Project Signing: Government of India and World Bank sign $500 Million Agreement to Accelerate Highway Development in India

July 1, 2014

About 1,120 km of national highways to be upgraded

NEW DELHI, July 01, 2014 - The Government of India and the World Bank today signed a $500 million loan agreement for the National Highways Interconnectivity Improvement Project to help improve the national highway network’s connectivity with economically lagging and remote areas.

The project will focus on three low-income states – Rajasthan, Bihar and Orissa – and on less developed regions in the states of Karnataka and West Bengal. In recent years there has been an increasing recognition of the importance of improving transport connectivity in remote and economically lagging areas which do not fall under the National Highways Development Program (NHDP). Some 43 percent of the primary highway network, also known as the non-NHDP network, has been identified for development. Considerable stretches of the non-NHDP network requires strengthening and upgradation, and suffer from connectivity gaps. Substantial portions of these roads are intermediate or single-lane highways and have poor traveling conditions.

“For the government, improving infrastructure, including road transport, is key to sustaining growth and bridging regional disparities. This project will help the government fulfill its objective of improving connectivity in less developed areas and in low-income states,” said Nilaya MitashJoint Secretary in the Department of Economic Affairs, Ministry of Finance, Government of India.

The agreement for the National Highways Interconnectivity Improvement Project was signed by Nilaya Mitash, Joint Secretary, Department of Economic Affairs, Ministry of Finance, on behalf of the Government of India; and Michael Haney, World Bank’s Operations Adviser in India, on behalf of the World Bank. 

The National Highways Interconnectivity Improvement Project will upgrade and widen about 1,120 km of existing single/intermediate lane National Highways to two-lane in Bihar, Orissa and Rajasthan and in less developed regions of Karnataka and West Bengal. Other key components of the project include enhancing the institutional capacity of the Ministry of Road Transport and Highways (MoRTH) to better manage the highway network.

“Over the years India’s core highway network has seen significant improvement. However, over 40 percent of the network suffers from major connectivity gaps and requires better maintenance and upgradation. These roads often serve as the primary or the sole transport link to several remote and economically lagging regions. By providing better connectivity and strong institutions, the project will help states achieve faster social and economic benefits,” said Michael Haney, World Bank’s Operations Advisor, India. 

Recognizing that road safety is a critical issue in the country today, the project will strengthen road safety management systems with the objective of reducing fatalities and serious injuries from road accidents in the country. “Road safety in India continues to be a major concern. Road accident death rate in India is ten times the levels seen in the European Union and is costing the economy an estimated 3% of the GDP on an annual basis. This project will focus on road safety by strengthening capacity, improving data collection and training," Haney added.

The project will improve road accident data collection and analysis at central and state levels through implementation of the Road Accident Database Management System (RADMS) in project states; strengthen road safety capacity at the central level; and focus on training.

“The project will contribute to economic growth both locally in the project area and at the regional level by removing barriers to connectivity. It will develop priority highways within the non-NHDP network; implement a range of contracting and institutional reform measures; and will have specific interventions for process improvements, network monitoring and management, and updating of standards and specifications, with particular emphasis on road safety,” said Pratap Tvgssshrk, Senior Transport Specialist and World Bank’s Task Team Leader for the project.

Overall the project will help road users have improved access to highways and transport services and benefit from the savings in travel time and transportation costs. Other expected positive outcomes of the project include improved access to a larger number of economic opportunities, better health services, better access to higher levels of education, and improved road safety.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 18 years.

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