Despite the advantages that are associated with the hybrid annuity model (HAM) in the road construction sector, the interest in it has moderated due to various reasons. Discuss.

Advantages

1. sharing of financial burden between govt. and private player
2. Promote efficiency in completion of work → (with private player participation) + quality

(3) Bring in competitiveness in the sector (4) Promote innovation / usage of new technology → (Private players will bring this) (5) Prevent the cost overrun of project → (Eq. Avg. cost overrun in India ≈ 4 lakh Crore (MoRTH)) (6) Reduce fiscal deficit of govt. → as capex burden is share (capital expenditure) (7) Create a virtuous cycle of investment ↓ by faster completion of project

Still interest moderated (1) Post HAM introduction, many project going for it → increasing govt burden (2) Also, some reluctance by private players is seen (3) Delay in payment / financial investment (4) Slow collection of tolls → increasing govt-burden (5) High fiscal deficit of govt. due to disruption like pandemic (≈ 12% during pandemic time) ↓ added to cost overrun (6) Issues of crony capitalism also remains.

Way forward (1) Deliberations on the issues needed (2) Blend of HAM with other models like BOT / BOT Annuity (3) Increasing Capital Expenditure of govt (Present ≈ 2.9% economic survey)