An entrepreneurial state in India? Investigating public-private partnerships, incomplete contracts and risks in the transport infrastructure sector

The liberalised Indian State post 1991 prioritised development of high quality infrastructure as a key driver of economic growth. To offset paucity of public funds the national government advanced privatisation and Public Private Partnerships (PPP) as a mechanism for implementing infrastructure projects. Scholars have previously argued that with liberalisation, the State in India transformed its role from a regulator and a provider to that of a facilitator. This research argues that the role of the State in partnership with private firms in a PPP mechanism however, goes beyond these dispositions. The adoption of PPPs now positioned the State as a partner to markets. Such a role has created dilemmas for the State in accomplishing multiple seemingly incongruous goals, of providing improved infrastructure to the public, regulating as well as protecting markets and safeguarding the public against the risks PPP projects may produce. The question this raises is: who bears this risk, the State, the firm or the society? This research contributes to the understanding of the entrepreneurial role of this State in partnership with private firms. Utilizing a macro-micro approach, ranging from policy analysis to contract analysis at PPP project level, and examining a range of court cases, this study of airports and national highway projects revealed that as opposed to economic growth goals that PPPs targeted their implementation resulted in a range of financial risks that not only impeded the State’s goals but also thwarted private sector profits. The study concludes with debates on costs and distribution of financial risks and contested public purpose outcomes.