Should Private Companies Be Allowed to Run Public Services?

From the Editor’s Desk

February 24, 2026

Finance Minister Nirmala Sitharaman has launched the National Monetisation Pipeline 2.0, a plan that aims to raise about 16.72 trillion (16.72 lakh crore) rupees by allowing private companies to operate public assets such as highways, railways, airports and energy networks for fixed periods. The government presents the move as a way to fund new infrastructure without increasing taxes or borrowing, but for ordinary citizens, the policy carries a set of risks that deserve careful scrutiny.

At its core, the plan allows private companies to run many public assets in everyday operations while the government remains the owner, as reported by The Indian Express. But because these companies aim to earn profits, people may slowly notice changes in prices, access to services and job security over time.

The first and most immediate concern is the possibility of higher user charges. Private companies often pay large amounts upfront to win the right to run these public assets and then rely on steady income to recover their money. In sectors such as highways and airports, past experience shows tolls and user fees tend to rise after private operators step in. For households, even small increases in transport and logistics costs eventually show up in the price of food and other essentials.

For example, government data show that total toll collections on national highways have risen steadily in recent years, crossing 480 billion (48,000 crore) rupees in 2022 to 2023 and moving toward about 540 billion (54,000 crore) rupees in 2023 to 2024, driven by traffic growth and periodic fee revisions. Industry bodies such as the All India Motor Transport Congress have long stated that tolls and fuel together make up a significant share of long haul trucking costs. Freight rates influence the cost of moving food from farms to wholesale markets and then to retail shops. As a result, increases in logistics costs, including toll payments, tend to feed into the retail prices that households pay for everyday items such as vegetables, milk and packaged foods.

A second risk lies in the growing influence of commercial logic over essential services. Public systems traditionally carry an obligation to serve low-traffic and low-income regions. Private operators, accountable to investors, tend to focus on high revenue corridors. Over time, this can create uneven service quality between profitable urban routes and less lucrative rural areas.

For example, in 2019 the government handed over the operation of six Airports Authority of India airports to private companies for long-term management. Early investment by these operators focused mainly on busy airports such as Lucknow, Ahmedabad and Jaipur, where higher passenger traffic promised faster returns. Government data also show that many smaller regional airports under the UDAN regional connectivity scheme still rely heavily on government financial support to keep flights running.

A third concern relates to jobs. Large asset monetisation programmes often lead to changes in how services are run in the name of efficiency. This can include more contract hiring, outsourcing of work and leaner staffing levels. Workers in sectors such as railways, ports, telecom and energy distribution can therefore face greater income uncertainty, which can affect the financial stability of their households.

A clear example comes from the Delhi airport after private management took over operations in 2006. Over time, the airport operator expanded automation and outsourced several ground services, while the number of Airports Authority of India staff directly deployed at the airport declined as operations shifted to the joint venture company. Parliamentary discussions and aviation sector reports have noted this larger shift toward contract staffing and leaner workforce structures at major privatised airports.

A fourth concern relates to long contracts. Many of these deals allow private companies to run public assets for 20 to 30 years. If a future government later tries to change user fees or service rules, the company can seek compensation or take the matter to court under the contract terms. That means people may continue to feel the effects of decisions taken many years earlier.

A fifth concern relates to where the money will go. The government says the funds raised will help build new infrastructure. The real benefit for the public depends on whether the money actually creates new assets or mainly helps manage the government’s finances in the short term. Clear and regular disclosure of how the funds are used will therefore be important.

A sixth concern relates to regional imbalance. Private investors usually prefer projects that generate steady and predictable income, which are often located in richer states and busy transport routes. Areas with lower demand may continue to depend heavily on limited government funding, which can widen gaps in infrastructure across the country over time.

For example, most highway bundles awarded to private operators under the Toll Operate Transfer programme have been located on high traffic national corridors in states such as Gujarat, Maharashtra, Andhra Pradesh and Karnataka, where vehicle volumes and toll collections are strong. By contrast, many highway stretches in low-traffic regions, especially in parts of the Northeast and hill states, continue to be built and maintained mainly through direct government funding because private bidders show limited interest. This pattern reflects how private capital tends to flow first toward roads with predictable toll revenue, while weaker traffic corridors remain dependent on public spending.

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