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New Delhi , Nov 21

THE Asian Development Bank (ADB) on Friday approved a $400-million loan for building 11,000 km of all-weather roads in Madhya Pradesh and Chhattisgarh as part of the Pradhan Mantri Grameen Sadak Vikas Yojana.

The $400-million loan for the Rural Roads Sector I Project, cleared by the ADB's board in Manila, will also be utilised to establish management systems to ensure sustainability of the road networks, a top ADB official said.

ADB's loan comes from its ordinary capital resources with a 25-year term, including a grace period of five years. The spread is determined in accordance with ADB's LIBOR-based lending facility.

ADB will also provide a technical assistance grant of $1 million financed by the Government of the UK to prepare a second phase of the project.

Most of the rural population of the two States, accounting for 16.6 million or 80 per cent of the population in Chhattisgarh and 60.9 million or 75 per cent in Madhya Pradesh, will benefit from better roads. The two States are among the most needy in terms of rural connectivity. Recent estimates show that less than half of all areas of more than 500 persons in these States have all-weather road connection.

The project will provide easier access not only for public transport and commercial vehicles, but also better links to markets, jobs and services, including health and education for the local people.

The rural roads programme aims to provide all areas of at least 500 persons and more with all-weather roads by 2007.

About 70 per cent of the country's population lives in rural areas and about 40 per cent of rural habitations are not connected to all-weather roads. Rural roads are a key element of rural development and poverty reduction, representing 80 per cent of the network and carrying 20 per cent of the traffic.

"There is a strong link between the lack of road connectivity and poverty in India," says Mr Tyrrell Duncan, Senior Transport Specialist at ADB.

ADB's support for road asset management will establish de-centralised systems and capacity for maintaining the rural road network in the two States and secure financing for maintenance.

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