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India: New All-Weather Roads Boost Rural Incomes

Last Updated: Sept 2009
India: New All-Weather Roads Boost Rural Incomes


In 2000, about 40 percent of India’s 825,000 villages lacked all-weather roads. The existing network of some 2.7 million km of rural roads suffered from years of neglect, under-funding, and a lack of maintenance. As a result, it loomed as a major constraint to reducing poverty and improving quality of life in rural areas. Moreover, the capacity of road agencies and the construction industry were meager. Many practices and technologies were outdated, which regularly led to poor-quality work. And the views of local communities were rarely considered in the design of new roads.


Over the years, IDA has supported a number of rural roads projects in the country, both as stand-alone projects and as components of larger agriculture or rural development projects. Currently, IDA’s major support is to the Prime Minister’s Rural Roads Program which was launched by the Indian Government in 2000 to connect all villages with more than 500 people—or about 180,000 villages. Under the program, some 375,000 km of new roads are being constructed and another 372,000 km improved at an estimated cost of US$34 billion. Of equal importance is improving maintenance. The IDA-financed Rural Roads Project is currently supporting the program in select districts of Himachal Pradesh, Rajasthan, Jharkhand, and Uttar Pradesh. In these locations, the project is financing road construction and maintenance, as well as institutional development and capacity building of the road agencies that manage the work.


IDA projects have been found to have wide-ranging impacts on rural communities, such as revitalizing the rural economy, raising incomes, increasing literacy and school enrollment, and improving families' access to health care.

- Incomes soared. Household incomes rose by 50 to 100 percent on average. Farmers received better prices for their products by accessing markets directly and cutting out middlemen, and spoilage of perishable produce reduced.

- Agricultural production improved. Agricultural and animal husbandry practices were modernized; improved seeds, fertilizers, and veterinary services became available. Yields of paddy almost tripled—from an average of 0.6 tons per acre to 1.7 tons per acre. Cash crops were introduced in previously isolated areas.

- Literacy improved. There was a 10 percent increase in the literacy rate and the gender gap narrowed as it was easier for girls to go to school. There was better availability of school teachers.

- Assets appreciated. Land prices increased by some 60 to 80 percent on average.

- More micro-business, more jobs, and diversification of the rural economy. Access to jobs improved, and new businesses started up, diversifying the rural economy.

A study in India found that Government spending on rural roads had significant impact on poverty reduction and on productivity growth: for every 1 million rupees spent on rural roads, 163 people were lifted out of poverty.


IDA credits supported the building and maintenance of rural roads in eight states. IDA contributed US$300 million to the Rural Roads Project, which also received US$100 million from the IBRD and US$309 million from the Government of India. Technical assistance valued at US$8.5 million built the capacity of India’s Rural Road Agencies.

IDA helped bring about a paradigm shift in the way rural roads in India are mapped, designed, and monitored. A number of innovative practices were introduced. Community participation in the road-building process was required, which ensured that their concerns were taken into account during the design stage, namely about making land available, protecting heritage sites and sacred places, as well as seasonal water bodies. New environmental codes ensured that trees were planted along newly built roads, steep hillsides were stabilized, topsoil was not affected, and debris from construction was not left behind. Cost-effective engineering designs were introduced reducing the unit costs of building roads by 15-20 percent. About 18,000 engineers were trained and 400 district laboratories have been established significantly improving the implementation of the PMGSY. A master plan for a core rural roads network has been laid down along with a computerized data base for the entire country so that rational and transparent criteria are used for making investment decisions. Independent monitors check the quality of engineering design, road construction, and procurement and financial management practices.


The Prime Minister Rural Roads Program is also supported by the Asian Development Bank through a series of projects in the states of Assam, Orissa, Chattisgarh, Madhya Pradesh, and West Bengal.

Next Steps

A second project for US$1 billion is under preparation. The project will aim to improve performance and address key sector issues such as maintenance, weak capacity, governance, and accountability. It will introduce efficiency measures, such as e-procurement, social audits, and performance-based maintenance contracts.

Learn More

The Rural Roads Project (2004-2010)
Project documents

For more information, please visit the Projects website.

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