Role of Public Private Partnership in India‘s National Highways

In this paper, the author has studied the private sector participation in road projects being developed as a part of the National Highways Development Programme (NHDP). Our data set is by far the largest and covers all of road projects that have been taken up for up gradation under various phases of the NHDP so far. We have discussed various issues related to the PPP policy and its limited success. We have analyzed the efficiency properties of PPP contracts. However, the focus of the study is on the following questions: Why have some projects attracted private investment while others have not? Why are PPPs more successful in some states and not so in the other states? We have shown that the richer states have attracted more PPPs than the poorer states. Other things remaining the same, the probability of PPP is higher for projects located on national highways connecting richer states, and those located closer to mega cities. Similarly, ceteris paribus, states with better governance index and projects located in them have higher probability of attracting private investment. Empirical evidence in support of these claims is conclusive and robust. In the light of our findings, we have answered the following questions: Is PPP a viable and desirable public policy for development of infrastructure in poorer states? What are the lessons emerging from the Indian experience with PPPs so far?