India Budget: As preparations for Budget 2025 gain momentum, Finance Minister Nirmala Sitharaman along with her team is poised to present measures aimed at steering India’s economy toward resilience and inclusive development.
Among the key priorities, rural infrastructure—especially roads—may emerge as a critical focus area. The government is likely to increase its allocation for rural road development by nearly 10% in the upcoming budget, recognising its significant impact on economic growth and social inclusion, reported ET Bureau on December 26, 2024.
The Pradhan Mantri Gram Sadak Yojana (PMGSY), a flagship rural road development scheme, received Rs 16,100 crore in the current fiscal, up from Rs 14,800 crore in FY24. “The government intends to maintain its rural focus. The PMGSY, in particular, will see a hike in outlay, considering its multiplier effect,” ET Bureau quoted a source as saying.
The fourth phase of PMGSY, announced earlier, aims to construct 62,500 km of rural roads over five years, connecting 25,000 habitations. This phase also involves revamping implementation strategies to accelerate progress.
In September, the government had approved a Rs 70,125 crore package for the fourth phase. Rural Development Minister Shivraj Singh Chouhan revealed that sanctions had already been granted for 6,614 km of road construction, with 3,380 km planned for West Bengal alone. Since PMGSY’s inception in 2000, approximately 769,284 km of roads have been built, underscoring its role in transforming rural connectivity.
Union Budget can drive economy via smooth rural roads
Rural roads are more than just physical infrastructure; they are enablers of social and economic mobility. For almost 63% of Indians who live in villages, roads link lives and livelihoods, connecting them to essential services, markets, and opportunities.
While the Pradhan Mantri Gram Sadak Yojana (PMGSY) has made strides in improving rural connectivity, much work remains. Many villages still rely on poorly constructed roads or have none at all, hampering their ability to fully participate in India’s growth story.
The emphasis on rural roads in Budget 2025 could set the stage for a multi-faceted economic boost. Here’s how:
Agriculture gets a competitive edge
Rural India’s economic pulse beats through its farmlands. Yet, farmers often lose a significant portion of their income due to inadequate access to markets and post-harvest losses. Better roads can reduce transportation costs and time, ensuring that perishable goods reach markets promptly and command higher prices. By improving farm-to-market connectivity, the government can enhance rural incomes and reduce wastage.
Additionally, rural roads can unlock new opportunities in allied sectors like food processing and cold storage facilities, creating value chains that directly benefit farmers.
Accelerating rural consumption
Rural India is not just a producer; it’s a major consumer. In the July-September quarter, rural demand grew twice as fast as urban demand. While urban demand for FMCG products increased by 2.8%, rural demand surged by 6%.
According to NielsenIQ, FMCG growth in rural India has outpaced urban growth for several quarters.
When connectivity improves, incomes rise, and so does spending. Access to better roads facilitates the entry of retail and e-commerce players into rural markets, offering villagers a wider range of goods and services. This rising consumption fuels industries such as FMCG, consumer durables, and automobiles, creating a virtuous cycle of growth.
Bridging the employment gap
Road construction is one of the most labor-intensive sectors, providing immediate jobs to local communities. Beyond construction, better roads enable the establishment of businesses, schools, and healthcare facilities, all of which generate employment. With India’s youth population concentrated in rural areas, enhanced connectivity could catalyse entrepreneurship and small-scale industries.
Strengthening supply chains
Robust rural roads are critical for the efficient movement of goods, particularly in sectors like agriculture, textiles, and handicrafts. Improved infrastructure reduces logistics costs for businesses, making rural products more competitive both domestically and globally. A well-connected rural India can emerge as a significant player in global supply chains.
Unlocking financial inclusion
India’s push for digital and financial inclusion hinges on accessibility. Better roads can bridge the gap between rural India and banking services, allowing financial institutions and fintech companies to penetrate deeper into underserved areas. This, in turn, empowers rural populations with access to credit, savings, and insurance, fueling economic activity at the grassroots level.
The Union Budget 2025 is expected to prioritise rural road development, building on the successes of PMGSY while addressing its challenges. Enhanced connectivity can unlock economic potential, reduce disparities, and fortify India’s rural backbone, making it a cornerstone of the country’s growth strategy.
