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Public-Private Partnership for the Development of a Backward State: a Case Study of Bihar

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Public-Private Partnership for the Development of a Backward State: a Case Study of Bihar PUBLIC-PRIVATE PARTNERSHIP FOR THE DEVELOPMENT OF A BACKWARD STATE: A CASE STUDY OF BIHAR A THESIS Submitted to the Gokhale Institute of Politics & Economics, Pune for the award of Degree of Doctor of Philosophy in Economics by Sandeep Kumar Under the supervision of Dr. S. N. Tripathy Professor Gokhale Institute of Politics & Economics, Pune 2012 1 PUBLIC-PRIVATE PARTNERSHIP FOR THE DEVELOPMENT OF A BACKWARD STATE: A CASE STUDY OF BIHAR Number of Volumes: Thesis (One) Name of Author: Sandeep Kumar Name of Research Guide: Dr. S. N. Tripathy Name of Degree: Degree of Doctor of Philosophy Name of University: Gokhale Institute of Politics & Economics, Pune. Month & Year of Submission: August, 2012 2 CERTIFICATE CERTFIED that the work in this thesis entitled “Public-Private Partnership for the Development of a Backward State: A Case Study of Bihar” submitted by Mr. Sandeep Kumar was carried out by candidate under my supervision. Such material as has been obtained from other source has been duly acknowledged in this thesis. Date: Place: Dr.S.N.Tripathy (Research Guide) 3 DECLARATION I do hereby declare that this thesis entitled "Public-private Partnership for the Development of a Backward State: A Case Study of Bihar" is an authentic record of the research work carried out by me under the supervision and guidance of Dr. S. N. Tripathy, Professor, Gokhale Institute of Politics & Economics, Pune. The thesis has not been submitted earlier anywhere else for the award of any degree diploma, associateship, fellowship or other similar title of recognition. Place: Pune Date: Sandeep Kumar 4 ACKNOWLEDGEMENT While completing this thesis, I have received valuable help and assistance from numerous people from various walks of life. I wish to acknowledge all those who were directly or indirectly instrumental in making this study a reality. First of all, I am greatly indebted to my respected guide and supervisor Dr. S. N. Tripathy, Professor, Gokhale Institite of Politics & Economics, Pune, for the continuous guidance rendered by him. Without his appreciation, timely interference, patient appraisal and valuable suggestions, this thesis would not have been reached to a completion. He has been a constant source of encouragement, support and wisdom. When I reminisce on the help rendered at each step of research, I truly feel proud to have him as my mentor and guide. I express my sincere gratitude to Prof. Rajas Parchure, Director, Gokhale Institite of Politics & Economics, Pune for his encouragement and suggestions. He has not only strengthened the research community by bringing in new programmes at the institute but also enormously furthered the much required resources and academic rigour. I am greatly obliged to all Members of Ph.D committee, Gokhale Institite of Politics & Economics, Pune for their attention and valuable suggestions at various stages of my work. I am Indebted to all the faculty members of the Institute for their help encouragement and suggestions. The faculty at the Institute has been very cooperative and never failed to provide their valuable suggestions and directions. The research fraternity at deserves special appreciation for their participation in my research seminar and sharing their experiences. All my respondents-politicians, government officials, project people, common man and peers in the field deserve a special applause as they were soul 5 of this research. Despite, their busy schedule, each one shared their experiences with sincerity and took keen interest in the process. I express my sincere gratitude and obligation to all office staff of Gokhale Institite of Politics & Economics, Pune for their help and cooperation. I am particularly thankful to all office staff of Ph.D Section of the institute. I am thankful to the Librarians of all institutions and universities where I visited, for their kind cooperation in allowing me to have access to the literature available in their respective libraries. I feel proud to thank all my family members because they have been with me at every step of my life. I offer my warmest gratitude to my parents for their constant encouragement and moral support. Without their blessings this work would never have been completed. My feelings are beyond words to express my gratitude to my wife and only daughter, for their forbearance and it is their encouragement which permitted me to overcome the stress and strain involved in this work. Lastly, I express my deep sense of gratitude to all the scholars from whose works and studies I have quoted their contributions in my thesis. Place: Pune Date: Sandeep Kumar 6 CONTENTS List of Tables List of Figures List of Graphs List of Maps Chapter Title Page No. No. 1. INTRODUCTION 1 1.1 Economic Development 1.2 Social Sector and Economic Development 1.3 Social Sector: India vs. World 1.4 Social Sector Scenario: Bihar vis-a-vis India and other major States 1.5 Public Private Partnership: A Way Out 1.6 Justification of the Study 1.7 Organization of Thesis 2. REVIEW OF LITERATURE AND RESEARCH 24 METHODOLOGY 2.1 Review of Literature 2.2 Research Methodology 3. DEVELOPMENT OF SOCIAL SECTOR IN 53 BIHAR 3.1 A Brief Profile of Bihar 7 3.2 Economy of Bihar 3.3 Status of Social Sector in Bihar 3.4 Social Sector in Bihar: Expenditure 3.5 Development of Social Sector in Bihar: Gaps 3.6 Social Sector in Bihar: Constraints 3.7 Concluding Remarks 4. CONCEPTUALIZATION AND EVALUATION 94 OF PPP AND ITS SIGNIFICANCE 4.1 Definition 4.2 Common Elements in Definitions of PPP 4.3 Need to Define PPP 4.4 Why Public Private Partnerships? 4.5 Characteristics of a Public Private Partnership Projects 4.6 Advantages of PPP Projects 4.7 Disadvantages of PPP Projects 4.8 Various Forms of PPP 4.9 Risks Factors in PPP 4.10 Misconceptions 4.11 Concluding Remarks 5. PPP PROJECTS IN INDIA: CASE STUDY 129 5.1 PPP in Education 5.2 PPP in Health 5.3 PPP in Water Supply & Sanitation 8 5.4 Failed PPP Projects 5.5 Views of Stakeholders on PPP 5.6 Factors responsible for successful PPP 5.7 Impact of PPP on social sector outcomes: A Discussion 5.8 Potential for PPP in Bihar 5.9 Concluding Remarks 6. BRIEF SUMMARY AND SUGGESTIONS 185 6.1 Brief Summary 6.2 Suggestions 6.3 Conclusion Bibliography I Annexure XIV 9 List of Tables Table No. Title 1.1 Trends in the Human Development Index (HDI), 1980- 2011 1.2 Top movers in HDI, non-income HDI and GDP, 1970- 2010 1.3 Vital Social Indicators for Selected Countries, 2012 (estimated) 1.4 Social Sector Expenditure as Percent of GDP, 2009 1.5 State-wise Socio Economic Indicators 1.6 State-wise Number of Most Backward Districts in India, 2003 3.1 Administrative Units in Bihar 3.2 Average Annual Growth Rate of GSDP in Bihar 3.3 State-wise Major Social Sector Indicators 3.4 State-wise Major Education Statistics 3.5 District-wise Education Parameters of Bihar 3.6 State-wise Major Health Statistics, 2009 3.7 District-wise Health Related Indicators of Bihar, 2010 3.8 State-wise Major Water and Sanitation Statistics 3.9 District-wise Data on Water Supply and Sanitation, 2010- 11 3.10 State Wise Expenditure Pattern, 2010-11 (Revenue Expenditure and Capital Outlay) 3.11 District-wise Per Capita Expenditure in Social Sector, 2009-10 3.12 Monitorable Targets of 11th Five Year Plan 3.13 Gaps in Education Facility in Bihar, 2009-10 3.14 Gaps in Health Facility in Bihar, 2008 3.15 Gaps in Water and Sanitation Facility in Bihar, 2012 5.1 PPP Projects in Education Sector 5.2 PPP Projects in Health Sector 5.3 PPP Projects in Water Supply and Sanitation List of Figure Figure No. Title 1.1 The HDI – Three Dimensions and Four Indicators 10 1.2 Synergy between Social Sector and Economic Development 3.1 Three Actors in Service Delivery List of Graphs Graph No. Title 3.1 Per Capita Gross State Domestic Product in Bihar List of Maps Map No. Title 3.1 Political Map of Bihar List of Annexure Annexure Title No. I Recent PPP Initiatives in Social Sector in Bihar II Public-Private Initiatives in Health Care in India III Public-Private Initiatives in Water Supply and Sanitation in India IV Public-Private Initiatives in Education in India 11 CHAPTER 1 INTRODUCTION Chapter - 1, the introductory chapter- deals with importance of social sector for the development of a country and welfare of its citizens. The performance of India in social sector with respect to other countries, expenditure pattern etc have been discussed in this chapter. The position of Bihar vis-a-vis other major states of the country, theoretical arguments about the importance of public private partnership (PPP) for the provision of public services, the rationale for the present study, chapterization schemes, organization and justification of the present study have been presented in this chapter. 1.1 Economic Development Economic development has often been used in the past as a synonym of economic growth, considering increase in output of goods and services as the measure of economic growth. The economic growth is a process whereby an economy‟s Gross National Product (GNP) increases over a long period of time (Meier and Baldwin, 1966). A country may record increase in its GNP if a resident of the country invested massive capital outside the country and earn big profits. But, this does not mean that the economy of a country has developed. This measure fails to take into consideration changes in the growth of population. A rise in GNP accompanied by faster growth in population will not reflect economic advancement or welfare of the country.
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