Regulatory uncertainty is the greatest risk that private investors are facing today, Secretary, Department of Economic Affairs Arvind Mayaram said today.
"We are entering into a completely new area of regulatory uncertainty. Regulatory uncertainty is the greatest risk that private investors are facing," he said.
"We have seen this regulatory risk starting with the 2G (spectrum) case... which is not strictly PPP, but there is certainly private investment and it takes spectrum which is something public forever," he said.
Delivering the keynote address in a conference on Public Private Partnership here, he said, these have now actually become part of the public policy where government's planned documents have started talking of allocation (of resources) through public private arrangement involving private capital for developing public infrastructure.
Mayaram said PPP is a very new concept and lot of research is required to understand what it is constituted of and how does it work. "... this is an area which is now coming under judicial scrutiny, but other than judicial scrutiny, there is other question of auditing part," he said.
On the auditing part, CAG (Comptroller and Auditor General of India) has also demanded that it should get the right to look into the financial audit of the private sector involved, he said. In case of PPP projects, even if the project is created by private finance and the management is under private hands, the project still remains a public asset and therefore it remains a question whether it should be subject to public scrutiny or not, Mayaram said.
He also emphasised on the need for minimising the regulatory risk involved in the PPP projects.