Revitalising PPPs

India's experience with public-private partnerships (PPPs) offers a clear lesson. When designed and executed well, PPPs can transform infrastructure delivery; when poorly structured, they can stall development for years.

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During the infrastructure boom of the 2000s, particularly in highways, power, ports, and airports, PPPs played a decisive role. Private investment accounted for nearly 37 per cent of infrastructure spending during the Eleventh Plan (2007-12).

Between 2009 and 2013, almost 60 per cent of new National Highways, over 6,300 km, were built under PPPs on the built-operate-transfer principle for tolls.

That momentum, however, dissipated rapidly. By the mid-2010s, many PPP projects slowed, turned distressed, or defaulted. Developers faced delays in land acquisition and clearances, weak traffic growth, high leverage, and rising costs. Aggressive bidding, often driven by ultralow toll assumptions, won projects but destroyed balance sheets. Crucially, risk allocation was deeply flawed, as too much risk was pushed on to the private side, while contracts were treated as immutable. With no formal renegotiation framework, even fundamentally viable projects became stranded. As the Kelkar Committee (2015) warned, "inefficient and inequitable allocation of risk ... can be a major factor in PPP failures".

The Union Budget this year once again reiterates infrastructure as a growth driver, announcing multiple initiatives across transport, urban development, housing, logistics and financing. Yet it sidesteps the most consequential question confronting India's infrastructure strategy today. How will the country revive PPPs as a central pillar of infrastructure development?