BS Infra Summit: Open more sectors to private investment, say experts

Experts warn India's infra push risks delays without better planning, funding models, and PPP reforms to match rapid growth

Systemic challenges hold back infrastructure projects despite India’s ambitious push, said Kuljit Singh, partner and leader for infrastructure at EY; Rahul Mithal, chairman & MD of RITES Ltd, and Jagan Shah, chief executive officer of The Infravision Foundation, at the Business Standard Infrastructure Summit 2025 in New Delhi. Opening more sectors for private involvement will help, they said during a panel discussion with Business Standard’s Dhruvaksh Saha. Edited excerpts: 

People are talking about infrastructure, especially during monsoons. Are our cities really falling apart? 

Jagan Shah: I think our cities are reeling under growth. What we’re facing is the fallout of not planning our cities sufficiently for modern expansion. While many neighbourhoods had good foundational planning, the kind of post-1991 growth we’ve seen has left systems and regulations unfit to handle today’s scale. Our systems, our policies, our regulations, all of it is not fit for purpose, for the kind of growth that we're seeing. 

Can you elaborate on the real challenges of infrastructure planning in Indian cities? What’s missing, and how do we address it? 

Jagan Shah: Cities are complex systems of systems. Planning them isn’t child’s play. It needs to be driven by a vision for the future, anticipating growth, and making preparations for that outcome. The shift needed isn’t limited to digital innovation- even core functions like sanitation demand scientific advances. That means adopting frugal, homegrown innovations, and building an entire ecosystem that supports this evolution. Diverse skills and disciplines must collaborate, especially given our geography — 8,000 cities across a vast subcontinent. 

Rahul, you’ve overseen infrastructure projects nationally. What are the concrete challenges in preparing and planning such projects at scale? 

Rahul Mithal: Planning is at the core of any infrastructure project, but it’s often undervalued.  To put it in perspective- for a ₹500 crore project, the detailed project report (DPR) might cost just ₹1–1.5 crore. Even though the DPR's quality determines the project’s cost, timeline, and final output, selecting the right entity for a DPR is mishandled. Too often, governments use a simple two-packet tender system—one technical, one financial—and give the contract to the lowest financial bidder (L1). This is appropriate for construction, but not for specialist consultancy like DPRs.

 

The better system is quality and cost-based selection (QCBS), which weighs technical merit and financial bid. Despite government instructions, only about half the entities use QCBS for DPRs. This is because QCBS requires judgement and accountability. It’s easier to tick boxes in a technical evaluation than to actually score and defend qualitative decisions.

 

Kuljit, from your vantage point, what hinders better planning and consultant selection?

 

Kuljit Singh: The QCBS debate is two decades old, yet the government continues with the two-packet system. The resistance is rooted in fear. Suppose a government official spends more for a better consultant, even if it complies with policy, they risk future accusations of overpayment. The only way hiring by QCBS works is when senior ministers explicitly back the process, which is rare. We need to track historical performance of DPRs, compare planned outcomes with what was delivered, build a database of deviations, and learn from it. Without that accountability, the cycle will repeat. Unless rules are clear and the data on outcomes is tracked and used, this fear will continue to stifle better practice. 

 

Jagan, is the planning problem just a matter of procurement, or something larger?

 

Jagan Shah: Procurement matters, but there’s a deeper issue—lack of confidence in decision-making. Even when processes are set, officers hesitate and want almost mechanical criteria so judgment need not be used. One of the reasons why we need more industry academia collaborations or collaborations across the whole ecosystem is that it helps the officer making a decision to have a reference.

 

We only have a decade to build infrastructure, and operational pressures will likely force more agile and experimental methods. The point is a full, 360-degree review of whether our systems—government, companies, institutions—are ready.

 

Let’s shift to the funding side. Has infrastructure financing become harder in India? Are we still haunted by the NPA crisis, especially for lenders and developers?

 

Kuljit Singh: For debt, things are much improved. It’s rarely difficult to fund a project in India from the debt side- 99 per cent of projects get financed. Banks, especially for highways (with the NHAI’s legal backstop), are keen. For renewable energy, there’s a mix—banks, non-banking financial companies (NBFCs), foreign banks, and specialist institutions like Power Finance Corporation.

 

Even in renewables and airports, money is available, though new fields like electric vehicle infrastructure get weaker terms. Where challenges remain is in equity investment. Foreign investors are happy to fund renewable energy—both greenfield and operating assets—but hesitate on highways. So from an equity perspective what we see is that it's just the greenfield highways where foreign investment is still difficult to get. Otherwise in every other sector, I think whether it's greenfield or operating, you do get foreign investors who are happy to put in the money.

 

InvITs (Infrastructure Investment Trusts) are gaining ground, especially in highways, but less so in renewables so far. We see this trend will probably change in the near future, but right now, the market seems to be more focused on InvITs for highway assets than for renewable energy.

 

Empirically we haven’t seen PPP take off in certain infra sectors. Why is domestic investment so cautious, and where do PPPs really work?

 

Kuljit Singh: PPP projects are common in centrally-managed sectors, except for railways, which haven’t seen many despite the need. Sectors like water and waste management, where demand for PPP exists, see very little actual flow. Anything governed by local or state bodies is hard to finance through PPP.

 

Are there sectoral patterns to where private investment works best? What are lessons for railways and other public goods?

 

Rahul Mithal: Across sectors, there’s no shortage of money or projects. The issue is the quality of deep due diligence- the risk assessment, revenue, policy analysis required for long-term PPP. Investors end up taking fragmented advice- financial from one agency, engineering from another, risk from a third. There’s no single gold-standard agency for holistic due diligence. Addressing this gap will boost investment flows.

 

Global experience shows railways have experimented with varied PPP models. Typically, operational and safety certification is kept in-house, but private investment is sought in sub-areas outside core operations and maintenance. Indian Railways is trying to replicate these global best practices, using PPPs in non-core segments and learning from international experience.

 

Despite central government budget allocations, municipal and state bodies face severe funding shortages for infrastructure. What’s going wrong?

 

Jagan Shah: This is tied to the dependency on sovereign guarantees. Large grants from the central government carry that kind of assurance, so big-ticket PPP projects tend to work. But urban infrastructure projects are smaller, scattered, and depend heavily on local bodies’ finances, making it hard to attract PPP investment.

 

However, some projects stand out—like Pune’s municipal water bond issued about a decade ago. It relied on two key reforms- a municipal resolution to increase water charges annually, and ring-fencing those revenues to repay investors. This de-risked the project by assuring investors of steady revenues and policy stability, preventing backtracking.

 

We’ve also maxed out programmes like NHDP on highways, so the focus must shift to well-planned, targeted projects with comprehensive due diligence accounting for the project’s full life cycle. Unfortunately, public investment culture rarely considers lifecycle costs, overruns and delays are common, resulting in huge wastage of public funds. Changing this mindset and curbing wasteful practices—whether by the government or private sector—is essential moving forward.

 

Where do you draw the line between infrastructure as a public good and the need to de-risk it or offer it to private players?

 

Jagan Shah: It’s not a binary choice. Design and foundational analysis matters a lot. I think fundamentally project preparation is the root where all of the value really originates. There have been talks for years about creating project-clearing houses at the government level, but it hasn’t happened yet. Programmes like the proposed Urban Challenge Fund announced by the finance minister could be transformative. They haven't brought out the guidelines yet for the urban challenge fund, but I believe we're always ahead of the curve in terms of really smart ideas coming in from the top, but by the time they hit the ground, they just fizzle out actually or malfunction.

 

Kuljit, do you believe even conservative sectors could successfully open up to PPPs?

 

Kuljit Singh: Yes. Every government in India is resource-constrained and needs outstrip funding. So by default, I think in India what needs to happen is that if there was a possibility to undertake private investment to fund what would have been otherwise funded by the government on a CAPEX basis, you should always go down that path without fail. Central agencies have succeeded by standardisation and replication— sectors like highways, renewables, airports. But in decentralised sectors— state and municipal authorities— every entity develops its own processes. There are 1,000+ municipal authorities, each trying separate experiments. The solution is accountability and prescription from above- set private investment targets for each segment and enforce consequences for missed targets.

 

Given the national monetisation pipeline and other initiatives, why hasn’t asset monetisation taken off?

 

Kuljit Singh: India has two kinds of infra assets- existing and new creations. Monetising what already exists is hard, because of legacy valorisation and fear of robbing the future. Every time an old asset is privatised, someone claims the government is mortgaging what belongs to future generations. But if the money realised is invested in new assets, you end up with net gain. Still, new creation is easier—no legacy issues, fewer emotional hurdles. So, for PPP adoption, focus on assets yet to be built, especially in sectors like water, waste, and railways where PPP hasn’t taken off.

 

Rahul, what really drives execution success on the ground? Is corruption or individual failure the main reason projects falter?

 

Rahul Mithal: It’s not as simple as blaming individuals. Even with strong design and documentation, success depends on not being blinded by the pressure for expeditious execution. Quality comes through effective project monitoring and placing good project management consultants (PMCs) on the ground. Innovative technology should be used for oversight, not for its own sake. A frequent misapprehension is that the entity preparing the DPR cannot serve as PMC due to conflict of interest. But often, having two separate entities leads to delays and duplications.

 

Jagan, does the push for speed in execution actually reduce project quality?

 

Jagan Shah: Absolutely. For example, highway safety studies—such as with IIT Delhi—reveal that while corner-cutting on safety has been common, it’s indirectly tied to construction pace. Some high-profile accidents, such as the one that killed Cyrus Mistry, were at poorly constructed junctions. Off the record, senior officials admit corners are cut to hit ambitious targets set by NHAI. You get a massive highway network at speed, but not all safety codes are met. So speed and quality can be in direct conflict. While the EPC (engineering, procurement, construction) mode delivers quick results, it opens the door to corner-cutting, which affects future generations. Execution is not just about constructing something. It is also about how it is going to perform over its lifetime. We have to stop rewarding only speed. If you build something in two years instead of four, but it fails in 10 years instead of 30, what have you achieved?

 

As we close, what is the way forward for Indian infrastructure?

 

Kuljit Singh: We need to open up more sectors to PPPs. India should open up new sectors. Highways and renewables are already doing well, even ports and airports are on track. But the sectors still closed to private investment represent vast untapped opportunity.  Focus on the sectors where you haven't got private sector investment and if you go after them, then you really increase the bouquet of projects which are available for private investment.

 

Investors have liquidity, corporate balance sheets are healthy, and if projects are structured right, funding is available. Interestingly, recent years have not witnessed major PPP failures in India. This is a good time to increase the volume and variety of PPP projects.