With an aim to improve the rural roads, the government has signed a $252 million loan pact with the Asian Development Bank (ADB) for development of rural roads in Madhya Pradesh, Assam, Chhattisgarh, Odisha, and West Bengal. Provision of all-weather roads in rural areas is a crucial investment since it will improve access to markets, district headquarters, health and education facilities, and other centres of economic activity.
The first tranche of the loan amount will be around $800 million for financing facility under Rural Connectivity Investment Programme, which will enable construction of 3,461 kilometres of all-weather rural roads in the five states, benefiting nearly 1,600 rural habitations. The first tranche from the ADB has a 25-year term, which includes a grace period of 5 years and has a commitment charge of 0.15 percent per year. Further, the interest rate has to be determined in accordance with ADB's LIBOR-based lending facility.
Moreover, the first stage of this loan will invest in physical infrastructure and strengthen institutional arrangements, road safety, business processes, and asset management. Meanwhile, the first phase of the project is expected to be completed in December, 2015. Ministry of Rural Development (MoRD) is the executing agency for the project at the central level while the respective state rural roads development agencies will be the implementing agencies at the state level.