Rs 1,600-cr World Bank loan for Karnataka road project

The World Bank today approved a $ 350-million (around Rs 1,610 crore) loan for development of Karnataka’s road network through the Second Karnataka State Highway Improvement Project (KSHIP-II).

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 18 years. This project follows the first $360 million Karnataka State Highway Improvement Project (KSHIP-I) implemented from 2001-07 which has improved and maintained 2,385 km of state highways and major district roads.

Under this project, while the share of state highways which are under good condition has increased from 5 percent to 35 percent, the travel time in key road corridors has decreased by 37 per cent.

The government of Karnataka has identified about 25,000 km of the most important traffic corridors and designated them as the state’s core road network. Accelerating the development of this network is critical at a time when road development in Karnataka is lagging behind the state’s economic growth and does not adequately meet either the current or the projected transport demand, the Bank said.

Citing the latest road condition survey, it said 39 per cent of the core road network needs improvement to bring it into good or fair condition.

Vehicular traffic in the state has been growing at a rate of 10 to 15 per cent per year in the last decade. Karnataka also accounts for 10 per cent of the total road accident cases in India.The high fatality rate in Karnataka is attributed to a lack of effective road safety management and enforcement system.

“For the government, improving infrastructure, including road transport, is key to sustaining growth and bridging regional disparities. This loan from the World Bank, we hope, will help the Government of Karnataka leverage private sector financing through economically viable Public Private Partnerships (PPP) in accelerating the development of their state highways,” said Venu Rajamony, Joint Secretary, Department of Economic Affairs.

The Second Karnataka State Highway Improvement Project (KSHIP II) will finance improvements in 1,231 km of roads into two lanes, designed to facilitate better movement.

It would support the government diversify its financing base by leveraging this loan to attract private sector financing through the PPP mode and co-financing with domestic banks and financial institutions. It would also improve road safety design, management and enforcement to reduce road fatalities and major injuries, consistent with the main thrusts of the 2007 Sundar Committee report.

The Global Road Safety Facility (a multi-donor fund) is helping the Public Works Department (PWD) carry out safety audits on two selected highway corridors through the International Road Assessment Program (iRAP), which will help determine the engineering and other measures required to improve safety on KSHIP-II roads.

“While Karnataka has made impressive economic progress, the Government of Karnataka recognizes the need for improving infrastructure, particularly road infrastructure, to make growth more inclusive. In fact, a recent survey highlights the positive socio-economic impact of building roads that can help reduce poverty,” said Roberto Zagha, World Bank Country Director in India.

“The acceleration of the road development program and attention to road safety as envisaged in this project will help the state realize faster social and economic benefits and spur more investments.” he added.