World Bank to chip in $1.5 billion for rural connectivity | business | Hindustan Times
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World Bank to chip in $1.5 billion for rural connectivity

The World Bank on Tuesday approved a USD 1.5 billion credit and loan for the Pradhan Mantri Gram Sadak Yojana (PMGSY), aimed towards improving rural accessibility of roads.

business Updated: Dec 22, 2010 11:48 IST

The World Bank on Tuesday approved a USD 1.5 billion credit and loan for the Pradhan Mantri Gram Sadak Yojana (PMGSY), aimed towards improving rural accessibility of roads. The new project will concentrate on the states of Himachal Pradesh, Jharkhand, Meghalaya, Punjab, Rajasthan, Uttarakhand and Uttar Pradesh, the Bank said in a statement.

Over the next five years, the project will aim to provide these states with an average connectivity of 91% by constructing 24,200 km of all weather roads to benefit an estimated 6.1 million people. The project will also develop a system for maintaining these roads in good condition over the long term.

"A good road network can generate many commercial and social benefits for rural economies through increasing access to goods as well as services such as health and education," said the World Bank's Country Director for India, Roberto Zagha.

The credit and loan, in part, is from the International Development Association (IDA); the World Bank's concessionary lending arm, which provides interest free loans with 35 years to maturity and a 10 year grace period. The remaining investment will come from the International Bank for Reconstruction and Development (IBRD), which has a 5 year grace period and a maturity of 18 years.

The program was established in the year 2000 to address the challenge of poor rural accessibility at a time when almost 40%, or 300 million people in the country lacked access to unpaved roads. And a large part of the existing 2.7 million km of the rural road network was in poor condition, impeding access to markets and increasing transportation costs.

While the PMGSY, also called as Prime Minister's Rural Roads Programme, has since added 2,74,000 km of new roads, vast parts of the country, especially the economically weaker and hilly areas, continue to remain inaccessible.

The project also includes USD 60 million in technical assistance to build capacity of the rural roads agencies, especially in the ongoing management of assets and the sustainable maintenance of roads.