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The Projects Monitoring Unit will monitor the performance of PPP projects at the project authority level and the Performance Review Unit at the ministry or state government level
New Delhi: With an aim of ensuring timely completion of projects undertaken in public-private partnership (PPP) mode, the Indian government on Thursday decided to set up an institutional mechanism to oversee contract performance effectively, reports PTI.
The Institutional Mechanism for Monitoring of PPP Projects, cleared by the Union Cabinet, will have two-tier system -- Projects Monitoring Unit (PMU) and Performance Review Unit (PRU).
The proposal of the Planning Commission was approved at a time when an increasing reliance is being placed on PPP projects across many wings of the government.
"It has become necessary to adopt a well-defined institutional structure for overseeing contract performance effectively," an official statement said.
"This is all the more necessary as concessionaires will have an incentive to cut corners whereas the criticism would be faced by the government," it added.
As per to the decision, the PMU will monitor the performance of PPP projects at the project authority level and the PRU at the ministry or state government level, as the case may be.
The PMU is to prepare a report to be submitted to the PRU within 15 days of the close of the relevant month.
The report is to cover compliance of conditions, adherence to time lines, assessment of performance, remedial measures and imposition of penalties, the statement said.
The PRU is to review the reports submitted by the different PMUs and oversee or initiate action for rectifying any defaults or lapses.
In addition to following the guidelines for the mechanism, the respective ministries will send a quarterly compliance report to the Planning Commission with a copy to the Ministry of Finance.
The Planning Commission, in consultation with the Ministry of Finance, will prepare a summary of these reports along with the recommendations relating to further action/improvements which would be placed before the Cabinet Committee on Infrastructure (CCI) once every quarter for the next two years.
Based on the experience gained, any necessary modifications would be made in the guidelines.
"This is an important governance mechanism in an area which will see a lot of activity in future," the statement said, adding it will ensure good governance, accountability, efficiency and economy in spending.
The Planning Commission will have a central role in ensuring high quality monitoring. The Cabinet will have a chance to monitor every quarter.
According to Asian Development Bank, India's outlook is clouded by a combination of high inflation and poor demand, both externally and internally
New Delhi: The Asian Development Bank (ADB) on Thursday lowered the growth forecast for India to 6.5% for the current fiscal, from the earlier 7% projection, on the back of subdued demand and high inflation, reports PTI.
"India's economy is now expected to grow by 6.5% in 2012, down from the previous forecast of 7%. India's outlook is clouded by a combination of high inflation and poor demand, both externally and internally," the ADB said in its 'Outlook Supplement' report.
It said that the weakness in the economy was reflected in declining business confidence, slow credit growth and subdued sales of automobile sector.
"With persistently high inflation, monetary policy has little room to counter the slowdown in economic growth...high inflation and trade deficit make it difficult to ease monetary policy to stimulate demand," ADB said.
The Reserve Bank of India (RBI) is scheduled to announce its quarterly review of monetary policy on 31st July.
Wholesale inflation was 7.55% in May. At the retail level, the Consumer Price Index (CPI) inflation for the same month was 10.36%.
The Manila-based multilateral lender has also lowered the India's growth forecast for 2013 to 7.3%, from the 7.5% projection made in April.
ADB has cut its growth forecasts for developing Asia to 6.6% for 2012 citing economic problems in the Eurozone and its impact on global demand. It had projected a 6.9% growth for the region earlier.
It further said that the decline in growth forecast for developing Asia was mainly on account of lower growth in India and China.
Moreover, ADB added, the global economic worries were also getting reflected in the plunge in business investment, and there could be slowing of growth in the second half of 2012.
According to official projections, Indian economy is expected to grow at 7.6% (+/- 0.25%) in the current fiscal.
While the RBI left its key policy rates unchanged in its last policy review in June, European Central Bank and People's Bank of China slashed their respective policy rate earlier this month to boost growth.
The ECB reduced its main interest rate to a record low of 0.75% and its deposit rate to zero to help tackle the euro zone crisis.
"Global economic growth remains sluggish, with rising concern that emerging economies are increasingly vulnerable to weak economic prospects in the United States and euro area," ADB said, while reducing the growth outlook for industrialised economies to 1%, from 1.1% earlier.