20 years of boosting economic opportunities in India: World Bank support to the world's largest rural road program

Imagine you lived in a village in rural India at the end of the 20th century. Most likely your village was poorly connected to towns and cities nearby through a road or path that was not usable if it was rainy, and even in the dry season travelling on it was quite challenging. That meant you would only work in your village, most likely in your family farm. Getting a job in a nearby town was not an option because of how difficult it was to travel there. Selling your crops in markets outside your village was costly, further hindering your opportunities. Also, your kids’ opportunities were undermined by the limited connectivity.

At the end of the 20th century, about 300 million people in rural India had limited connectivity because their villages lacked all-weather road access. In response to this poor connectivity and limited opportunities, in 2000 the Government of India launched the Pradhan Mantri Gram Sadak Yojana (PMGSY) rural roads program to connect 178,000 rural villages through all-weather roads. The World Bank has been engaged in PMGSY since its inception providing financial and technical support. 

Twenty years into the program, what has been the impact of PMGSY on India’s rural communities? What can we learn from this program to inform the design of future rural roads programs in India and other developing countries? Aiming to answer those questions, a few years ago we embarked on an impact evaluation of PMGSY.

Three results emerge from the evaluation:

"PMGSY increased access to economic opportunities for both men and women, with men mostly switching to non-farm employment outside the village and women taking over farming close to the homestead."

For men, the improved accessibility provided by PMGSY roads triggered a shift from farm to nonfarm employment, particularly nonfarm employment outside the village. As a consequence of PMGSY roads:

• The rate of primary employment in the nonfarm sector increased by about 12 percentage points in the villages studied. This increase represents a 33 percent increase over the average share of nonfarm primary employment in 2009 in villages that were connected after 2009.
• The share of people with primary employment outside their village increased by 8 percentage points. This increase represents a 35 percent increase relative to the average share of primary employment outside the village in 2009 in villages that were connected after 2009.
• Most workers who switched to nonfarm employment were men. But the entrance of women into the workforce was the main force behind the 5.5 percent increase in employment in connected villages.

This shows that improving road connectivity through PMGSY not only lead to an increase in employment but also resulted in a shift in the labor allocation within the household, and a shift to potentially more productive and better paid jobs in construction, manufacturing, and services. The shift to nonfarm sectors, can lead to an increase in land per farm worker, increasing the productivity of agriculture. Unfortunately, our data does not allow us to test that hypothesis, but we find a small positive impact on the land area cultivated with cash crops per farmer.

PMGSY improved farm-to-market connectivity, providing farmers with access to further away markets.  PMGSY roads increased the share of crops transported to markets for sale. Farmers selling food grains traveled to more distant markets to sell their crops after the PMGSY roads were built, and the cost to carry the crops did not seem to have changed, which suggests that farmers were travelling to locations where prices for their crops were higher and potentially making a higher profit.

PMGSY roads had a positive impact on human capital formation in rural India, with boys and girls benefiting equally.  In terms of schooling, the primary beneficiaries were middle and high school age children. On average, children who were in middle or high school at the time their village was connected had about one more year of schooling as a result of PMGSY roads. The analysis found no overall impact on primary schooling, although years of primary schooling rose in hilly areas. In terms of health outcomes, the primary beneficiaries were babies and young children. The share of babies delivered at home decreased by 30 percent in connected villages, and the reduction was even larger in villages farther away from urban agglomerations. Young children in connected villages were also less likely to fall sick, possibly because vaccination take-up among children under the age of four increased by 15 percentage points, with boys and girls benefiting equally.

The impacts of improved rural roads connectivity on middle and secondary educational attainment and health outcomes for young children demonstrate the important role of transportation in improving Human Capital Index for India.

The results of this impact evaluation underscore the benefits of providing access to reliable rural roads in terms of employment, health and education. Further research is needed to better understand the impact of PMGSY on agriculture and identify complementary interventions that might be needed to increase productivity in the sector.