Urban Local Bodies (ULBs) are increasingly coming under pressure of service delivery in India, but with the poor state of their finances, alternative models that are outside the traditional budgets assume importance. Public-Private Partnerships (PPPs) are one such important off-budget model for ensuring service delivery and leveraging private finance wherever possible. PPPs have assumed importance in the delivery of public infrastructure services across the world; it was only recently that they began to be utilized in the delivery of urban infrastructure. This paper outlines, in general, the potential and importance of PPPs in public service delivery, presents the major PPP options, the PPP process and principles which urban local governments could adopt, and discusses their prospects in the light of recent experiences.

India has been witnessing a high population growth, rapid urbanization and low levels of economic growth for quite sometime now. This has made the country remain at a low level of development and encouraged the policymakers to tackle the urbanization pressures through policies that aim to reduce the population growth, reduce the migration of rural people to urban areas, and continue with import-substituting economic policies. However, the break was found on the economic development first through the adoption of liberalization policies in the early 1990s. India has been experiencing an unprecedented rate of economic growth in the last little over a decade since then. Likewise, the population growth has started showing signs of stabilization to remain in a state of demographic transition. However, urbanization is rapidly engulfing several developing countries and India is no exception to it. But India has also experienced a relatively lower pace of urbanization when compared to the earlier decades (Kundu, 2006). Yet, the absolute levels of urbanization in terms of growth of urban population are high and it is spreading across the country.

Cities are not only the centers of population concentration now, but they are also centers of economic activities, investment flows, employment generation, and trade and commerce. Therefore, the pressure on the delivery of urban services from various sections of the society is increasing. While the pressure on the provision of public services is mounting, Urban Local Bodies (ULBs) are increasingly finding it difficult to cope with the pressures, given the poor base of their finances.

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