ADB approves $500-mn loan for rural roads in five states

Multilateral funding agency Asian Development Bank (ADB) on Wednesday said it will provide a $500 million loan to improve rural road connectivity in five states, including Assam and West Bengal.

The board of directors of ADB has approved the multi-tranche financing facility (MFF) for the 'Second Rural Connectivity Investment Programme' to improve rural roads in five states of India, ADB said in a statement.

Under this project, ADB will invest to construct and upgrade over 12,000-kilometre rural roads in Assam, Madhya Pradesh, Chhattisgarh, Odisha and West Bengal. It will also support state governments to improve rural road maintenance and safety.

"All-weather roads are crucial for economic growth, especially in India's rural areas," said Andri Heriawan, an ADB Transport Specialist.

ADB is building on the success of previous assistance for rural roads in India. The agency will work closely with the government to improve connectivity for the rural people to access markets, health centers, education and other opportunities, Heriawan said.

In the first tranche, ADB is expected to invest $250 million in December for construction of initial 6,254 km all-weather rural roads in these states. While the second tranche of the loan of the same amount is expected to come by the third quarter of 2019.

This leg of the ADB loan assistance for rural roads builds on the first 'Rural Connectivity Investment Programme in 2012' financing $800 million MFF to add about 9,000 km all-weather rural roads in these five states.

Apart from this MFF, the Manila-headquartered agency will provide a $500,000 technical assistance (TA) grant from its Technical Assistance Special Fund to strengthen the sustainability of rural road assets, disaster resilience and innovation in rural road development.

The TA is due for completion in December 2021, with the investment programme expected to be completed by the end of 2023, ADB said.

Rural roads comprise nearly 80 per cent of India's overall paved road network connecting them to major district roads, state roads and national highways.