Every Rupee Spent On Highway Construction Boosts GDP By Rs 3.21: IIMB Report

A recent preliminary report by the Indian Institute of Management, Bangalore (IIMB) highlights the transformative impact of highway development on India’s economic growth since 2013.

The report, accessed by The Economic Times, shows that every unit of expenditure on highway construction has led to a 3.21-unit increase in GDP growth, demonstrating the strong multiplier effect of infrastructure development.

From 2013 to 2022, national highway development boosted household incomes by 9 per cent, household expenditure by 6 per cent, and car sales by 10.4 per cent. Additionally, transportation costs between factories and suppliers dropped by 2.94 per cent, while costs between factories and customers fell by 1.33 per cent, enhancing supply chain efficiency.

The study, conducted by IIMB’s Supply Chain Management Centre (IIMB-SCMC) in collaboration with the National Highways Authority of India (NHAI), aimed to assess the socio-economic impact of national highway expansion.

Professor Jitamitra Desai of IIMB explained, “This study shows an increase in household incomes, improved household expenditure, better access to agricultural markets, and enhanced job opportunities.”

He added, “The study also reveals growth in micro, small, and medium enterprises (MSMEs), better access to schools, higher education, healthcare, and community services.”

The findings also show reduced crime rates, accidents, pollution, noise levels, and traffic congestion in areas impacted by national highway development.

The study used surveys and data from over 100 districts with varying socio-economic conditions.

India’s national highway network expanded from 91,287 km in 2013-15 to 1,46,145 km in 2023-24, a 60.1 per cent increase. Expenditure on road infrastructure also grew more than fivefold, from Rs 37,588 crore in 2014-15 to Rs 2,40,427 crore in 2023-24, highlighting the government’s commitment to infrastructure growth and economic development.

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