Page 28 - Banking Finance July 2019

ARTICLE

¢ It is argued that this method shows bias towards the government cannot arbitrarily choose any person it likes for
originator. entering into such a relationship or to discriminate between
persons similarly situate, it is open to the government to
¢ This method is more suitable to the projects where
reject even the highest bid at a tender where such rejection
creativity and design and innovation are key
is not arbitrary or unreasonable or such rejection is in public
determinants to project success.
interest for valid and good reasons." But, the words, "valid,
reasonable, good, public interest," are easy to define but
Purported Benefits
difficult to ensure.
The advocates of Swiss Challenge argue that this would
speed up the process of awarding projects. It reduces the
The polity and the public administration should embody
red tape. It encourages enterprise as this method enables
highest values of purity and probity to ensure that the
the governments to reward the private sector for its
process is not arbitrary as hoped by the highest court of
innovative ideas. Quite often, infrastructural projects like
India. The government should be accountable to the political
roads, railways, power projects etc., are inordinately
system and civil society in this regard as there is a limited
delayed, causing serious time and cost overruns.
scope for judicial review of government contracts as courts
normally do not replace the executive decisions with those
The Swiss Challenge method is followed across the world to
of their own.
tide over this. The Supreme Court of India in Ravi
Development Vs. Shree Krishna Prathisthan and Ors (AIR
Swiss Challenge is Innovative: Indian
2009 SC 2519), held that, "the said method is beneficial to
the government in as much as the government does not lose Perspective
any revenue as it is still getting the highest possible value." In order to achieve and maintain the target rate of growth
But all this is only one dimension of the debate. of infrastructural development a revamping of the entire
infrastructure sector is absolutely essential. Unless and until
Is it Really Unsolicited? the infrastructure bottlenecks are removed, such a jump in
the rate of growth will not be possible. The Indian
The public private partnerships are normally prone to private
government realized early on in the process of economic
appropriation of public resources. India's development
reforms that without involving the private sector, it would
history is replete with many examples to substantiate this.
not be able to revamp the infrastructure sector. It neither
The government before embarking upon Swiss Challenge is
has the financial resources, nor the technical/administrative
obliged to convince the people and the political system of
resources to undertake such a mammoth task on its own.
the relative advantages of this new method when compared
to competitive global bidding.
It has therefore, undertaken several initiatives since 1991
Normally, the government grants a plethora of concessions to open up the infrastructure sector, and to provide
to private developers in granting of public private incentives to private parties. Likewise, other developing
partnership projects. Such concessions can include viability countries India has also adopted the Swiss Challenge system
gap funding, allotment of land at subsidized or no price for to attract private capital investment for infrastructural
the private parties to commercially develop, tax concessions development schemes.
etc. Quite often such concessions and the projects as a
whole can land up in political and legal controversy. A Under the ‘Swiss Challenge Method’, a project proposed by
number of scams like the Commonwealth Games, spectrum, a private sector company will first be vetted by the state
KG basin, coal, etc., reveal how the corporate hobnobbed government and if the concept is approved, the project will
with ruling politicians and bureaucrats to curry be awarded through a competitive bidding process in which
unprecedented favours. no bidder will have a predefined advantage, in the bidding
process the government would give challengers an
However, the apex court has observed, "Though the opportunity to make better offers (for an infrastructure

28 | 2019 | JULY | BANKING FINANCE