Evaluate the role of Special Purpose Vehicles in financing and executing large infrastructure schemes in India, with reference to BHAVYA.

A Special Purpose Vehicle (SPV) is a separate legal entity incorporated under the Companies Act, 2013 to ring-fence a project's assets, liabilities and financing. BHAVYA — the ₹33,660 crore Central Sector Scheme for 100 industrial parks (2026-27 to 2031-32) — routes park development through project-specific SPVs [1][2].

Merits in financing

• Risk ring-fencing: a standalone SPV isolates project debt, shielding sponsors' balance sheets and enabling project-based financing for capital-heavy parks [1].
• Crowding-in private capital: SPV equity lets Centre, states, CPSUs and private developers co-invest, leveraging the large outlay to attract further investment [1][2].
• Milestone-linked funding: BHAVYA channels equity support tied to land value and project milestones, improving fiscal discipline [1].

Merits in execution

• Focused governance: a dedicated SPV with defined mandate speeds decisions and land aggregation, delivering true plug-and-play infrastructure [1].
• Cooperative federalism: state-Centre SPVs align local land/utilities with national coordination; NICDC anchors implementation across ministries [3].
• Transparency safeguards: guidelines mandate accountability and audit mechanisms within SPVs [1].

Limitations

• Blurred accountability and thin capitalisation can leave SPVs debt-laden — as seen in some Smart Cities/highway SPVs.
• Multiple SPVs risk fragmentation and coordination overheads; state fiscal capacity varies.
• Off-budget borrowing may obscure contingent liabilities.

On balance, SPVs are an indispensable, flexible vehicle for financing and executing schemes like BHAVYA, provided strong audit, adequate capitalisation and NICDC-led monitoring convert structural agility into transparent, investment-ready outcomes advancing Make in India.