PPP is an arrangement between a government owned entity and a private sector for development of infrastructure or delivery of services. The said arrangement works towards financing, designing, implementing, and operating infrastructure by use of substantial financial resources from the private sector. The essential feature of this unique arrangement is risk sharing by the government and private entity and investments being undertaken by the private entity.
The Department of Economic Affairs, Government of India defines PPP as under-
“Public Private Partnership (PPP) means an arrangement between a Government / statutory entity / Government owned entity on one side and a private sector entity on the other, for the provision of public assets and/or public services, through investments being made and/or management being undertaken by the private sector entity, for a specified period of time, where there is well defined allocation of risk between the private sector and the public entity and the private entity who is chosen on the basis of open competitive bidding, receives performance linked payments that conform (or are benchmarked) to specified and pre-determined performance standards, measurable by the public entity or its representative.”1
The World Bank defines PPP as under-
“A long-term contract between a private party and a government entity, for providing a public asset or service, in which the private party bears significant risk and management responsibility, and remuneration is linked to performance"2