Construction and Engineering Industry in India in PPP Regime with a Special Focus on Airport Development

  • Bhaskar Chatterjee
  • Sarmila Banerjee


Till the early 1990s, the general understanding that guided economic policy framework and planning in India hinged on the paradigm that the Government is mostly responsible for the provision of public goods/services which are by nature indivisible and non-excludable and thus cannot be priced by the market mechanism. The liberalization and globalization process that was initiated in the early 1990s catalyzed a paradigm shift in this perception. Rapid growth brought forth a manifold increase in demand for social/civil infrastructure. The Government’s financial status and delivery capabilities were grossly inadequate to meet this demand. Moreover, the delivery mechanism itself was functioning quite inefficiently in the hand of the public sector authorities. So, from the demand side there was sudden expansion in scale and from the supply side the prevailing institutional arrangement was proved to be insufficient. It was in this backdrop that the government invited private participation in the public domain of social infrastructure. The financial as well as circumstantial rationale extended to justify such a change in paradigm in India has basically hinged on three crucial premises: (i) given the limited wherewithal of the Government in the face of burgeoning budget deficits, the rapid demand for social/civil infrastructure of a growing economy can only be met through active investment and participation of the private sector; (ii) with the involvement of private capital under global influences there would be constant monitoring of sovereign credit worthiness by international financial institutions and global credit rating agencies; and (iii) PPP model would raise efficiency of both resource usage as well as the speed of delivery helping the economy to sustain rapid growth. The optimism regarding this arrangement derived support from the successful adoption of this model in Europe in the 1960s, in Latin America in the mid-1980s, and more recently in Africa and East Asia.


Total Project Cost Private Participation Special Purpose Vehicle Concession Period Tariff Fixation 
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Copyright information

© Springer India 2013

Authors and Affiliations

  1. 1.Larsen & Tubro LimitedChennaiIndia
  2. 2.Department of EconomicsUniversity of CalcuttaKolkataIndia

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