The Hybrid Annuity Model (HAM) is a Public-Private Partnership (PPP) framework and contractual concept introduced by the Ministry of Road Transport and Highways (MoRTH) and the National Highways Authority of India (NHAI) in January 2016 to accelerate highway development in India. It was created to solve the problem of stalled infrastructure projects and the collapse of private investment in the road sector between 2012 and 2015, which had led to a rise in Non-Performing Assets (NPAs) for banks. HAM was a middle path, blending the fully government-funded Engineering, Procurement, and Construction (EPC) model with the wholly private-risk Build-Operate-Transfer (BOT) Toll model.
The mechanism of HAM works by sharing the financial risk between the government and the private concessionaire. The government, through NHAI, contributes 40% of the Bid Project Cost as a construction grant, disbursed in five equal installments of 8% each, linked to verified physical milestones. The private developer arranges the remaining 60% through a combination of equity and debt. Crucially, the developer is shielded from traffic risk, as NHAI is responsible for toll collection. Once construction is complete, the project enters an operations-and-maintenance phase, typically for 15 years. During this period, NHAI repays the private developer's 60% investment through semi-annual annuity installments, which include the amortized capital repayment, interest on the outstanding balance, and inflation-indexed maintenance payouts. HAM's legal architecture is governed by a Model Concession Agreement (MCA) issued by NHAI and is connected to the broader Bharatmala Pariyojana program, sanctioned in October 2017, under which a substantial portion of national corridor expansion is financed. HAM originated from the recommendations of the Vijay Kelkar Committee on Revisiting & Revitalizing the PPP Model.