TOPIC: Investment Models

• In this method, a private player (say P1) goes  Swiss Challenge Method to the government Swiss Challenge Method voluntarily with an innovative proposal.
• The concerned Department or the Ministry will put his proposal on it’s website so that other private players can give suggestions to improve it or challenge it by a better proposal.
• Suppose another private player (say P2) challenges the original proposal and it is better than the original in terms of cost and technological aspects.
• Then an expert committee will accept the best proposal and the original proposer will get a chance to accept it if it an improvement on his proposal. If P1 rejects the best offer, the challenger will get to develop the project then.
• The committee can also ask P1 to bring a new proposal to counter the best proposal (proposed by the challenger) decided by it.
• Or, the government can even buy the intellectual property rights of the best proposal from the proposer and can then invite bids from other private players by issuing a tender.
• The government will have to reimburse reasonable costs incurred by P1 in preparing suo moto proposals, if they end up as the loser.

Positive Aspects( Swiss Challenge Method)

• It is not new to India. It is being used in states like Karnataka, Gujarat, Rajasthan, Andhra Pradesh, Madhya Pradesh, Bihar and Punjab for housing and road construction projects.
• Many stuck PPP projects got a new lease of life using the Swiss challenge Method.
• Even the Supreme Court in 2009 accepted it as a valid system for awarding contracts.
• The Union Cabinet in 2015 gave its approval to redevelop 400 railway stations using the method. This is because of insufficient resources with Railways to develop them on its own.
• Local projects that are not national priorities will benefit.
• As the projects will be put online, this will discourage non-serious proposals.

Negative Aspects

• Unsolicited ( voluntary) proposals bring information Swiss Challenge Method  asymmetries in the procurement process and result in lack of transparency and in the fair and equal treatment of potential bidders in the procurement process.
• Crony capitalism ( cartelisation i.e. private players helping each other by proposing frivolous counter proposals)
• Lack of enough challengers which can affect efficiency.
• Even the Planning Commission had warned of using the Swiss Challenge method as an exception and not as a rule.