Why India needs an aggressive highways programme

New roads not only improve connectivity but also help raise incomes of communities that are touched by highways

Sunil B.S.
Published17 Dec 2012, 01:14 PM IST
A file photo construction work in progress on NH 24. Photo: Satish Kaushik/Mint<br />
A file photo construction work in progress on NH 24. Photo: Satish Kaushik/Mint(Satish Kaushik/Mint)

The Indian government has painted itself into a sorry corner, with profligate spending during good times leaving it with very little fiscal space to boost the weak economy. It should now focus on funding programmes that deliver the most bang for the buck, or what economists would describe as the maximum fiscal multiplier. Too much money has already been poured down the drain on populist policies such as fuel subsidies.

add_main_imageOne option is roads. The Atal Bihari Vajpayee government launched an ambitious highways programme when the economy was in the midst of an earlier slowdown. The new ribbons of tar and concrete connecting our major cities not only helped highway users, but also generated demand for key inputs such as steel, cement, construction machinery and labour.

There will be other advantages as well. According to a study by Transport Corporation of India, the country could save $12 billion a year in fuel through better roads. This alone has enough potential to substantially reduce the subsidy burden that is weighing down public finances. Also, most of India’s fruit and vegetables rot before they reach urban markets. With better roads, prices of fresh farm produce could drop.NextMAds

According to a recent study by the World Bank, Impact of the Golden Quadrilateral (GQ) Project on Indian manufacturing, there has been a positive effect on most of the non-nodal districts that lie 0-10km from the GQ network. Such districts saw the entry of more industries and improvement in the productivity of the plants. The GQ project, which was completed in 2007, upgraded the quality and width of 5,846km of roads across India.

A 2008 study by the International Food Policy Research Institute, an international agricultural research centre, points out that government spending on roads has had a significant impact on productivity and helped in the reduction of poverty. It found that for every 10 lakh spent, 124 people escape poverty and that every rupee spent on rural roads yields more than 5 in additional agricultural output.

To be sure, the national highways programme has suffered because of two sets of factors. First, land acquisition problems have derailed some projects. Second, many private developers who have bid for highway projects are under financial stress. So getting the roads programme back on track deserves more policy attention, because new roads not only improve connectivity but will also create demand for other industries and later help raise incomes of communities that are touched by the new highways.

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:17 Dec 2012, 01:14 PM IST
Business NewsOpinionOnline ViewsWhy India needs an aggressive highways programme

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Tata Steel share price

    149.70
    07:18 PM | 1 NOV 2024
    1.05 (0.71%)

    Indian Oil Corporation share price

    145.00
    07:19 PM | 1 NOV 2024
    2.3 (1.61%)

    Tata Power share price

    445.20
    07:19 PM | 1 NOV 2024
    5.15 (1.17%)

    Bandhan Bank share price

    183.65
    07:10 PM | 1 NOV 2024
    1.4 (0.77%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Rainbow Childrens Medicare share price

    1,545.00
    06:59 PM | 1 NOV 2024
    -67.25 (-4.17%)

    ICICI Securities share price

    833.45
    06:59 PM | 1 NOV 2024
    -32.85 (-3.79%)

    Vijaya Diagnostic Centre share price

    966.70
    06:59 PM | 1 NOV 2024
    -30.35 (-3.04%)

    Narayana Hrudayalaya share price

    1,235.60
    06:59 PM | 1 NOV 2024
    -36.75 (-2.89%)
    More from Top Losers

    Brigade Enterprises share price

    1,244.80
    07:19 PM | 1 NOV 2024
    71.75 (6.12%)

    PCBL share price

    432.15
    07:17 PM | 1 NOV 2024
    21.35 (5.2%)

    Piramal Pharma share price

    281.85
    07:17 PM | 1 NOV 2024
    13.45 (5.01%)

    Jubilant Pharmova share price

    1,273.00
    06:59 PM | 1 NOV 2024
    60.65 (5%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      80,415.00-150.00
      Chennai
      80,421.00-150.00
      Delhi
      80,573.00-150.00
      Kolkata
      80,425.00-150.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.92/L0.00
      Chennai
      100.80/L-0.43
      Kolkata
      104.95/L0.00
      New Delhi
      94.77/L0.00

      Popular in Opinion

        HomeMarketsPremiumInstant LoanMint Shorts