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To further fuel economic development and promote poverty reduction in one of the poorest states of India, the Asian Development Bank (ADB) is supporting efforts to rehabilitate and reconstruct 1,800km of state road in Madhya Pradesh. The project will improve transport efficiency and accessibility to social services and markets, and enhance road transport usage.


ADB will be providing a US$320mn loan to fund the bulk of the road project, as well as a US$1mn technical assistance grant to help the government of Madhya Pradesh in improving the state road network and enhancing the state’s capacity for road asset development and management.


“This project will connect major towns in the state, improve access to socioeconomic services, increase employment opportunities and improve means of transport services,” said ADB transport specialist Hiroaki Yamaguchi. “In turn, the project will promote economic growth and human development, and reduce poverty in the state.”


In Madhya Pradesh, 37% of the population lives below the poverty line, significantly higher than India’s overall average of 27%, said Yamaguchi. The estimated annual per capita income of those living below the poverty line in the state is US$90. Madhya Pradesh also ranks low in terms of the human development index, which is at 0.394, as against the national value of 0.472.


Road improvement works under the project include rehabilitating and improving existing roads, strengthening existing culverts and bridges and constructing new bridges and cross-drainage structures. The project will also provide equipment to enhance sector capacity, such as road safety and control of overloading.


Madhya Pradesh has 72,000km of road, and roughly half of that network has deteriorated severely and requires major rehabilitation largely because of the continuous shortfall in investment on road maintenance in the past and increasing volume of traffic and loads. Madhya Pradesh is located at the centre of India, and traffic from the surrounding states passes through it using the road and rail networks.


“The state’s road network requires improvement,” says Yamaguchi. “Demand for road transport is increasing. The state has the backlog of deferred maintenance. The government of Madhya Pradesh is now working to rehabilitate the state road network with adequate financing to maintenance.”


Total project cost is estimated at US$400mn, most of which will be covered by the ADB loan. The loan will come from ADB’s ordinary capital resources and will carry a 25-year term, including a grace period of five years. The project is part of the US$1.1bn Madhya Pradesh state roads rehabilitation program 2006-09.


The technical assistance component of the project will be sourced from the Japan Special Fund funded by the government of Japan.


In 2002, ADB approved a total US$180mn in loans to support the rehabilitation of about 1,750km of state highways and rural connector roads in Madhya Pradesh.