Economic Analysis of Government Investments in Rural Roads
Rural roads are the basic infrastructure requirement of any country and play a vital role in socio-economic upliftment of the rural community. Especially, in a country like India, rural roads assume a lot of importance as nearly half of the Indian population still lives in rural areas, and hence, it is impossible to ignore the rural sector whenever strategies of development are pursued. It goes without saying that rural roads increase mobility of men and materials, thus, facilitating economic growth of the country.
It is for this reason, since past few years, Government of India is increasingly focusing on rural India as one of the key drivers for the economy. If we talk about the Union Budget 2017-2018, special emphasis was laid on boosting rural road development.
Initiatives of government for rural road development
Here, we discuss some of important steps taken by the government to boost rural development activity in India:
• Government of India has allocated Rs 1,07,758 crore for Ministry of Rural Development in the FY 2017-2018.
• An allocation of Rs19,000 crore has been made towards the Pradhan Mantri Gram Sadak Yojana (PMGSY) to connect far flung habitats in the Union Budget 2017-2018. The target is to complete PMGSY by 2019. In all, Rs 27000 crore is there after state contribution.
• The 12th Five Year Plan (FYP) has proposed spending of Rs 126,491 crores on rural roads which is on par with the total sanctioned amount for PMGSY since inception. The investment is expected to result in the construction of 1,58,000 km of new roads and upgrades for 84,181 km of existing roads in rural areas.
• As many as 1.9 lakh habitations across the country have been connected through roads from April 2000 to January 2017 under PMGSY incepted in 2000 (the central governments plan to provide good roads to isolated villages). Between FY 2000-2001 and January 2017, 1.54 lakh new projects have been approved and 4.87 lakh kilometres of roads has been newly constructed or upgraded under the scheme. This amounts to an average of 80 kilometres constructed per day.
• The pace of road construction under PMGSY has been increased and it was 133 kilometre per day in 2016-17 as compared to 73 kilometre during 2011-14. Further, the total length of roads, including those under PMGSY, built from 2014-15 till the current year is about 1,40,000 kilometres which is significantly higher than the previous three years.
These investments in rural roads are not only expected to have an impact on the rural economy but the country’s economy to a very large extent.
A look at the economic analysis of the government’s investment in roads
1. Improvement in transportation services: Government knows this well that improved transportation services through rural roads can lead to improved access to market centres for the rural producers, better availability of inputs and raw materials at reduced prices and improved mobility. In fact, a well-developed rural road network can provide mobility and connectivity to more than 800 million people living in rural areas. Hence, it is increasingly investing in rural roads.
2. Boosts agricultural activities: Better network of rural roads can also provide a boost to the agricultural activities by making water, seeds and other raw materials needed for farming reach in time to the farmer.
3. Diversification of agricultural activities: Rural road networks can lead to improved market access, favour growth of cash crops and commercialisation of agricultural activities for the better future of the farmers.
4. Diversification of livelihood opportunities: Better connectivity through better roads in the rural areas can enhance employment opportunities too in the non-agriculture sector as masses can move freely from one place to another.
5. Improved services: Improved road connectivity can enhance access of rural masses to education, health and financial services as well.
6. Increase in the outreach of the state: Improved rural roads can also ensure that the rural areas are served with better public services and all the benefits offered by the state reach the far-flung areas easily.
7. Alleviation of poverty: Last but not the least, one of the major impact of government’s investment in rural roads is that it can help in eradicating poverty in rural areas as it provides better livelihood to people, better access to state, education and health services and other basic services.
The above factors clearly state that the rural roads have all the potential to boost the rural economy and lead to overall economic growth of the country. Emphasising on the development of rural roads can prove to be a catalyst to Indias goal of maintaining a good GDP growth rate and improving the well-being of millions of underprivileged and rural citizens. It is for the same reason that the Indian government has been taking proactive steps for the development of rural roads these days and has increased its investments in the same.
Rural road development’s impact on the construction equipment sector
Well, if we are doing the economic analysis of government’s investments in rural roads, then it is important here to mention that increased government’s attention on rural roads can not only boost the rural economy but also lead to growth of the construction sector of the country which contributes heavily to the overall economic growth of the country. Obviously for constructing a better network of rural roads, more Construction Equipment (CE) would be needed. So, backhoe loaders, mini-excavators, tractors and other CE are expected to do well. Particularly, backhoe loaders which are entry level equipment are touted to see good growth and are expected to constitute more than 40 per cent of the total demand in the rural road development activities.
If we talk about the indigenous backhoe loader manufacturers in the country, then Mahindra Construction Equipment (MCE) with its flagship Mahindra EarthMaster backhoe loaders loaded with a plethora of features deserves a special mention. Even MCE’s Mahindra RoadMaster G75 motor grader should be noted here which is created to offer an affordable, un-compromised and mechanised grading solution for small and medium roads in India. It is an ideal grading machine for spreading, grading of earthwork in different types of roadwork across the nation. Both the equipment’s demand and reach is expected to increase drastically due to increase in government’s investment in rural roads
In a nutshell
Rural roads have been proved to be catalytic for poverty alleviation in rural areas and boost rural as well as overall economic growth of the country. In addition, they are also responsible for growth of other sectors of the economy like construction and CE sector. At least, the economic analysis of government investments in rural roads clearly shows this!