If global shocks explain the pressure on India’s infrastructure sector, negative bidding explains its fragility. India’s public procurement system continues to rely heavily on the L1 (lowest bidder) model, where contracts are awarded primarily on the basis of the lowest cost. In theory, this approach promotes transparency and cost-efficiency. In practice, however, it often distorts pricing and undermines project viability.
What is negative bidding?
Negative bidding refers to contractors quoting 15-30 per cent below project estimates to secure contracts.