Rural Roads: India’s Growth Arteries

The social development project, which involves the Union Ministry of Rural Development, Union Ministry of Road Transport and Highways as well as different State Governments, aims to construct about 371,000 km of new roads and upgrade around 368,000 km of roads

June 22, 2018

As per India’s union budget for financial year 2018-19, around US$225 billion has been alloted for creation of livelihood and infrastructure in rural areas

According to the Ministry of Rural Development, as of June 16, 2018, over 83 per cent of the 143,325 road works sanctioned have been completed

Launched in 2000, PMGSY is now not only about building roads and connecting remote habitations but also constructing durable all-weather roads

Road connectivity, especially in a developing nation, is essential for the provision of essential services such as education, healthcare, employment and security

A strong rural economy is critical to India’s overall growth aspirations since the majority of the nation’s 1.3 billion population is based out of rural areas. Among the multiple initiatives launched by Government of India to ensure a robust rural economy is a road connectivity project called Pradhan Mantri Gram Sadak Yojana (PMGSY). The social development project, which involves the Union Ministry of Rural Development, Union Ministry of Road Transport and Highways as well as different State Governments, aims to construct about 371,000 km of new roads and upgrade around 368,000 km of roads. Road connectivity, especially in a developing nation, is essential for the provision of essential services such as those related to education, healthcare, employment and security. As per India’s union budget for financial year 2018-19, around US$225 billion has been alloted for creation of livelihood and infrastructure in rural areas.

According to the Ministry of Rural Development, which is the nodal department for coordinating the PMGSY programme, as of June 16, 2018, over 83 per cent of the 143,325 road works sanctioned have been completed. Of the 102,795 new connectivity projects, 81.64 per cent has been completed. Likewise, of the 40,530 upgradation works, 86.52 per cent has been completed. In all, the total road length sanctioned is 461,128 km. It is the Government’s firm belief that connectivity is key to rural development because roads not only provide easier access to input and finished goods markets but also facilitate efficient delivery of education and healthcare services. Rural roads are therefore vital not only for improving agricultural income but also to promote access to various social services. In essence, rural roads which provide access to remote habitations (of 500 people of more) have become central to sustainable poverty reduction.

Enthused by the progress of PMGSY so far, the World Bank has signed a US$500-million loan agreement with the Indian government to provide additional funding for building 7,000-km of climate resilient roads

These new modes of connectivity have other collateral benefits for the economy: they make remote areas available for fresh capital investment and integrate them with the national marketplace for all varieties of goods and services. Availability and price of land were a hindrance for attracting foreign investment into manufacturing; even if it was made available, getting capital goods and other inputs to these locations was always a challenge. PMGSY obviates some of these worries. In addition, roads are somewhat like pipelines, allowing multiple utilities to ride on them, such as power connections and digital infrastructure. Launched in 2000, PMGSY is now not only about building roads and connecting remote habitations but also constructing all-weather roads that can withstand natural wear and tear caused by climatic variations.

Enthused by the progress of PMGSY so far, the World Bank has signed a US$500-million loan agreement with the Indian government to provide additional funding for building 7,000-km of climate resilient roads, of which 3,500 km will be built using green, low-carbon and new technologies. The project will cover nine Indian states: Bihar, Himachal Pradesh, Jharkhand, Meghalaya, Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and Tripura. According to World Bank project report, the additional financing is also designed to achieve, “Institutional strengthening, a technical assistance program designed to cover all states to strengthen the capacity of relevant agencies to implement and enhance the programme and support asset management, institutional, investment and development effectiveness.” Prior to sanctioning the current $500 million funding, the World Bank had disbursed US$1.4 billion towards PMGSY since 2010.

The World Bank has also expressed its satisfaction with PMGSY’s implementation and progress so far. According to the Bank’s Implementation Status and Results Report, “The Project has been a successful operation with a ‘Highly Satisfactory’ rating in achieving its project development objective (PDO) and significant accomplishments on civil works, institutional development, and disbursement linked indicators.”

Among the other multilateral financial institutions, Manila-based Asian Development Bank and Beijing-based Asian Infrastructure Investment Bank (AIIB) have also been key supporters of PMGSY. ADB signed a US$250-million loan agreement with the Indian government in December 2017 to improve rural connectivity in five Indian states – Assam, Chhattisgarh, Madhya Pradesh, Odisha and West Bengal. The loan proceeds will finance construction of 6,254-km of all-weather rural roads in these five states. The loan builds upon the US$800-million ADB-financed first Rural Connectivity Investment Program in 2012 that added about 9,000 kms of all-weather rural roads. Meanwhile, in April 2018, the Asian Infrastructure Investment Bank (AIIB) had approved a US$140 million loan for projects to improve rural connectivity in Madhya Pradesh. The funding will improve livelihoods, education and mobility for 1.5 million rural residents.