Invisible Balance Sheet In Infrastructure Finance: Legal And Economic Perspectives
- IJLLR Journal
- Jul 31
- 1 min read
Shivam Goyal, Tathya Sarkar & Devesh, Institute of Law, Nirma
ABSTRACT
India’s infrastructure financing ecosystem is increasingly shaped by legally non-enforceable but economically significant instruments such as comfort letters, off-budget borrowings, and quasi-sovereign guarantees that escape disclosure and accountability. These practices, while enabled by corporate actors, are further entrenched by state institutions that exploit legal and constitutional gaps to obscure fiscal risk. The "invisible balance sheet," a shadow layer of governmental and corporate responsibilities that elude official financial statements, regulatory supervision, and parliamentary examination, is the result of this phenomenon, according to this research. The paper uses Indian case studies like Telangana's PSU debt, KIIFB, and IL&FS to place this phenomenon within larger doctrinal failures, such as the Companies Act's statutory silences, contract law's stringent enforceability requirements, and the absence of constitutional protections against off- budget state borrowing. Despite recent regulatory efforts to improve fiscal transparency, such interventions have been largely ad hoc and insufficient in addressing the underlying structural issues. This paper undertakes a detailed legal and policy analysis to argue for the formal codification of quasi-fiscal instruments, the imposition of mandatory disclosure obligations for all contingent liabilities, and the introduction of constitutional safeguards to ensure legislative and public oversight. By prioritizing the economic substance of fiscal commitments over their legal form, the paper proposes a comprehensive reform agenda aimed at strengthening the transparency, accountability, and legal integrity of India’s infrastructure financing framework.
