ADB $200 Million Road Loan to Support Growth in India's Northeast

MANILA, PHILIPPINES – The Asian Development Bank (ADB) is extending up to $200 million in loans to reconstruct roads in northeast India that will reduce its isolation and open up badly needed growth and development opportunities in some of the country’s poorest states.

The ADB Board of Directors has approved the multitranche financing facility for the North Eastern State Roads Investment Program. The funds, which will be released in two tranches, will upgrade over 400 km of roads in the states of Assam, Manipur, Meghalaya, Mizoram, Sikkim and Tripura. The improvement work will include widening existing sections of roads, strengthening pavements, raising embankments, and providing permanent structures at river crossings.

“More than 30% of the population in these states lives below the poverty line,” said Hideaki Iwasaki, a Portfolio Management Specialist in ADB’s South Asia Department. “By upgrading these roads we will be able to improve mobility and accessibility for many communities that will help provide new economic opportunities, boost growth and reduce poverty.” Better roads in the region will also significantly improve the investment climate for the private sector, both domestic and foreign.

Assistance will also be given to raise the capacity of state public works departments to carry out effective planning and asset management. An associated technical assistance grant of $1.2 million from the Japan Fund for Poverty Reduction, administered by ADB, will be provided to introduce modern road management practices.

The first tranche loan of nearly $75 million will be used to fund improvements to over 200 km of roads in three states. It will have a 25-year term, with a grace period of 5 years and interest determined in accordance with ADB’s LIBOR-based lending facility. The central and state governments will provide counterpart finance of $98.2 million for a total program investment cost of $298.2 million.

The Ministry of Development of North Eastern Region, along with the six state governments, will carry out the program, which is due for completion by the end of December 2016.