Page 102 - ITU-T Focus Group Digital Financial Services – Executive Summary

1 Introduction

1.1 Background

Development of infrastructure is a precondition for the economic growth of a country. Increasing demand
for quality infrastructure can only be met with robust investment, proficient project management and
technological advancement. To meet these requirements, governments are utilising the capabilities of the
private sector in a big way. Public–private partnerships (PPP) have become the preferred mode for the
construction and operation of infrastructure projects, both in developed and in developing countries. As most
governments in emerging economies are facing fiscal and capacity constraints, PPP provides a way for them
to bridge the gap in infrastructure investment.
The Airports Authority of India (AAI) manages and operates 123 out of a total of 134 airports in India. This
includes 12 international airports, 99 domestic airports and 12 customs airport. The remaining eleven
airports (5 international airports and 6 domestic airports) are managed by PPP concessionaires, State
Governments and the private sector.

The domestic air traffic improved at a compound annual growth rate (CAGR) of 11.3% — from 71 million in
FY07 to 121.3 million in FY12. It is expected to touch 209 million by FY17. During the same period,
international air traffic grew at a CAGR of 9.4% to reach 40.7 million, and is estimated to reach 60 million by
FY17.

1.2 Challenge and response

Upgrading an airport to international standards requires a lot of resources, given a sharp increase in air traffic,
and the projected future air traffic trends being high. Since the number of airports that require an upgrade
is high, it becomes a challenge for the government to shell out resources for this purpose. Many a times,
financial resources are pumped into providing basic services and amenities like health and education, thereby
leaving less resources for airport upgrades. Improving conditions in the aviation sector under such conditions
seems to be a luxury.

India is a big tourist destination. Poor air connectivity to some of the exclusive tourist destinations remain a
big bottleneck in the growth of tourism. Unless air connectivity improves, the full potential of tourism cannot
be harnessed. Air connectivity needs resources. Since the upgrade and augmentation of major airports is a
challenge, investing on smaller airports remains an even bigger challenge.
The solution

Financing projects for making cities smarter and more sustainable could be a challenge particularly in the
developing nations. One of the alternatives in such cases is to opt for a PPP (Public Private Partnerships),
wherein the project is funded by the private sector, and the government plays the role of the enabler and
regulator.

2 The Project(s)

2.1 Vision and content

Vision
The vision behind this project is to provide internationally acceptable aviation facilities in Indian cities,
without getting constrained by the limited resources.
Concept of Aerotropolis and associated industrial development- With the Hyderabad Airport PPP project, the
concept of Aerotropolis, or Airport City was brought to India. This concept, which espouses the development
of a self-sustaining city around an airport, promises to take Indian urban development to the next level.

98 U4SSC series