London: Terming the Gujarat government as "fiscally credible", a two-year review of the Indian infrastructure sector conducted by London`s financial district lauds the state`s performance in implementing public-private partnership (PPP) projects.
The review by the City of London released yesterday during a seminar on India said that the legal framework for PPP in the state is "solid", and that the Gujarat Infrastructure Development Act (1999) sets a "comprehensive framework" for a variety of projects.
During the seminar attended by leading lights of India`s business and financial sectors, development in Gujarat was described as "amazing" by Nasser Munjee, Chairman of Development Credit Bank.
The City of London refers to a small part of London and often stands for the UK`s financial services industry. The City has an office in Mumbai to strengthen trade and investment links between India and the UK.
The Gujarat Infrastructure Development Board (GIDB) oversees PPP projects and provides a "relatively high standard of expertise and judgement", the review said.
"Institutionally, Gujarat has a strong system, with a clear delineation of responsibilities between the GIDB, and the line departments of procuring government agencies. The technical expertise of GIDB is also adjudged to be high," it added.
The GIDB provides a fair and clear mechanism for the selection of concessionaires, and "in practice, this system typically works well", the review said.
"In terms of financing, Gujarat is in a strong position, having emerged as a top investment destination in India; the government is also fiscally credible, meaning that payment risk is considered very low," it said.
The Gujarat State Guarantee Redemption Fund (initiated in 2010) acts as a cushion for contingent liabilities arising out of state guarantees, the review adds, and quotes a recent report of the Asian Development Bank that the state is the "best destination" in India for PPP projects.
Overall, the review for the years 2010-2012 concludes that while India`s PPP framework has improved, further coordination at a central level is needed, "as well as improvement to governance capabilities for infrastructure projects across India if it is to meet its infrastructure development target".