backbone, supporting growth and prosperity. The National Infrastructure Plan (NIP) has laid out
a vision that requires a staggering investment of INR 111 lakh crores over the next five years.
This monumental task is not just a matter of national interest but a strategic imperative for the
country’s future. Public-Private Partnerships (PPPs) are not merely a component of this vision;
they are the linchpin that can bridge the financing chasm and propel infrastructure projects to
new heights.
NIP itself recognizes 8%-10% i.e Rs 9 lakh crores – Rs 11 lakhs crores of the totl requirement to
be brought through private investment in form of PPPs and an additional Rs 3 lakh crores – Rs
5.5 lakh crores to be generated for financing by way of monetization of existing assets which
would also largely entail use of PPPs to monetize the asset and generate real value from these
assets.
In total, approximately 12 to 16 lakh crores of investments gap will need to be bridged
by PPP investments. This gap is not a void but an opportunity—an opportunity for private
investments to step in through the vehicle of PPPs.
The advantages of PPPs extend far beyond mere financial considerations. They bring with them
the efficiencies of the private sector in construction and operations, enhancing the speed of
development and the quality of infrastructure. One of the key benefits is the ability of PPPs to
generate additional resources outside government budgets.
The private sector raises these funds and recovers them through the lifecycle of the project, creating a self-sustaining ecosystem of development. India already has a vibrant PPP ecosystem with a large number of PPP projects in roads, airports, electricity transmission, silos, tourism and many other sectors with the department of economic affairs database mentioning a list of more than 1800 projects entailing a project cost of more than Rs 24 lakhs.
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The recent economic and social disruptions caused by the COVID-19 pandemic have forced
policymakers to revise their budgetary allocations, focusing more on social programs and
reducing the headroom available for infrastructure investments. There is a general pressure on
governments worldwide to increase spending on social programs.
Consequently, the budgetary sources envisaged under the NIP may not be fully realized for investments. The government may have to rely more heavily on PPPs and asset monetization to meet the fund requirements of economic and infrastructure development programs.
The role of PPPs in state and municipal infrastructure development is becoming increasingly
significant. The 2023 RBI report on state finances highlights that the gross fiscal deficit of the
states continues to exceed 3%, which will inevitably limit the budgetary resources available for
infrastructure development.
The state of municipal finances is even more precarious, with a high dependence on state devolutions and a declining share of self-generated revenues.
The success of PPPs in financing infrastructure is evident across various sectors. The highway
and power sectors, for instance, have seen substantial PPP investments, constituting a 43%
share of India’s PPP projects.
These initiatives have not only financed infrastructure needs but also introduced technological advancements and service level enhancements, contributing to the economy in ways that transcend traditional metrics.
As we navigate towards a future focused on climate resilience, circular economy, and
Sustainable Development Goals (SDGs), the expertise, innovation, and technology of the
private sector become indispensable. Internationally, PPPs are being integrated into
infrastructure programs that align with SDGs and climate resilience goals. The UNECE’s
initiative to develop a guide for aligning PPP projects with SDGs exemplifies this trend.
India, with its vast economy and infrastructure backlog, must embrace PPPs to develop
sustainable infrastructure. It is time to recalibrate our national PPP framework to prioritize
sustainability and climate resilience over merely bridging financial gaps.
India’s burgeoning economy necessitates the swift delivery of sustainable infrastructure
projects. With government budgets already stretched thin, PPPs will play a dual role as
financiers and innovators. They have become an integral part of our infrastructure development
ecosystem, and it is crucial to realign our PPP policies and mechanisms to foster sustainable
practices. This will ensure that the infrastructure sector can meaningfully contribute to India’s
commitment to the SDGs.
The author is a Partner at Deloitte India