a company no longer making a profit on that particular project, and an accumulation of such projects can drive the company into bankruptcy.
- Operational risks: PPP projects are susceptible to operational risks, such as variations in demand, outdated technology, and upkeep difficulties. The revenue stream and profitability of the project may be affected by these risks.
- Legal risks: PPP projects call for intricate legal agreements between public and private partners, and there is always the possibility of disagreements resulting from breaches of agreements, problems with performance, or disputes over risk distribution.
Public-private partnerships (PPPs) present a number of risks that need to be managed.
- Appropriate risk allocation: In PPPs, it’s crucial to distribute risks to the party most qualified to handle them. Through careful contract drafting, risk analysis, and negotiation, this can be accomplished. In order to identify the major risks and distribute them in a way that is just, reasonable, and in line with the project’s goals, the public and private partners should collaborate.
- Strong legal foundation: A strong legal foundation can establish a clear foundation for the rights and obligations of the public and private partners and help to avoid conflicts from arising. To ensure that all parties are held responsible for their actions, the legal framework should include clear guidelines for resolving disputes, such as mediation or arbitration.
- Independent oversight: Independent oversight can add another level of accountability and help ensure that the project is being completed in accordance with the agreement. This can be accomplished by appointing a neutral auditor or regulator who will keep an eye on the project and submit regular reports on its development.
- Effective risk management: Successful risk management is essential to PPPs. This includes identifying, evaluating, and managing risks all along the project’s lifecycle. Together with contingency planning to address unforeseen events, public and private partners should develop risk management strategies.
- Effective governance and transparency: Effective governance and transparency can promote trust between public and private partners and guarantee that the project is carried out in the public interest. Clear decision-making procedures must be established, project status must be reported on a regular basis, and stakeholders must be engaged in open dialogue.
Successful PPP projects depend on effective risk management and cooperation between public and private partners. These tactics can be used to reduce the risks involved in PPP investments and to realise the advantages of these alliances.
India’s Hunger Paradox: Production Self-Sufficiency Doesn’t Guarantee Food Security
Covid-19, which disrupted the world’s food production and distribution systems, along with the ongoing conflict between Ukraine and Russia, have made food insecurity a global problem that affects even developed, wealthy nations.
GS Paper-2: Issues relating to poverty and hunger
Analyse the National Food Security Act’s (NFSA) contribution to the reduction of food insecurity in India. (150 Words)
Are You Aware?
- The Global Hunger Index (GHI) is a tool created to fully assess and monitor hunger on a global, regional, and national level.The International Food Policy Research Institute (IFPRI) determines GHI scores each year to evaluate any advancements—or lack thereof—in the fight against hunger.
- The GHI combines the following four component indicators to reflect the multifaceted nature of hunger:
- Child wasting: the proportion of children under the age of five who suffer from wasting (that is, low weight for their height, reflecting acute undernutrition);
- Child stunting: the proportion of children under the age of five who suffer from stunting (that is, low height for their age, reflecting chronic undernutrition);
- Child undernourishment: the percentage of undernourished people as a percentage of the population;
- Among mothers with children between the ages of 6 and 23 months, 18% reported that their child had consumed zero calories (also known as “zero-food”) in the 24 hours prior to the survey.
- The prevalence of infants without food was 30% for those 6 to 11 months old, and it is still alarmingly high at 13% for those 12 to 17 months old and 8% for those 18 to 23 months old.
- At this crucial juncture in a child’s development, going without food for a full day raises serious questions about extreme food insecurity.
- The World Health Organisation estimates that at age six, 33% of a person’s daily caloric intake should come from food.
- At the age of 12 months, this percentage rises to 61%. The minimum number of calories that should be obtained from food is indicated by the recommended percentages here.
- Access to adequate and affordable nutritious food is equally important for mothers for healthy breastfeeding. It is assumed that the child obtains the remaining calories through “on-demand” breastfeeding, which means the child is breastfed whenever they need it throughout the day and night and not just when the mother is able to provide it.
What Effects Does Young Children’s Nutritional Deprivation Have?
- Stunted growth: Kids who don’t get enough nutrition may have stunted growth, which means they don’t get as tall for their age. For their long-term physical and intellectual development, this may have negative effects.
- Weak immune system: Children who are malnourished have immune systems that are more susceptible to infections and illnesses. Longer recovery times and more illnesses may result from this.
- Delays in cognitive development: Malnutrition can affect a child’s cognitive development, which can cause learning challenges, lack of concentration, and a decreased capacity for academic success.
- Behavioural issues: Lack of nutrition may exacerbate behavioural issues like irritability, aggression, and anxiety.
- Increased risk of chronic illnesses: Childhood malnutrition can raise the chance of developing chronic illnesses like obesity, diabetes, and heart disease later in life.
- Delayed physical and developmental milestones: Poor nutrition can cause a child to take longer than usual to reach physical and developmental milestones like walking, talking, and socialising.
The National Food Security Act’s (NFSA) function is:
- In order to ensure food security for the people of India, the government of India launched the National Food Security Act (NFSA) in 2013. The act calls for the distribution of subsidised food grains to designated beneficiaries through the Public Distribution System (PDS).
- here are a number of obstacles that must be removed for it to be truly effective.
- The identification of beneficiaries is one of the main difficulties in implementing the NFSA. The act calls for the identification of beneficiaries through an enumeration and classification process, but this procedure has come under fire for being inaccurate and flawed. As a result, some ineligible households are included while many deserving households are excluded from the system.
- The NFSA also has to deal with the problem of corruption and leaks in the PDS. Leakages and corruption continue despite systemic improvements, preventing a sizable portion of the subsidised food grains from reaching the intended recipients. Additionally, there are difficulties in the procurement and distribution of food grains. This is particularly true in areas with weak governance structures and insufficient monitoring mechanisms. Food shortages in some areas are possible due to India’s extensive and complicated food procurement and transportation system. There have also been issues with the grain quality distributed through the PDS. Several actions can be taken to address these issues.
- The first is to enhance beneficiary identification. This can be done by the government conducting regular audits of the beneficiary lists to make sure they are accurate and up-to-date, using technology-based solutions like biometric authentication and linking Aadhaar cards to PDS accounts.
- The PDS’s governance and monitoring systems need to be strengthened. This can be achieved by increasing the accountability of the system’s participants and implementing technology-based monitoring techniques, such as GPS tracking of grain-transporting trucks.
- To ensure a timely and sufficient supply of food grains, the food procurement system needs to be simplified.
- This can be accomplished by enacting reforms like the liberalisation of the agricultural market, lowering the government’s responsibility for food procurement, and promoting private sector participation in food distribution and procurement.
Other government initiatives to address the problem of hunger and malnutrition in the nation include:
- Integrated Child Development Services (ICDS): The ICDS is a federally funded programme that aims to improve the nutritional and physical health of mothers and their young children under the age of six. The programme offers a variety of services, such as additional nutrition, vaccinations, and physical examinations.
- The Mid-Day Meal Scheme (MDMS) is a federally funded programme that offers free cooked meals to students enrolled in public and government-aided schools. The programme aims to raise kids’ nutritional status and promote school attendance.
- The National Rural Health Mission (NRHM) is a flagship initiative with the goal of increasing access to and availability of high-quality healthcare in rural areas. The mission calls for the distribution of free medical care and medications and places a strong emphasis on maternal and child health.
- Pradhan Mantri Matru Vandana Yojana (PMMVY): The PMMVY is a maternity benefit programme that was introduced in 2017 with the intention of giving pregnant and nursing women financial support. The programme offers eligible women a cash transfer of Rs. 5000 to support their needs for nutrition and healthcare.
- The POSHAN Abhiyaan is a flagship initiative that was started in 2018 with the goal of reducing malnutrition in the nation. Through a variety of interventions, such as nutrition education, dietary diversification, and the distribution of micronutrient supplements, the programme focuses on improving the nutritional status of children, pregnant and lactating women, and adolescent girls.
- Mission Poshan 2.0: The overall flagship programme for maternal and child nutrition has advanced in the right direction by focusing on food-based initiatives, including its flagship supplementary nutrition programme service as required by the 2013 National Food Security Act. SDG 2 “zero hunger” is the program’s primary goal.
India should take into consideration a strategic initiative led by the Prime Minister’s Office aimed at eradicating food insecurity in India and ensuring affordable access to sufficient quantities and quality of nutritionally diverse food, with a special and immediate focus on India’s youngest children, in order to achieve the SDG of zero hunger and build on the Pradhan Mantri Garib Kalyan Anna Yojana.