Rural road building picked up speed under NDA

Through Pradhan Mantri Gram Sadak Yojana, the NDA-II govt has significantly invested in extending India’s rural road network, shows official data

The Bharatiya Janata Party (BJP) has made big promises on rural infrastructure in its 2019 election manifesto, just as it did in 2014. These include road connectivity for all villages in the country.

For the BJP, infrastructure has long been a priority and considered a critical path to prosperity. In 2000, the BJP-led National Democratic Alliance (NDA-I) launched the Pradhan Mantri Gram Sadak Yojana (PMGSY), a central scheme providing funds for states to connect villages to all-weather roads. PMGSY continued, with slight changes, during both terms of the United Progressive Alliance (UPA) governments.

Under NDA-II, road construction has been taken up with renewed vigour. The government has, over the last five years, spent more than 80,000 crore on building and upgrading rural roads across the country, even as the PMGSY funding model has changed.

For much of its history, PMGSY operated as a centrally sponsored scheme where the central government provided 100% of funding, with states only responsible for implementation. However, starting 2015-16, the financial burden was split between the centre and states in a 60:40 ratio. Even with this change, the proportion of annual road spending to total government spending under NDA-II, at 0.83%, has been a little less than that under UPA-II (1.14%) and exceeds both UPA-I (0.76%) and NDA-I (0.6%).

The increase is reflected in road construction numbers. Since 2014, nearly 200,000km of new roads have been built across rural India, according to data presented in Parliament. This works out to roughly 109km of roads constructed per day, a rate of construction that is faster than previous UPA regimes (UPA-II built 102km per day and UPA-I 89km).

The time taken to complete road projects has also fallen from around two years between 2008 and 2011 to less than six months in 2016-17, according to Accountability Initiative, a non-profit research organization.

The point of roads is to connect people and villages. In March 2014, 55% of India’s habitations were connected to a road and this increased to 91% by January 2019, according to PMGSY data provided to Parliament.

However, there are definitional issues that may distort the data. PMGSY guidelines define habitations as clusters of population whose location does not change over time and these have been identified using the 2001 Census.

However, in a 2016 performance audit, the Comptroller and Auditor General of India noted several discrepancies in habitation connectivity and population counts across the country.

The ministry of rural development’s own Mission Antyodaya, a nationwide village survey, suggests that progress has been less remarkable than PMGSY claims.

Only 74% of villages are connected to an all-weather road with more than half (51%) of the country’s small villages (populations of less than 250) adrift from the road network (Chart 3a/Chart 3b).

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The gains in road construction have been distributed unevenly, even if we take PMGSY data at face value. About 50% of all new road construction since 2014 has been concentrated in just five states—Bihar, Madhya Pradesh, Odisha, Rajasthan and Uttar Pradesh. In terms of village connectivity to roads, the North-East lags behind. The four states where more than 50% of villages are unconnected are all in the North-East.

The NDA, like many governments around the world, believes more roads can rejuvenate the economy by bringing people together, connecting villages to markets and, ultimately, driving rural growth.

However, new research suggests that rural roads on their own may be no panacea. In a 2019 working paper, Sam Asher of the World Bank and Paul Novosad of Dartmouth University combine PMGSY data with Socio-Economic Caste Census data to reveal that rural road construction does not generate massive economic benefits. PMGSY roads are not associated with increases in consumption, assets or income. Instead, the primary effect of PMGSY new roads is that it makes it easier for workers to gain access to non-agricultural jobs.

Regardless of their impact, rural roads form the most important component of India’s road network. Of India’s 1.7 million km of roads, 73% are rural roads.

A smaller but important component that the central government influences is national highways. Here, too, the NDA-II has scaled up activity.

For a start, highway construction targets are significantly higher. In 2017-18, the road transport and highways ministry awarded contracts for around 17,000km of national highways, the highest in nine years.

This target has not been met, but overall highway construction is still greater (35,000km under NDA-II vs 24,000km under UPA-II) and quicker (20.5km/day in NDA-II vs 13.5km in UPA-II).

However, this data, too, could be distorted by changing definitions. In April 2018, the government switched to a lane km measure of highways—counting the length of every lane in a highway—rather than the linear length of the total highway.

The BJP can take credit for increasing highway construction but, like with rural roads, whether this has the desired effect on the economy remains less clear.

In theory, highways reduce transport costs and connect centres of economic activity. However, globally, there is mixed evidence on whether this boosts growth. Some studies suggests it helps, while other studies reveal little effects.

For instance, a 2018 study by Nathaniel Baum-Snow of the University of Toronto and others found highways in China did increase gross domestic product (GDP)—but this effect was limited to important regional cities. Hinterland areas, which highways were meant to connect, do not grow and actually see wages drop.

Similarly, Abhijit Banerjee and others in a 2012 study of the long-run impact of Chinese highways construction reveal that while highways are associated with slightly higher per capita GDP and business activity, they do not affect economic growth.

Taken together, all these studies seem to suggest investment in roads alone may not be enough to provide a path to growth.

This is the ninth of a 12-part report card series on NDA-II.

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