India has undergone significant change in recent years. Previously, when road construction was under the purview of the government, roads used to be financed out of budgetary allocation. However, road construction has been privatized in India in recent years and the quality of roads has improved significantly. As road is a public good, it is difficult to price it. Further, it has to be borne in mind that fund requirements are large and also almost the entire expenditure has to be made upfront. Thus it is an interesting exercise to analyze under what circumstances the private sector has come forward in road construction. The purpose of this paper is to examine and analyze the various financing structures that have been observed in India.

The road sector in India has seen significant changes in recent years. The focus of the government, the technology in use, the number of participants from the private sector and the quality of roads that are being built all indicate a qualitative transformation in this sector. This is in spite of the fact that consumers are unwilling to pay for this service. This is also in spite of the fact that road construction and maintenance was earlier the sole responsibility of the government.

It is well documented that infrastructure including the road sector is essential for economic development. Speed and ease of communication is basic to remain in sync with the market, particularly in today's globalized environment. The issue is how to arrange finance for this sector, where the investment requirements are large and almost all has to be given upfront. The objective of this paper is to examine the issue of financing with respect to this sector and analyze various funding options being used in India. Specific case studies will be taken to examine alternative funding options.

Infrastructure Journal, Road Projects, Private Sectors, Economic Development, National Highway Development Programme, NHDP, United Nations Commission on International Trade Law, UNCITRAL, debt-equity ratio, Maharashtra State Road Development Corporation, MSRDC, Non Performing Asset, NPA, World Development Report, Government Departments.