India, World Bank sign $500 mn loan pact for rural roads

India signed a USD 500 million (Rs 3,371 crore) loan pact with World Bank today to provide additional financing for PMGSY rural road projects.

The loan has a 3-year grace period, and a maturity of 10 years, the finance Ministry said in a release.

It will provide additional financing for the Pradhan Mantri Gram Sadak Yojana (PMGSY) Rural Roads Project "which will build 7,000 km of climate resilient roads, out of which 3,500 km will be constructed using green technologies", the release said.

The World Bank has supported PMGSY since its inception in 2004. So far it has invested over USD 1.8 billion in loans and credits mostly in the economically weaker and hill states across North India -- Bihar, Himachal Pradesh, Jharkhand, Meghalaya, Rajasthan, Uttarakhand, and Uttar Pradesh.

It has built and improved about 35,000 km of rural roads and benefited about eight million people with access to all-weather roads.

The release further said that adequate maintenance of the existing 4.6 million km of road network is emerging as a major challenge.

Many parts of the existing road network are either vulnerable to or have already suffered damage from climate induced events such as floods, high rainfall, sudden cloud bursts and land-slides.

To support the rural economy and communities and households that depend on rural livelihoods, it will be critical to ensure that infrastructure is built and maintained to withstand climatic changes, said Mr Junaid Ahmad, World Bank Country Director in India.

The project, he said will demonstrate how climate resilient construction can be integrated in the strategy and planning of rural roads.

The additional financing will also fill the gender gap by creating employment opportunities for women in construction and maintenance.

The earlier project had piloted community-based maintenance contracts through women self-help groups (SHGs) for routine maintenance of 200 km of PMGSY roads in Uttarakhand, Meghalaya and Himachal Pradesh.

SHG-run maintenance contracts will now be extended to about 500 km roads over 5 states, the ministry said.