NEW DELHI: Public private partnership (PPP) projects are making a strong comeback as the government looks to rope in private investors to sustain the investment momentum in the economy.
So far in 2025, the Centre has approved PPP projects worth Rs 86,000 crore across a wide spectrum of sectors, including highways, ports, railway station redevelopment, tourism infra, logistics infrastructure, solid waste projects and educational infrastructure, according to official sources.
This is already the highest since 2022. With many more projects in the pipeline, the PPP investment commitments will increase substantially in 2025.
The PPP projects approved by the government had an investment commitment of Rs 1.28 lakh crore in 2021, but such projects plunged to Rs 10,709 crore in 2022 and Rs 11,256 crore in 2023. PPP project clearances improved to Rs 66,919 crore in 2024.
The roads sector, which was one of the major beneficiaries of the Centre’s budgetary capex boom, accounts for a lion’s share in PPP projects so far in 2025 with total investment commitment of Rs 58,816 crore. The PPP road projects are being offered on built operate transfer (BOT) toll mode or hybrid annuity mode.
The renewed thrust to PPP projects followed the Centre’s capex hitting 3% of GDP and finding no room for further rise, given the fiscal constraints. Private investment-led growth is seen as an imperative.
Highway projects were fully funded through the Budget in the last five years through FY26, and railways projects over the four years through the current fiscal. These sectors together accounted for about 50% of the Centre’s capex. PPPs will reduce the pressure on the Centre’s budget going forward.
The Centre’s capex grew by a robust 28% in four years through FY24 before moderating to nearly 11% in FY25 and likely 6.6% in FY26.
Railways, which has made several attempts to promote station redevelopment via PPP, has recently decided to redevelop Vijaywada railway station via this mode. The project was approved last month. A private party will design, build, finance, operate and transfer (DBFOT) it back after the lease period of 60 years. The concessionaire will generate revenues through commercial exploitation of space like AC Lounges, food court, parking, commercials, retail outlets, etc.
“Vijayawada template could be replicated in dozens of other railway stations across the country,” an official said
Besides these core infrastructure projects, the Centre is for the first time promoting PPP in a big way in social infrastructure like hospitals and hostels.
In May, the Centre approved the development of a medical college and hospital at Namsai in Arunachal Pradesh under the Aspirational District Programme through PPP mode on DBFOT. The project will get some viability gap funding given the nature of the projects.
Similarly, for the first time, the Centre rolled out the PPP model to transform the country’s student hostel infrastructure by pooling private investment and management skills to improve campus living experiences.
In 2024, the PPP model was approved for building and running multiple hostels in three top educational institutions—IIT Madras, IIM Udaipur and IIIT Nagpur—which would set a template for more such projects in the country.
Source: The Financial Express
