New Delhi: The central government, in partnership with state governments, will purchase 80,000 mini-buses to connect 125,000 villages, two people aware of the matter said.

The move, which could mean a windfall for mini-bus makers such as Tata Motors Ltd, Mahindra and Mahindra Ltd and Ashok Leyland Ltd, will also integrate the villages with the country’s economic mainstream, providing access to markets as well as better employment and education opportunities.

The contours of the scheme, Pradhan Mantri Gramin Parivahan Yojna, are a work in progress, and it is not clear whether the ministry of road transport and highways or the rural development ministry will oversee it.

“The Prime Minister’s Office wants a low-cost mobility solution for rural areas," a top roads ministry official said, adding that the scheme is likely to be ready by next year’s Union budget.

The scheme has already been approved by a group of state transport ministers at a meeting convened by Union transport minister Nitin Gadkari. The group is headed by Rajasthan transport minister Yunus Khan.

The funding pattern of the scheme is likely to be on the same lines as the Pradhan Mantri Gramin Sadak Yojana (PMGSY), where 60% comes from the centre and 40% from the states.

“Private bus operators can’t be forced to run buses in villages and state transport corporations are also unable to reach villages because of non-viable routes," said Khan. The result: despite the existence of roads, there’s no connectivity. The states will also do their bit by issuing permits for the mini-buses, he added.

Industry lobby group Society of Indian Automobile Manufacturers (Siam) welcomed the move. “The scheme will be very useful. If you look at the buses segment, it is still not doing good. If some purchases from the government happen, that will be helpful," Siam’s deputy director general Sugato Sen said.

Led by a recovery in medium and heavy commercial vehicles segment, the sales of trucks and buses jumped 11.51% to 685,704 units during the year ended 31 March. Siam does not provide data for buses separately.

Ravi Pisharody, executive director of Tata Motors’ commercial vehicle business unit, said, “While the initiative may lead to a short- to medium-term spike in the demand for passenger commercial vehicles, we at Tata Motors are encouraged by the government’s initiative to help provide last-mile connectivity for people in rural areas and have a range of products and solutions, along with a network, to cater to such a demand."