India’s rural roads programme should pay for reliable journeys

Finishing a bridge on a rural route can create more value than upgrading several additional kilometres of road. The Cabinet on 18 April extended Pradhan Mantri Gram Sadak Yojana-III, which upgrades routes from rural habitations to markets, secondary schools and hospitals. It revised the outlay to ₹83,977 crore from ₹80,250 crore. The case for continuing the programme is strongest where an incomplete link, weak bridge or seasonal interruption still makes the journey unreliable. Delhi and the states should judge projects by the trips that become possible at an acceptable cost. Kilometres completed are useful for monitoring construction and incomplete as a measure of access. Cabinet decision extending PMGSY-III · PMGSY-III programme guidelines

Fix the part of the network that sets the cost of the journey

The extension gives roads in hills and roads and bridges in plains until March 2028, with hill bridges given until March 2029. The Cabinet decision allows tendering of certain works already sanctioned and permits the sanction and award of 161 pending long-span bridges on already sanctioned alignments, at an estimated ₹961 crore. The ₹3,727 crore increase in the overall outlay is about 4.6% of the original allocation. That is a revision to the programme envelope. It should be kept separate from the eventual incremental spending on the bridges and from the value of the work already completed. Cabinet decision extending PMGSY-III

A missing crossing can determine whether all the adjacent spending is useful. A road that ends at a river a vehicle cannot cross in the monsoon is effectively two separate links. Completing the crossing can shorten the whole trip or allow a bus operator to run a schedule through the year. This is why a project should be ranked by the journey it improves and the availability of other routes. Extending a high-quality road that already has a good alternative may be worth less than making a shorter, unreliable route usable. Appraisals should include detours, waiting times and closures, alongside normal running times. Cabinet decision extending PMGSY-III · PMGSY-III programme guidelines

For illustration, suppose a crossing saves ₹200 on each of 15,000 freight trips a year. That is ₹30 lakh in annual freight savings at existing volumes. Separately, 1,000 regular passengers each making 30 round trips a year could save 20,000 hours in total if each round trip becomes 40 minutes faster. At an assumed ₹75 per hour, that adds ₹15 lakh in time savings. These are illustrative figures, before maintenance, safety or gains from trips that would not otherwise occur. They show how a shorter route can be evaluated even when the project carries few kilometres. Use local counts and values of time for a real appraisal.

The worked example can be carried into the investment decision. If the ₹45 lakh annual benefit lasts ten years and is discounted at an illustrative 8%, its present value is about ₹3.02 crore. The appraisal would deduct construction and maintenance costs and add any independently estimated safety or access benefits. A shorter closure-free life or benefits that accrue only in the dry season would reduce the estimate. New trips can add benefits as well, but they should be valued using evidence of what travellers are willing to pay or save, rather than assuming every new journey is worth the full time saving. The assumptions should be visible before the project is selected.

A road expands options and changes where work happens

A study by Sam Asher and Paul Novosad uses eligibility thresholds in an earlier rural roads programme to estimate the effect of new connections. It finds a shift out of agricultural work, with limited evidence of large short-run gains in village income, assets or agriculture. One interpretation is that the road made it easier to take work outside the village. That is a gain for some households and a reason to keep local enterprise outcomes separate from residents’ earnings. The evidence comes from new connections under an earlier programme. Upgrading a link that is already used can have a different effect. The study is useful because it challenges the assumption that every road will raise output in the place where it is built. Asher and Novosad, American Economic Review

The benefits can be uneven within a village. A farmer with saleable surplus and access to a truck can benefit immediately from more buyers. A household that sells little output may gain more from lower bus fares, access to health care or the chance to take paid work in a nearby town. A paved road does not guarantee a scheduled vehicle. Where there is little competition among operators or traffic is too thin, travel costs can fall less than engineering estimates suggest. In those cases the missing complement may be a regular service, usable loading space at the market or a safe route to the pickup point. A monitoring survey should ask who uses the route and who still cannot. Cabinet decision extending PMGSY-III · Asher and Novosad, American Economic Review

Maintenance determines whether the benefit persists

The strongest case for extending the construction programme is that stopping halfway through a network can waste earlier investment. There is also a strong argument for moving maintenance up the list. A bridge approach that washes out or a road surface that becomes unsafe can recreate the very detour the project was built to remove. The programme’s guidelines provide for routine maintenance through the initial contracts and address subsequent responsibilities. The policy question is whether funds and inspections are available when those responsibilities fall due. A state that can afford a new link but cannot preserve access on existing roads may get a better return from repair and drainage than from another upgrade. PMGSY-III programme guidelines · ILO study on rural road maintenance

Market access can also alter bargaining. When a grower can get a perishable crop to two wholesale markets instead of one, the local buyer has to compete with a credible outside option. That can raise the farm-gate price even if the farmer rarely changes buyer. The opposite is possible for a local trader protected by the cost of entry, or for a village shop now facing competition from larger markets. Those distributional effects can be tested by recording price differences for comparable grades, transport charges and the number of active buyers before and after a link opens. This offers a clearer measure of integration than the amount spent on the road. Asher and Novosad, American Economic Review

For the same reason, the benefit calculation needs a life-cycle cost. A cheap construction bid can become an expensive route if it requires frequent resurfacing or prolonged closures. Spending more on drainage or a more durable crossing may be economical in a flood-prone area. A useful procurement score would report construction cost, scheduled maintenance, expected renewal and the number of days a route is likely to remain open under realistic weather. Publishing actual closures and maintenance payments would make it easier to detect a contractor or design that wins on price while imposing costs on travellers after completion. PMGSY-III programme guidelines · ILO study on rural road maintenance

Measure access after the work is finished

Measure journey times and prices to the specific markets, schools and hospitals the projects are meant to serve, including during the monsoon. Record days closed, bus frequency, freight charges and emergency travel times. Compare routes where the missing link is completed with similar routes that are still waiting, checking whether their pre-completion trends were comparable. Track residents who find work outside the village as well as businesses that open inside it. A rise in reliably completed trips, at lower total cost and with maintained roads, would justify prioritising similar projects. A programme that hits construction targets while journeys remain seasonal would need to change which links it funds and how it maintains them. Cabinet decision extending PMGSY-III · Asher and Novosad, American Economic Review