India’s current plight shows why it’s not a good idea for any local or state government in America to think it can depend on private-public partnerships to fund its infrastructure construction projects once it’s out of municipal-borrowing capacity (or for any other reason).

Infrastructure spending in India is slowing down partly because

Much of the new infrastructure is supposed to be funded through … public-private partnerships, in which private-sector companies build and manage the projects, and then make a profit through tolls or other fees for a few years before handing them to the government. Now the private sector isn’t as interested ….

… reports the Journal. Private partners on such projects can’t get financing for their projects.

If we are still allowed to take lessons from this global capital crisis rather than just throw up our hands and say that “nobody could have anticipated it,” one good lesson could be that thus far, neither method of raising capital for infrastructure projects — PPPs or traditional US-style municipal finance — has proven immune to the capital-markets forces acting against it.

Of course, the American muni markets haven’t seen the same level of capital flight other markets have, but that’s likely because of their long performance history and still relatively transparent financial structure (as well as, possibly, investors’ confidence that the U.S. government won’t let municipalities default en masse). Still, our traditional municipal-bond markets are probably through with their own cheap-financing years. Further, the recession is laying bare how close some municipal issuers — like New York’s Metropolitan Transportation Authority — already were to bumping up against hard borrowing ceilings even before the credit crisis started.

Local and state officials can still hope that PPPs will take up some of the added debt burden as cities and states can’t afford to borrow any more. But they should be realistic about that prospect. After all, to attract money to their projects, those PPPs in recent years have depended on the same capital-market assumptions (cheap debt and ever-rising asset values) that the municipal governments depended on to fund their own budgets and capital projects (cheap debt and ever-rising property values).

It’s probably a good idea, in the future, for governments accustomed to relying on PPPs to try to develop robust US-style muni-finance markets, and vice versa.

But neither is a sure thing just when local and state officials need it to be.