Discuss the essential characteristics of public sector-centred and market-centred perspectives in Public Private Partnerships and also compare the two.

Public Sector-Centred Perspective

The public sector-centred perspective in PPPs views the private sector as a contractor or agent of the public sector. The primary objective is to deliver public services efficiently while maintaining strong public control and accountability. Key characteristics include:

• Dominant Public Role: The public sector retains significant control over project selection, design, implementation, and monitoring.
• Risk Allocation: A substantial portion of the project risk remains with the public sector, particularly demand risk (risk of low usage).
• Focus on Affordability: Emphasis is placed on ensuring affordability for the end-user, often through subsidies or regulated tariffs.
• Detailed Contractual Framework: PPP contracts are typically lengthy and detailed, specifying performance standards and penalties for non-compliance.
• Transparency and Public Scrutiny: Greater emphasis on transparency and public scrutiny throughout the project lifecycle.

Example: The Delhi Metro Rail Corporation (DMRC) is often cited as an example of a public sector-centred PPP. While private participation exists, the DMRC maintains significant control over planning, execution, and operations, and the government bears a substantial portion of the financial risk.

Market-Centred Perspective

The market-centred perspective treats the private sector as a partner with expertise and capital, capable of driving innovation and efficiency. The focus is on creating a conducive environment for private investment and allowing market forces to play a greater role. Key characteristics include:

• Private Sector Initiative: Private sector is encouraged to identify, propose, and develop projects based on market demand.
• Risk Transfer: A significant portion of the project risk, including demand risk, construction risk, and operational risk, is transferred to the private sector.
• Commercial Viability: Projects are primarily evaluated based on their commercial viability and ability to generate returns for private investors.
• Flexible Contractual Framework: PPP contracts are often more flexible and outcome-based, focusing on achieving desired results rather than prescribing detailed processes.
• Limited Regulatory Intervention: Reduced regulatory intervention and greater reliance on market mechanisms to ensure service quality and affordability.

Example: The development of several National Highways in India through the Build-Operate-Transfer (BOT) model exemplifies the market-centred approach. Private companies bear significant financial and operational risks, and toll rates are often determined based on market conditions.

Comparative Analysis

The following table summarizes the key differences between the two perspectives:

Characteristic	Public Sector-Centred	Market-Centred
Primary Objective	Public Service Delivery & Control	Private Profit & Efficiency
Risk Allocation	Public Sector Dominant	Private Sector Dominant
Project Selection	Public Sector Driven	Private Sector Initiated
Contractual Framework	Detailed & Prescriptive	Flexible & Outcome-Based
Regulatory Intervention	High	Low
Affordability Focus	High (Subsidies common)	Moderate (Market-driven pricing)

The choice between these perspectives depends on the specific context, project characteristics, and policy objectives. A purely public sector-centred approach may lead to bureaucratic delays and inefficiencies, while a purely market-centred approach may compromise public interest and affordability. A balanced approach, often referred to as a ‘hybrid’ model, is often preferred, combining elements of both perspectives to optimize outcomes.