Socio Economic Impact of development of Highways [Indian Context]

It is often argued that while liberalization and globalization provide opportunities for developing countries to integrate with the global market and attain a high growth rate it may be accompanied by social inequalities. Since independence, Indian policy makers have been concerned about inequalities and, therefore, followed a socialist model with low growth rates. From the mid-1980s, the  government gradually moved towards market-oriented reform policy and the pace of reform accelerated in the 1990s.The focus of the policy was a shift from direct state intervention to government as a facilitator for more equitable distribution of benefits of liberalization, privatization and globalization. It was believed that benefits of high growth rate will trickle down to the poor. However, whether or not the country has actually achieved this objective is widely debated.

development of Highways

Increase in trade volumes in the post-liberalisation period created a huge demand for transport infrastructure. With liberalisation, private investment in this sector increased manifolds which have complemented the government initiatives in reducing the demand-supply gap in the transport sector. NCU aimed at integrating economic and spatial planning which would help in achievement of national development goals of economic growth and social justice. The social impacts of liberalising the transport sector are discussed below:

  • Better connectivity to domestic and international markets and increase in income
  • Increased access to social sector
  • Increase in efficiency and reduction in time and cost
  • Impact on employment and development of local industries
  • Other impacts

Better connectivity to domestic and international markets

Connectivity to urban markets and trade centres are crucial for increase in income and poverty reduction. The NHDP is in the process of connecting the major urban and trade centres (ports, etc.) of India. Between 2000 and 2005, about 11 per cent of unconnected habitations were provided connectivity under PMGSY and other schemes. These roads are now being linked to national highways providing opportunities to farmers to access international markets. In the absence of proper road connectivity, farmers in remote areas often find it difficult to sell agricultural goods in bigger markets located at a distance from their village. They have to sell their agricultural products to the middlemen and due to a large number of intermediaries they often get a low price for their products while consumers have to pay a high price. Also, due to the lack of connectivity they do not have access to farm inputs as and when required. Poor connectivity along with lack of cold storage facilities leads to wastage. In India, 5-7% of food grains and 25-30% of the fruits and vegetables get wasted in the supply chain.


The rural roads have facilitated access of farmers to the markets and reduced wastage. Farmers are now more informed. Binswanger, Deininger and Feder (1993), in a study of 13 states in India, found that investments in rural infrastructure lowered transportation costs, increased farmers’ access to markets, and led to substantial agricultural expansion. Improved condition of roads and construction of new roads lowered the transaction costs of credit services significantly, this resulted in increased lending to farmers, better demand for agricultural inputs, and higher crop yields. Impact Assessment of PMGSY in the state of West Bengal found that it has significant forward and backward linkages.

Other benefits

Improved transportation routes and access to market and reduced the transportation cost and increased use of fertilizers and pesticide. Road network enabled farmers to opt for new machines and chemicals to increase their output as material now could be sent and received through roads. Poultry production, for commercial dairy purpose, has increased due to better accessibility to markets. In some habitations, poultry industry started only after road connectivity was established. The study also found that in some places there were changes in the cropping patterns from food crops to cash crops.


With development of roads, non-motorized transports such as bullock carts are being replaced by faster and more reliable modes of transport. The Impact Assessment of PMGSY in the state of West Bengal found an overall increase in the use of motorized agricultural vehicles, like tractors and threshing machines after the development of rural roads. Some villages bought or rented tractors for the very first time after road connectivity was established. Since the use of tractors is cost and time saving, it helps to increase the agricultural productivity. A study conducted by ADB (Asian Development Bank) on the socio-economic impact of road improvement in some Indian states found that more and better quality transport services are available around the clock once the road infrastructure improves. In fact, in five out of six sample villages there were no bus services before the road projects. After the implementation of the projects, there were privately operated bus services. With developments of roads, the land prices have increased and therefore the wealth of farmers have increased.

Increased access to social sector

Road connectivity enables better access to basic services such as schools and healthcare facilities and improves the quality of life. The development of rural roads has increased school enrolment and attendance. It has increased attendance in middle and high schools and colleges. Those in connected areas have better access to public healthcare centres and health workers and there have been increase in childbirth in medical institutions. Road connectivity has increased the frequency of visits by Government functionaries. This has led to an improvement in the implementation of various development schemes and programmes. The ADB study found that improvements in rural roads have led to sharp increases in the number of girls going to high schools and colleges outside their villages. There has been significant reduction in primary and middle school dropouts. The Impact Assessment of PMGSY in the state of West Bengal found that better roads not only increase access to healthcare facilities it offers more choice to consumers. Reduction in travel time enables faster access to curative care and better management of medical emergencies. It has reduced instances of neo-natal mortality as frequent interaction with health workers has made the villagers more aware of obstetric risks and essential care for the new born. Children immunization has also increased. Overall, increase in mobility and improvement in access to social and health services have directly benefited the poor.

Increase in efficiency and reduction in time and cost

Modern transport infrastructure increases efficiency and reduces costs of transportation. The development of national highways has reduced travel time by 50 per cent or more. Reduction in travel time has reduced the vehicle operating and maintaining costs, reduced fuel consumption and increased profits. Better transport infrastructure reduces the cost of commodities purchased. A survey conducted in the states of Rajasthan (Bhilwada) and Uttar Pradesh (Muzaffarnagar) found that cost of basic commodities such as sugar is lower in places connected by roads compared to unconnected areas.

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