Multi-dimensional public–private partnership readiness index: a sub-national analysis of India

Abstract

PurposeDespite being a global public–private partnerships (PPPs) leader, India faces a vast PPP divide at a sub-national level, wherein a few states receive the majority of PPP projects, whereas other states face severe issues in attracting PPP investments. This necessitates the identification of factors that make some states attractive to PPP investors. The purpose of this study is to construct a “PPP readiness index” at the Indian state-level, which aims to assess the readiness of states for the diffusion of PPPs.Design/methodology/approachUsing a quantitative method on secondary data, the study scores 17 Indian states on dimensions such as experience with PPPs, physical infrastructure, financial sector development, market conditions, institutional quality and political stability and fiscal constraints for each of the years during 2009–2018. Principal component analysis is used for assigning weights to the dimensions, thereby arriving at the composite index.FindingsResults highlight that Tamil Nadu and Maharashtra offer the most favorable environment for PPPs to flourish. In contrast, Jharkhand and Bihar are laggards because they score the least and have limited PPP experience.Practical implicationsThe index will assist the private sector in conducting a comparative analysis between state-specific PPP arrangements, thereby enabling them to make informed decisions prior to forging PPP arrangements. Further, the index will help the state governments in improving their PPP readiness by following the policies of the leading states.Social implicationsImprovement in PPP readiness of the states will enable higher PPP investments in infrastructure, thereby reducing infrastructure deficits. This, in turn, will lead to economic growth, development and an improvement in the quality of life.Originality/valueTo the best of the authors’ knowledge, this is the first study that comprehensively analyzes the PPP readiness at a sub-national level in India.