A country’s infrastructure reflects the structural growth of the nation. It is one of the building blocks for the nation’s social and economic growth. It is conventionally taken care of by the government, but these projects are usually capital intensive in nature, and it requires strong backing by the government.
How these funds are helpful?
Hence, it is usually funded with the help of taxes, government borrowings, and user charges. But that can also be strainful on the government’s funds. In such cases, it becomes easier, if the funding is assisted by some external features. Investments by the private sector in infrastructure projects can be a helpful model for the country.
External funding for public projects:
Alternative funding models give an opponent for the private sector to contribute to public sector projects. They can invest in these projects to support the development in exchange for capital in return. It is done in various forms like lending expertise as well as capital. It is a highly beneficial model for all investing parties.
This model has been accepted in many developing countries as it helps in reducing risks for the governments and still supports national growth. Many Asian countries, including India and China, have witnessed the benefits of investments by the private sector in infrastructure for a long time.
