INVESTMENT MODELS

The process of investment involves in itself the procedure of allocation of a sum of money for a certain set of business proceedings. To ease out the procedure of investing, various investment models are thus derived. The paradigm followed by this investment procedure involves purview of different economic sectors present in the market. Investment models use direct investment procedures for primary, secondary and tertiary sectors. This model is also cited as “Equity investment”. For indirect investment procedures, an implication for consideration of bonds, debentures, shares and financial securities are done. Here the investment model procedure is cited as “Debt investment”.

Public Investment Model

The investment procedure at this juncture is done by the particular government of a state. Procedures of investment may vary either from central to local government and their owned corporations and industries. The total cost in infrastructure measures and capital investment is bored by the State. In the past few decades, demand for public sector units has risen dramatically. That is production of a certain amount to build good infrastructure and services. In the purview of national interest, this investment modelling procedure has become gradually important. The capital investment in the public model comes from the revenue generated by collection of taxes. 

Therefore it can be iterated here that properly targeted investment procedures would help not only in generation of income but also dramatically increase the States’ performance economically in the global market. Measures for public investment procedures are carried out quantitatively as it directly affects the growth of national income as well as the gross domestic product. These permanent assets may further be embarked on return generation which may fix a debt and demand, which would hence develop sustainable growth patterns for the State. Investment in public sectors has been considered necessary on the ground of economic theory. Goods and services such as clean water, electricity and military services need vibrant supply chain procedures. Through the provisions of the public investment model, these services are guaranteed. 

Private Investment Model 

The main difference between the public and private investment models is its funding techniques for creation of assets. On one hand, tax and other forms of revenues are accumulated from the source of capital investment for the public sector. On the other hand, the private investment model does not depend on revenue of the public but on other mediums for raising capital investment. Equity and hedge funds may be entered as the most common type of functioning of procedures in a private investment model. Several studies on investment modelling procedures have iterated that even though equity investment may be riskier than the debt investment procedure followed in public investment. It has the potential of a high-income generation with a high return value on investment.

Equity investments are done with investing a certain capital through the paradigm of stock options and warrants. Asset rotation, sector rotation and TSP allocation are some of the equity investment models which are followed by private investment modelling. In asset rotation model examination regarding performance of a stock is carried out. This equity model grants the highest return value in investment. In sector rotation, the stock market proceedings are broken down into various groups and equity is allotted accordingly for better return of value. TSP or thrift savings plan is generally concerned with return benefits for savings investment plan SIP may be cited as an appropriate example for TSP measures. 

Public-Private Investment Model

This investment model is based on the concept of ease inflow investment through a mutual contract. Management of risk and organisation proceedings falls under the purview of private players. As for the governments’ purview, a certain amount of remuneration is granted over following the performance in the market. Being fiscally sustainable and offering efficient public infrastructure and public service are shared objectives for the public-private investment model. Good governance along with balanced regulatory proceedings in PPP model would ensure better organisational development through contracts backed by the national law of the State. Here the organisational retention capability falls in the hand of the government and thus does not amount to privatisation.

Among the various public-private investment models, management and lease contract models are considered major investment models. Under the purview of the management contract model, the ownership of a public service domain is partly handed over to a private entity for the process of management. It can be said that proceedings of public sector organisation are handed over to private players while ownership remains with the government of the State. Under lease contract model, depending on economic situation and revenue generation the whole proceedings along with ownership rights is leased to a private entity for a certain amount of time. The “Build-operate-transfer” model is the most commonly used operational model in PPP purview.

Conclusion

It may be iterated here that development and maintenance of large-scale projects and infrastructure would require a large capital investment. Individually seeking both public and private investment models has a certain backdrop. Even then they are the best generation of employment and offer daily public service. But for involvement in large-scale transit projects, public-private investment may be considered as the best means. Here both delivering infrastructure and its maintenance would be jointly carried out. Hence creating not only more employment opportunities but also balancing fiscal benefits. A means of robust infrastructure ecosystem with sustainable development opportunities may be created with proper adoption of investment models.