How better roads help in India’s rural development -ARCHIE D’SOUZA

How better roads help in India’s rural development

Archie d’souza

Better road transportation lead to greater opportunities for people living in areas connected.  In rural areas it leads to improvements in employment, education and healthcare.

We have seen in an earlier article how the Golden Quadrilateral has helped in movement of goods and in the development of areas en route.  Is this development restricted to areas close to the route?  Is there any way a hinterland can develop?  The central government has come up with just one such scheme.  It is the Pradhan Mantri Gram Sadak Yojana (PMGSY).  Here are some of its highlights.

The PMGSY was launched on 25^th December 2000 as a fully funded Centrally Sponsored Scheme to provide all weather road connectivity in rural areas of the country.  The programme envisages connecting all habitations with a population of 500 persons and above in the plain areas and 250 persons and above in hill States, the tribal and the desert areas.   A total of 59,564 habitations are proposed to be provided new connectivity under Bharat Nirman.  This would involve construction of 1,46,185 Kms of rural roads.    In addition to new connectivity, Bharat Nirman envisages upgradation/renewal of 1,94,130 km of existing rural roads.  This comprises 60% upgradation from Government of India and 40% renewal by the State Governments. 

MP and Chhattisgarh are two states where the poverty levels are among the highest in India.  In these states close to 75% of the population lives in rural areas.  While the GQ, North/South and East/West corridors are connecting several places, most villages in India, especially in these two states don't have any all-weather road connection.  Several sections of the country's rural population continue to be isolated from the mainstream.  They are thus deprived of the benefits of the country's economic growth.  Despite major road projects nearly half of the country's population continues to remain unconnected.  One of the main reasons for low or no growth in rural areas is improper road connectivity.

However, thanks to the PMGSY, things are looking up in these states.  Studies conducted by the Asian Development Bank indicate that, in villages provided connectivity under this plan, the figures from 2006 to 208 for the number of households living below the poverty line decreased by 5% in MP and 2% in Chhattisgarh.  This trend is bound to continue and the living conditions in connected villages are bound to continue improving.  This will further bring down the number of people living below the poverty line.  How has this connectivity impacted rural living conditions?  This, according to the report, has happened in the following two ways:

1.    The communities living in these areas got more reliable and quicker access to outside products, services and social linkages.

2.    It gave external service & product providers as well as social contacts better access to these rural communities.

In other words, connectivity has enabled these communities to fully access existing government services that aid rural areas.  Of the total investments under PMGSY these two state’s share has been 15%.  When completed, 9,574 km of rural roads will have been constructed.  This will significantly improve connectivity in these areas.  The number of beneficiaries of this scheme exceeds 11 million people spread over 3,207 habitations.  The socio-economic impacts can at the moment only be imagined. 

It has been mentioned time and again by several people, including yours truly, that prosperity and connectivity are irrevocably linked.  Therefore, building a nationwide network of all-weather roads in rural areas is bound to lead to a great deal of progress.  Rural connectivity is intrinsically linked to growth, employment, education and healthcare.  The plan has definitely had the desirable impact in the newly connected areas.

The ADB, which conducted this study, was the main finance provider for the plan.  However, the Bank didn't stop with just providing finance, as so often happens with financial institutions.  It sent its representatives to the places where the programme was implemented and asked them to take stock of the benefits the programme brought to the rural areas.  After a study which lasted all of three years, they came to the conclusion that the programme is quickly resulting in a socio-economic transformation in rural India.  The Bank found that the presence of all-weather roads has directly or indirectly contributed to improvements in the areas of connectivity, transportation, government services, livelihood, commerce, education, health, land value, infrastructure, social interactions and gender empowerment.  The entire report is available on the bank’s website.  Figures released by the Union Ministry of Rural Development indicate that 1.67 L unconnected habitations are eligible for coverage.  This will lead to the construction of approximately 3.71 L km of roads for new connectivity.

In 2005, the union government announced another major plan to rebuild rural India.  The following were its objectives:

·      Every village to be provided electricity: remaining 1,25,000 villages to be covered by 2009 as well as connect 2.3 crore households

·      Every habitation over 1000 population and above (500 in hilly and tribal areas) to be provided an all-weather road: remaining 66,802 habitations to be covered by 2009

·      Every habitation to have a safe source of drinking water: 55,067 uncovered habitations to be covered by 2009. In addition all habitations which have slipped back from full coverage to partial coverage due to failure of source and habitations which have water quality problems to be addressed

·      Every village to be connected by telephone: remaining 66,822 villages to be covered by November 2007

·      10 million hectares (100 lakhs) of additional irrigation capacity to be created by 2009

·      60 lakh houses to be constructed for the rural poor by 2009

While the agenda, according to the ministry, is not new, the effort here is to impart a sense of urgency to these goals, make the programme time-bound, transparent and accountable. These investments in rural infrastructure will unlock the growth potential of rural India.

“Rural roads”, as one can see, is one of the six components of Bharat Nirman.  To repeat its objective it is to set a goal to provide connectivity to all habitations with a population of 1,000 persons and above (500 persons and above in the case of hilly or tribal areas) with an all-weather road.  A total of 59,564 habitations are to be provided new connectivity under the plan.  To achieve this 146,185 km of rural roads need to be constructed.  Besides new connectivity, under the project up-gradation/renewal of 194,130 km of existing rural roads will be taken up.  This comprises 60% up-gradation from the Union Government and 40% renewal by the State Governments.  79,938 habitations, almost 73 per cent of the sanctioned habitations, have been provided all-weather road connectivity till September 2011.

Road connectivity to rural areas needs to be speeded up if India needs to bring its rural folks into the mainstream.  A lot of private sector investment has come in for developing the country's highways.  The private sector could also play a role in connecting rural India through good road projects.  However, unlike highway projects, rural roads cannot become a revenue earner for the private sector as it will be impossible to either collect tolls or develop real-estate.  The only way for private-sector involvement here is for companies to make it as a part of Corporate Social Responsibility.  The union and state governments should give the necessary encouragement.

According to data revealed by the Planning Commission 8% of India has come above the poverty line in five years.  As per the report, the percentage of poor in India has declined from 37.2% in 2004-05 to 29.8% in 2009-10.  Rural poverty has declined from 41.8% to 33.8% and urban poverty 25.7% to 20.9%.  The new estimates are on the basis of poverty line that averages Rs 672.8 per month in rural areas and Rs 859.6 per month in urban areas.  Poverty alleviation and better transportation facilities definitely go hand-in-hand.

The Golden Quadrilateral -Archie D’Souza

The Golden Quadrilateral

Archie D’Souza

The Golden Quadrilateral is a highway network, envisaged during Atal Bihari Vajpayee’s prime minister-ship.  It connects India's four largest metros, viz. Delhi. Mumbai, Chennai and Kolkata.  As these four highways form a quadrilateral of sorts, it’s been given this name.  Besides these four metros, four others from among India’s top ten, viz. Bangalore, Pune, Ahmedabad and Surat are also served by it.  It is part of the largest and most ambitious public infrastructure project in the country's history, one with a social engineering goal at its heart: Much as the U.S. interstate highway system mobilized American society and grooved the post-war economy, India hopes the Golden Quadrilateral will push the country's economic engine into overdrive—bringing the benefits of growth in its booming metropolises out to its impoverished villages, where more than half the population lives.  It is the first phase of the National Highways Development Project (NHDP).  It consists of 5,846 km (3,633 mi) of four/six lane express highways at a cost of 60,000 crore (US$ 13.2 billion).  In January 2012, India announced that the four lane GQ highway network was complete.  The 5,846 km of highway connects many of the major industrial, agricultural and cultural centres of India.  Most of the stretches within the GQ are not access controlled.  However, certain safety features such as guardrails, shoulders, and high-visibility signs are in use.

The project was initially announced in 1998 by Sri Vajpayee.  He has also been credited with giving the project its grandiose name.  The Golden Quadrilateral is exceeded in scale only by the national railway system, most of it inherited by us from our colonial rulers who started constructing it in the 1850s.  For decades after independence, thanks mainly to shortage of resources, India’s founding fathers believed that socialism was ideal for India’s economic growth.  This was in keeping with the ideals of our founding fathers, Gandhi and Nehru.  Severe restrictions on imports were also in place.  In the mid-eighties, thanks to growing prosperity and availability of capital, the country began opening its markets to foreign investment.  From a controlled economy we started moving towards a free-market one.  This led to very high levels of economic growth.  With Vajpayee’s predecessors having laid the foundation for a modern India with high levels of growth, it was only natural that he continue the process.  Roads were the most visible way to show that the government business even though they may have hardly looked at other areas.  The project started by him was successfully carried forward by successive administrations led by PM Manmohan Singh. 

Today, fourteen year later, the GQ is considered to be among the most elaborately conceived highway systems in the World.  While India was growing into a visible soft-power worldwide, PMs Vajpayee and Singh realised that hard infrastructure to needs to be developed.  So, along with implementing this highly visible project PM Singh conceived of another almost invisible project – the Pradhan Mantri Gram Sadak Yojana (PMGSY).  We shall be looking at this in more detail in another article.  Coming back to the GQ it is considered by many as a masterpiece of high-tech ingenuity.  Along with the strides we’ve made in software, this could be looked upon, in many ways, as a calling card for India in the 21^st Century.  The GQ definitely makes for an excellent sight on a TV screen or computer monitor.  There’s plenty in it that should make its designers and the rest of the country proud.

While the road surface is state-of-the-art, the system and design too are technologically very advanced.  So advanced, that the designers claim that one day, the tiniest of ruptures will be detected by sensors and communicated to maintenance crews who will be immediately dispatched to the place needed.  Toll collections too, already computerized could be instantly tabulated against long-term projections.  Accidents, whenever and wherever they occur, would trigger instantaneous responses from nearby emergency teams, who are all ready for action at very short notice.  The building of the highway has per se triggered a great deal of economic activity, generating development and a great deal of employment with it.  This has definitely quickened the pulse of the nation.  We shall have a look at the economic impact of the GQ and other infrastructure projects at a later stage.  What it has done that is visible to all is that it has boosted traffic volumes and, with it, brought crores of workers from rural areas moving into medium-size and large cities.

When it was first envisaged, the government had estimated that the GQ project would cost a staggering Rs 60,000 crore at 1999 prices.  However, it is one of the very few, perhaps only, government project that has been completed built under-budget. At 30,858 crore as of AUG 2011, the amount of money spent by the central government is about half of initial estimate.  Another announcement was made in September 2009.  The existing four-lane highways would be converted into six-lane ones.  This expansion has not been progressing as quickly as desired.  There are two main reasons for this, one – land acquisition constraints and two – re-negotiation of contracts.

The agency managing the GQ project is the National Highways Authority of India (NHAI), which comes under the Ministry of Road Transport and Highways (NHAI).  India’s first controlled-access toll road, the Mumbai-Pune Expressway is part of the GQ.  This project, however, is not funded by the NHAI and is not on the GQ’s main route.  This has been funded by the Infrastructure Leasing and Financial Services (IL&FS), a major contributor in infrastructure development in India.  The IL&FS has also contributed in a big way in the GQ project.

Economic benefits

One of the most direct benefits of the GQ project is that it establishes better and faster road transport networks between many major cities and ports.  This obviously provides a major impetus to smoother movement of products and people.  The impact is not restricted to larger cities and major ports.  Also enabled is industrial development in smaller towns.  This helps in job creation in these places.  With job creation come increased purchasing power resulting in demand for agricultural produce and consumer products.  Better access helps farmers transport their produce to the local markets faster with reduced spoilage.  Produce can also be moved from interior places to the bigger towns and cities as well as to ports and airports for export.  Road construction, in the first place, drives economic growth directly pushing up the demand for cement, steel and other construction materials.  This is a sector that grew by 12.6% in the financial year ending March 2008.  The transport sector is another direct beneficiary as better highways give a further impetus to truck transport throughout India.  The GQ’s sheer size at over 5800 km is phenomenal.  It connects all the major population centres in the country, viz. Delhi, Mumbai, Chennai and Kolkata.

A huge economic fallout from it is very similar to the effects that the US highway system built in the 1920s & 50s and the German autobahns had.  The improved connectivity aided goods and services to be moved to and from very isolated areas leading to the economic development of these places and free movement of people.  As we have seen in the previous paragraph, the construction of the highway led to several employment opportunities and demand for cement, steel and other construction materials.

Manufacturing is another area which has received a great boost leading to the creation of a great deal of jobs.  The Hyundai plant near Chennai directly employs around 5400 people.  This not only feeds the nation’s increased desire for cars but also helps in several other ways.  Like several other companies on the GQ, Hyundai creates ancillary and support industries, leading to indirect employment.  An automobile manufacturer will require to be supplied with accessories like windshields, headlights, rear-view mirrors, carburettors, shock-absorbers, etc.  Many of these units will be located in the proximity of the purchaser.  All these companies, Hyundai include, need the services of truck drivers, warehouse workers, record-keepers, etc.  They also need to use the services of freight forwarders and carriers.  Hyundai’s cars are not just sold in the domestic market.  They are also exported.  This led to the commencement of RO-RO shipping services from Chennai, a possible boon to other auto manufacturers.

Hyundai is just one example of a successful manufacturing unit on the GQ.  Every factory that exists on the GQ, including Hyundai, creates its own ecosystem.  Employees and visitors need transportation, cafeterias, etc.  This has led to opening of scores of specialised niche units.  These in turn are quickly filled by energetic entrepreneurs.  Remember, India has more of them than any other country.  Only Thailand has a higher percentage of its population compared to India engaged in entrepreneurship.  Hyundai, itself has 83 ancillary units in the vicinity of its factory.  The cascading effect is tremendous.

Taking a cue from China, the Indian government created or let the private sector set up several Special Economic Zones (SEZs).  This is a topic that shall be dealt with in detail elsewhere.  These SEZs provide new state-of the-art infrastructure, tax concessions, freedom from stringent labour regulations, etc. to any company – Indian or foreign – that sets up units here.  The products/services made here are mainly for export markets, most of them to the developed World.  Most of the companies that have set up units in the SEZs are foreign MNCs taking advantage of the highly skilled work-force and low input costs.  There are, today, over 200 SEZs all over India.  These earn the nation over US$ 15 billion in foreign exchange, thanks to the exports generated from units situated there.  In addition, we have over half a million people employed in these SEZs.  One factor that has played a significant role in India’s high GDP & export growth is the vitality of these ecosystems.  This factor is definitely partly, if not wholly, responsible for India's consistently high economic growth rate of 9 percent a year for most of the decade.  In terms of economic growth, we are second only to China among comparable market economies.

However, unlike China, India is a vibrant democracy where people’s representatives are elected and need to stand for re-election every five years.  The elected members of national & state legislatures and local bodies cannot afford to antagonise their voters.  Freedom of expression and the right to protest are enshrined in the Indian Constitution.  Therefore, protests by affected people, very often peaceful but sometimes quite violent, are a regular phenomenon.  Clashes take place over land acquisition for the highway, both new and expanding, and setting up of industrial clusters, which are what SEZs are, and individual units.  Many experts on the subjects have termed these as inevitable.  Remember, we live in a very densely populated country.  We have more than a billion people living in an area about a third the size of the United States.  So, it is very unlikely that even a single square metre of viable land would remain unspoken for.  New factories gobble up farms.  Widening highways leads to the displacement of several small shops, restaurants, other businesses and residences too.  While roads do change everything and are a boon from several people, not all of the change affects everyone positively. 

Although land disputes are not within the scope of our discussion, they are so common that one cannot avoid touching the topic.  Whenever a new highway is built or an existing one widened, it destroys restaurants and shops as well as farmlands and residences.  True, landowners are compensated.  However, quite often, the levels of compensation are not always enough.  Politicians too very often incite violence taking advantage of the genuine plight of farmers who very often know nothing else besides farming and are left helpless without their land.

Yet, the GQ has been a great boon to the agricultural communities.  Thanks to improved transportation, as we have already seen, agricultural produce from remote areas is able to move to the biggest of cities.  Compared to the numbers of farmers displaced those that still have land are much more numerous.  Paved roads, many of them constructed under the PMGSY, connect villages to secondary highways and then to the GQ.  Another innovation, the cell phone, has helped these farmers to trade with buyers in distant locations.  Markets have been opened up beyond nearby towns and villages.  Automobiles and the better roads also cut down the amount of time needed to haul goods to markets.

Without a shadow of doubt, the automobile industry provides employment opportunities to a great deal of people.  The automobile also helps improve the movement of people and goods.  Today, the annual sale of passenger cars exceeds 1.5 million in India.  However, there is a downside also to it.  What is good news for Hyundai, Ford and other auto units on the GQ can be bad news elsewhere.  In spite of huge oil reserves, India has yet to reach self-sufficiency in energy production.  We rely heavily on coal and foreign oil imports for energy needs.  This means that a volatile global oil market could potentially cripple not only automobile manufacturers, but also the people who drive the automobiles.

However, opportunities do exist that can convert these shortages into our favour.  India has still to tap its resources in areas like solar, wind, hydropower, and biomass production. An estimate prepared by the Global Energy Network Institute reports that the sum of India’s potential renewable energy sources is 152,000 megawatts.  This interestingly, is greater than the current total installed generating capacity of the entire country.  Luckily, the governments at the centre and states are well aware of the dangers of relying primarily on fossil fuels for energy.  Hence, they are developing a regulatory framework to promote energy diversification.

The developed World has still to recover from the recession that hit it not long ago.  Despite this fact and the continuing economic downturn there, India is heavily industrializing.  While population growth continues at menacing levels the markets for goods and services is also growing rapidly.  It is this persistent economic growth that is leading to increased incomes for more people and therefore further automobile sales.  This will mean greater demand for energy.  Therefore, the nation will be forced to seriously consider renewable fuel sources not just for electricity, but also consider alternative fuels for vehicles. 

In any situation, problems and benefits exist side by side.  Our nation’s workforce today is highly motivated and creative.  Companies have been offered tax holidays/concessions and infrastructure in these SEZs which are dotting the countryside.  The result is greater foreign and domestic investment leading to greater employment.  The number of Indians living below the poverty level has seen a dramatic drop in recent decades.  However, there is a downside to it.  Improving transportation of products requires a better highway system.  This results in displacing farmers and using their land for roads instead of growing crops.  More cars on the road lead to higher pollution and congestion levels.  Safety is also a factor that needs to be taken into account.  However, the end result is a prosperous and industrialized India.