New Delhi — The Asian Development Bank (ADB) will lend $300 million to India for improving regional road connectivity.
India on Thursday signed an agreement with ADB for developing 500km of roads under this programme, along the north Bengal-north eastern region (NER), the government said in a statement.
The funds provided by the multilateral bank are aimed at improving road connectivity and increasing the domestic and regional trade along the northeast.
ADB had shown interest in funding road projects in the country’s northeastern region to establish transport linkages with India’s neighbouring countries for greater intra-regional trade in South Asia and could provide more than $300 million for the same under ADB’s South Asia Subregional Economic Cooperation (SASEC) programme, Mint had reported on 20 February last year.
“The loan is the first tranche under a $500-million multi-tranche South Asian Sub-regional Economic Cooperation (SASEC) road connectivity investment programme. Under this programme, about 500km of roads will be constructed,” the statement said.
ADB’s loan of $300 million makes-up nearly 71% of the total project cost of about $425 million, with the central and state governments providing counterpart finance of about $125 million, the statement said.
The statement also cited Tarun Bajaj, the joint secretary at the department of economic affairs in the finance ministry who signed the agreement on behalf of the government, as saying that the project will improve road connectivity and efficiency of the global trade corridors by expanding roads in north Bengal and the northeastern states, reported livemint.
“The tranche 1 project will construct two national highways totalling about 150km in West Bengal, and state roads totalling about 180km in Manipur, extending to Myanmar. The project is expected to be completed by 31 December 2021,” the statement said.
SASEC is an initiative to promote economic cooperation between Bangladesh, Bhutan, India and Nepal. In 1996, these four South Asian neighbours formed the South Asian Growth Quadrangle (SAGQ) with the primary objective of accelerating sustainable economic development among them.
This sub-regional initiative was endorsed at the South Asian Association for Regional Cooperation, or Saarc, summit in Malé in 1997. Subsequently, these four countries requested ADB’s aid in facilitating their economic cooperation initiative. This request led to the implementation of the SASEC programme.
Intra-regional trade in South Asia is only 2% of the total trade, as compared with 25% in the Association of Southeast Asian nations, or Asean, and 40% in North American free trade agreement countries and 63% in the European Union.