Public–Private Partnership: Financing and Constraints

India is unable to compete globally because of infrastructure constraints and hence is adversely affected, which is extremely important to improve the country's productivity of all sectors. This issue is not only related to scarce finance but also due to lack of government's capacity to implement the programmes. In India, the budget resources of the Government are increasingly restrained in the matter of financing economic infrastructure projects. Because of these reasons, Public–Private Partnership (PPP) is the only viable option for financing such infrastructure needs. The recent trends in such PPP finances have highlighted many issues related to implications for large-scale PPP financing programme promised by the Government of India. Such PPPs have relied mostly on commercial banks to finance their projects so it is still unclear how this dependence will sustain. Long-term finances have exposed the banks to asset-liability mismatch risk. There needs to be an active bond market, which increases the flow of such long-term finance and in turn reduces the dependence on banks.