Investment Models

Public Investment Model: In a Public Investment Model, investment in specific goods, services is made by the government through the central or state government or with the help of the public sector by using the revenue earned through it.
Private Investment Model: Under private investment model, the government invites private players to invest in some of its ventures. This investment can be domestic or foreign in nature.
Public-Private Partnership: Public-private partnership (PPP) is the most common investment model which eases the flow of investment.

Public Private Partnership (PPP) is a long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance.

Build-Operate-Transfer (BOT) Model: The most common form of PPP used where the private sector operator designs, builds, finances, owns and constructs the facility and operates it commercially for the concession period, after which the facility is transferred to the authority. In this case legal ownership of the asset vests with the public sector the concession period ends. The most common form of a BOT project is a Toll Road project.
Operations & Maintenance (Service contract): The Government bids out the right to deliver a specific service or gives part of the undertaking to the private sector for operations and maintenance of the assets. Such contracts are normally of a shorter duration than concession contracts.
Lease, Develop, Operate and Maintain (a variation of BOT): Assets are leased out to the private sector under specific terms, to operate and maintain the asset for the term of the concession period.
Toll, Operate and Transfer (TOT): The TOT model has been developed to encourage private participation in the Highway sector. In TOT Model, the right of collection and appropriation of fees for National Highway (NH) projects is assigned for a pre-determined concession period to concessionaires (developers/investors) against upfront payment of a lump-sum amount to NHAI.

Viability Gap Funding (VGF): Viability Gap Funding of upto 40% of the cost of the project can be accessed in the form of a capital grant. The scheme aims at supporting infrastructure projects that are economically justified but fall marginally short of financial viability. Support under this scheme is available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding.
India Infrastructure Project Development Fund (IIPDF): Scheme supports the Central and the State Governments and local bodies through financial support for project development activities (feasibility reports, project structuring etc.) for PPP projects.

Why in News?

NHAI has awarded Toll, Operate and Transfer (TOT) bundles 13 and 14 of a combined length of 273 km for Rs. 9,384 Crores.

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