Thus, after 25 years of greenfield PPPs, India’s infrastructure strategy is pivoting to a more practical format: The asset stays public; only its operation changes hands. The launch of the NMP 2.0 in February, targeting ₹16.72 trillion (FY 2026-30) is 2.6 times the NMP 1.0 target of ₹5.95 trillion (FY 2021-25).
This reset reflects a clear recognition among policymakers that private capital has a proclivity towards the third stage of projectisation — viz, the operating risk stage — after the state has itself taken up the first two stages, development risk and construction risk.
PPP frameworks theoretically should be structured on a simple principle: To allocate risk to the party best able to manage it across the three tranches: Development risk (land acquisition, clearances, financial closure), construction risk (cost overruns, delays) and operations risk (demand and revenue uncertainty). India’s earlier greenfield PPP boom fundamentally shifted all three risks inappropriately to private developers, who bid aggressively on optimistic assumptions. For example, by 2013, 60 per cent of national highway projects were under the BoT (build-operate-transfer). The model buckled: Flawed traffic projections, land acquisition delays, and cost overruns stressed the portfolio: 43 of 73 highway PPPs (8,300 km) were terminated, eroding private sector confidence in greenfield PPPs. This phenomenon of inappropriate risk allocation surfaced in other sectors as well, notably power, and at one time added up to a humongous ₹18 trillion of non-performing assets, resulting in what the Economic Survey referred to as the twin balance sheet problem.
The private sector traditionally finds its competitive advantage in operations, not in development or high-risk projects constrained by state capacity and politics. The hybrid annuity model (HAM), introduced in the mid-2010s, reflected this reality — the government assumed land and revenue risk, while private players built and operated assets for fixed returns. HAM worked as a practical public contracting format, albeit with private sector skin in the game. NMP formalises this logic. At its core is the “family silver” logic: Monetisation keeps ownership intact.
NMP 1.0, with a target of about ₹6 trillion was the first formalised target for brownfield monetisation. It established targets around roads, railways, power, pipelines, and telecom. Toll-operate-transfer (ToT), Infrastructure Investment Trusts (Invits), and securitisation were deployed, achieving ₹5.3 trillion (89 per cent) of the target. Performance was uneven though: Roads and coal led, while railways (30 per cent) and aviation (14 per cent) lagged significantly.
NMP 2.0 raises the ante, targeting ₹16.72 trillion. (see table) Market response affirms credibility. The National Highways Authority of India (NHAI) has raised ₹28,307 crore in FY26 via InvITs and ToT. The landmark launch of Raajmarg Infra Investment Trust (RIIT), the NHAI’s first public Invit for retail investors, raised ₹9,500 crore. It was oversubscribed nearly 14 times and listed on BSE in March 2026. It complements National Highways Infra Trust (NHIT), which has raised over ₹43,000 crore from global pension funds and domestic institutions.
Policy directions are leading to alignment. The Railways met just 29 per cent of NMP 1.0 targets but are now obliged to meet ₹2.62 trillion under NMP 2.0. The Railway Board’s 2025 proposal to revise its 2012 PPP policy, extending concessions to 50 years and assuming land acquisition, reflects evolved risk allocation. Critically, NMP 2.0 goes beyond leasing operations. It involves selling minority stakes in listed public sector units (PSUs): ₹82,700 crore from seven railway PSUs alone, with further stake sales in power, port, and infrastructure PSUs. The disinvestment target jumps from ₹47,000 crore (FY26) to ₹80,000 crore (FY27), through a combination of asset monetisation and PSU stake sales, bringing investors into boardrooms, with a tangible say in management decisions.
But even formats for “monetisation” can be tricky. They have to be crafted to ensure that the new private operators adhere to strict service-level agreements (SLAs) as well as focus adequately on safety, modernisation, renovation and public service, while earning an adequate return on the invested capital. SLAs must define measurable benchmarks (punctuality, safety, grievance redress timelines), yet weak penalties invite non-compliance while punitive ones deter serious bidders. Quantifying “public service” contractually is inherently difficult. Modernisation obligations clash with short concession periods, while mandating socially essential but loss-making routes erodes viability without structured subsidies or viability gap funding built into the contract. Crafting a monetisation format that threads all these together is, in practice, a complicated political, institutional and economic challenge.
Getting all this right is clearly the challenge in creating a side door for private capital to engage in a partnership format for building India’s infrastructure services delivery, without selling the family silver.
The author is an infrastructure expert. He is also the founder & managing trustee of The Infravision Foundation. With research inputs from Mutum Chaobisana
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