The Evolution of Hybrid Annuity Model (HAM): Has It Balanced Public Risk and Private Profit?

The evolution of Public-Private Partnership (PPP) models in India’s highway sector reflects a broader institutional response to challenges in risk allocation, financial sustainability, and delivery efficiency. This study investigates the Hybrid Annuity Model (HAM), introduced in 2016, as a middle path between the Build-Operate-Transfer (BOT) and Engineering, Procurement, and Construction (EPC) frameworks. While BOT exposed private concessionaires to revenue volatility and EPC returned full risk to the government, HAM attempts to balance the equation by blending annuity payments with government funding during construction. Despite widespread adoption, scholarly assessments of HAM’s actual performance remain limited. This paper conducts a qualitative comparative case study of four national highway projects two under HAM and one each under BOT and EPC—using secondary data from MoRTH, NHAI, CAG, and credit rating agencies. Metrics analyzed include cost overruns, time delays, traffic forecast deviations, and dispute incidence. Findings indicate that HAM improves financial predictability, reduces arbitration, and enables quicker financial closure. However, its effectiveness is hindered by systemic issues such as unrealistic traffic projections and delayed government annuity disbursements. Compared to its predecessors, HAM provides a more stable risk-sharing environment and enhances stakeholder confidence, yet remains dependent on administrative efficiency. The paper concludes with targeted policy recommendations, including stricter demand forecasting norms, digital project monitoring, and ESG-linked annuity models, and highlights future research directions on regional scalability and sustainable financing under HAM.