Paper short abstract:

Within the labyrinth of public private partnerships for regional infrastructure projects in India, the State paradoxically exhibits a Firm’s ‘make or buy’ dilemma, while various Firms remain embedded therein, for potential profits, resulting in cyclical risk sharing. The author examines outcomes.

Paper long abstract:

Within the objective of promoting economic growth in India the central and state (provincial) governments have proposed five industrial corridor regions in the country (Department of Industrial Policy & Promotion, Government of India). The production of these regions is hinged upon regional infrastructure including road based expressways, freight corridors, airports and port projects (Ministries of Roads, Highways, Ports, Airports) many of which are 'projectized' and structured as PPP (public private partnership) projects, forging a labyrinth of partnerships between the State and the Firm. This paper investigates the relationship between an 'entrepreneurial State' in India and the Firm as distinct governance structures, towards understanding the governance of the construction industry for regional infrastructure projects. While the State plays the role of the regulator it's growth objectives are often executed partially by private firms and/ or hybrid government owned companies which exercise substantial autonomy. Public sector agencies forge PPP contracts with private firms, in the process transferring liabilities arising from uncertainties and risks onto the private sector party, enabled through complex project contracts. Cyclical sharing of institutional roles and risks characterizes this milieu of PPP projects in India, where often, a hybrid public agency outsources projects to private sector agencies, which almost complicitly, foster a continuous principal-agent relationship with the public sector in order to capture potential markets and profits. This paper investigates conditions under which the binary between the State and the Firm exists and/ or ceases to exist for large scale regional infrastructure construction PPP projects.