Indian Economy Quiz: Infrastructure Development and Public-Private Partnership

The correct answer is D, (A) is false but (R) is true. The National Infrastructure Pipeline was announced in the Budget speech of 2019-20 and the task force under the Secretary, Department of Economic Affairs, drew it up for the five years from 2019-20 to 2024-25, with projected capital expenditure of about 111 lakh crore rupees. The period in the assertion, 2020-30, is therefore wrong, which rules out A and B, both of which treat the assertion as true. The reason, however, states the pipeline aim correctly: the NIP report sets out to give every citizen equitable access to world-class infrastructure, and that purpose is genuine. C is wrong because it reverses the position, calling the false assertion true and the true reason false. Read such pairs by testing the assertion first, because a false assertion settles the answer at once.

The correct answer is B, 40 per cent. The Hybrid Annuity Model was adopted to revive road construction after both the toll and the annuity models ran into trouble. The authority releases forty per cent of the bid project cost as a construction grant in instalments while the work proceeds, and the concessionaire raises the remaining sixty per cent from its own funds and from lenders. That sixty per cent is returned after completion as a series of annuities with interest linked to a bank rate, and the toll is collected by the authority itself. A, twenty per cent, is the ceiling for central viability gap funding, not the HAM grant. C, sixty per cent, is the share the concessionaire brings, so the option inverts the split. D would make it an EPC contract rather than a partnership.

The correct answer is B, 20 per cent. Viability Gap Funding is a one-time or deferred capital grant for a project that is economically necessary but commercially unviable, such as a rural road or a water supply line whose user charges can never repay the capital. The Department of Economic Affairs gives up to twenty per cent of the project cost, and the sponsoring ministry, State government or statutory authority may give a further twenty per cent, so support can reach forty per cent in total. That is why C is a tempting distractor: forty per cent is the combined ceiling, not the central share alone. A understates the scheme, and D is not available under it at all. Remember the pair of figures as twenty plus twenty.

The correct answer is A, the Public Private Partnership Appraisal Committee, usually written as PPPAC. It is the standing inter-ministerial committee that examines the concession agreement, the risk sharing and the financial structure of a central sector PPP proposal before approval, and its chair is the Secretary of the Department of Economic Affairs, with the secretaries of Expenditure, Legal Affairs, NITI Aayog and the sponsoring ministry as members. B, the Cabinet Committee on Economic Affairs, takes the final political decision on large projects but does not perform the technical appraisal. C is the body of chief ministers that guides NITI Aayog and has no project clearance role. D is a constitutional body under Article 280 that recommends the sharing of taxes between the Union and the States.

The correct answer is B, an operating national highway stretch that already collects toll. Under TOT the authority bundles completed highway sections that have a proven traffic record and auctions the right to collect toll on them for a long concession, usually thirty years, against a single upfront payment. The money so received is used to build new roads, so TOT is a monetisation tool rather than a construction model, and the asset returns to the authority at the end. A describes a greenfield concession such as BOT or HAM, where the road has yet to be built and the traffic is only a forecast. C is a land lease, not a toll concession. D is outside the scheme, which covers national highways held by the central authority.

The correct answer is C, Engineering, Procurement and Construction. In an EPC contract the government owns the project, funds it from its own budget and simply buys construction services; the contractor is paid for the work done, keeps no operating responsibility and takes no revenue risk, so none of the defining features of a partnership is present. A, BOT on annuity, is a partnership in which the private partner builds with its own finance and is repaid in fixed instalments. B, the Hybrid Annuity Model, mixes a forty per cent construction grant with private finance for the rest. D, DBFOT, is the fullest form of concession, where the private partner designs, finances, builds, operates and finally transfers the asset. Examiners use this question to test the single idea that private finance and operation make a PPP.

The correct answer is B, NITI Aayog. The National Monetisation Pipeline was released in August 2021 in two volumes, the second of which lists the assets ministry by ministry, with an aggregate monetisation potential of about six lakh crore rupees over four years from roads, power transmission, railways, pipelines, warehouses, stadiums and airports. Monetisation means leasing the right to operate a completed asset for a period; the ownership stays with the government and the asset comes back at the end. A, the Reserve Bank, is the monetary authority and has no role here. C regulates securities markets and would be involved only when an InvIT is listed. D is one of the ministries whose assets appear in the pipeline, not the body that prepared it.

The correct answer is A, a GIS-based digital platform that brings the project layers of infrastructure ministries onto one map. Launched on 13 October 2021, PM Gati Shakti is an institutional answer to the old complaint that a road is dug up soon after it is laid because a pipeline or a cable was planned separately. Each infrastructure ministry puts its existing and planned assets on a common geographic information system, so that alignments, utility crossings and clearances are seen together before work begins, and multi-modal connectivity to economic zones is planned as one network. B is incorrect because the plan carries no lending window. C is invented; no such cess accompanies it. D describes the Western Dedicated Freight Corridor, a separate railway project. Note also that Gati Shakti is a planning platform and carries no money of its own.

The correct answer is C, 2021. Infrastructure needs loans of twenty years or more, while a commercial bank takes deposits for a few years, and the mismatch between the two had crippled infrastructure lending after earlier development finance institutions were converted into banks. Parliament therefore passed the National Bank for Financing Infrastructure and Development Act in 2021, setting up NaBFID as a development financial institution with paid-up capital of twenty thousand crore rupees and a grant of five thousand crore rupees from the Central Government, with the mandate to lend long term and to deepen the bond and derivatives market for infrastructure. A and B are the years of other reforms and are offered only as near misses, and D is later than the Act.

The correct answer is A, the committee chaired by Vijay Kelkar. Set up by the Finance Ministry after a decade in which stalled road and power concessions turned into bad loans, the Kelkar Committee reported in 2015 that risk had been pushed on to whoever would accept it rather than on to the party best able to manage it. It asked for independent sector regulators, a specialised dispute resolution mechanism instead of years of litigation, better preparation of projects before bidding, and an end to the use of PPP for small works. B led committees on poverty estimation and on the Twelfth Plan approach. C headed a group on the Reserve Bank economic capital framework. D is remembered for the two banking sector reform committees of 1991 and 1998.