BharatNotes What is Public Private Partnership (PPP) Models?
The Department of Economic Affairs (Ministry of Finance) defines a PPP as an arrangement between a government/statutory/government-owned entity and a private entity for providing public assets or services, where the private partner makes investments and/or undertakes management for a specified period, with substantial risk-sharing and performance-linked payments against pre-determined standards. PPP "models" are the different ways risk, financing and ownership are split between the two partners.
Key PPP Models
| Model | Full form | Who finances / key feature |
|---|---|---|
| BOT | Build-Operate-Transfer | Private partner finances, builds, operates (collects user fees) and transfers asset back to government |
| BOOT | Build-Own-Operate-Transfer | Like BOT, but private partner owns the asset during the operation period before transfer |
| BOLT | Build-Own-Lease-Transfer | Private entity builds, owns, leases to the public sector, then transfers ownership |
| DBFOT | Design-Build-Finance-Operate-Transfer | Private sector designs, builds, finances and operates; government retains ownership throughout |
| Annuity | BOT-Annuity | Government pays fixed annuities based on availability/performance; demand risk stays with government |
| HAM | Hybrid Annuity Model | Government funds 40% as construction support; developer arranges 60%, repaid as annuities |
| BOO | Build-Own-Operate | Private partner builds, owns and operates permanently (no transfer) |
The Hybrid Annuity Model (HAM)
HAM was introduced by the National Highways Authority of India (NHAI) in January 2016 to revive private participation after BOT-toll projects stalled. It blends EPC and BOT-Annuity: the government provides 40% of project cost as construction support (released in tranches against milestones) and the developer arranges the remaining 60%, recovered as annuity payments with interest over the operations period. Crucially, traffic/demand risk is retained by the government, while the developer bears construction and quality risk, making HAM a dominant mode for awarding national highways under the Bharatmala programme.
Policy Support: VGF and Kelkar Committee
To make socially desirable but commercially unviable projects bankable, the Viability Gap Funding (VGF) scheme (Ministry of Finance) provides capital grants of up to 40% of Total Project Cost (20% Centre + 20% sponsoring authority), enhanced to up to 60% for social-sector projects under the revamped scheme (2020).
The Kelkar Committee on Revisiting and Revitalising the PPP Model (chaired by Vijay Kelkar) submitted its report on 19 November 2015, recommending optimal risk allocation, a national PPP policy, dispute-resolution mechanisms and a focus on service delivery over fiscal gains.
Current Status (2026)
PPPs remain central to India's infrastructure push. Central-sector projects are appraised by the PPPAC (set up 2006). The National Monetisation Pipeline 2.0 / Asset Monetisation Plan 2025-30 (announced in Union Budget 2025-26, detailed by NITI Aayog, Feb 2026) targets an aggregate monetisation potential of ₹16.72 lakh crore across 12 sectors over FY26-FY30, much of it through PPP and leasing structures such as airport monetisation. For current affairs on infrastructure financing, see Ujiyari.com.
