ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Increasing Incidence of PPP Project Cancellations in India

A spurt in the cancellation of public-private partnership projects in recent times can be attributted to macroeconomic crises, inherent problems in the water sector projects, and foreign sponsorship of these projects. Since giving the renegotiation relief to many of these projects seems to be problematic, cancellation is probably the only way for the government to elicit more realistic bidding from the private sector.

Twenty-six public–private partnership (PPP) road projects have been cancelled in India since 2013. With this, India has caught up with the worldwide average rate of PPP project cancellations1 (Table 1). While 4.7% of the 6,318 PPP projects were cancelled2 in developing countries worldwide during the period 1990–2014, India has seen 4% of its 834 PPP projects being cancelled in the same period. As a percentage of total investments, India has seen 4.7% of these investments cancelled compared to the worldwide rate of 4%.

Admittedly, these percentages seem low as “freedom to fail” is part of the reason to turn to the private sector in infrastructure provisioning. The low proportion of project cancellations could be because infrastructure projects acquire a resilience of their own once they are set up owing to concerns about service continuity (Tata Mundra Project), possible termination payments (Delhi–Noida toll road), and negative publicity surrounding these perceived failures.

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