A groundbreaking study from the Indian Institute of Management Bangalore (IIMB) has disclosed that each rupee invested in highway construction in India yields a significant economic return, with a multiplier effect of Rs 3.21 on GDP growth. This revelation could potentially reshape India’s approach to infrastructure investment, emphasizing the economic benefits of expanding the nation’s highway network.
The study, conducted in collaboration with the National Highways Authority of India (NHAI), analyzed the socio-economic impacts of national highway development over a period from 2013 to 2022. According to the findings, the construction of highways not only directly boosts the economy but also leads to secondary benefits such as increased household incomes, higher consumer spending, and a surge in car sales.
Key highlights from the Research include:
- GDP Growth: For every unit of expenditure on highway construction, there is a corresponding 3.21 unit increase in India’s Gross Domestic Product (GDP).
- Household Income: A 9% increase in household incomes has been observed, reflecting the economic upliftment in areas where highways have been developed.
- Consumer Spending: Household expenditure has risen by 6%, indicating improved economic activity and consumer confidence.
- Car Sales: There’s been a notable 10.4% increase in car sales, suggesting better connectivity has encouraged personal vehicle purchases.
- Transportation Costs: Significant savings have been noted with a 2.94% decrease in transportation costs between factories and suppliers, and a 1.33% reduction between factories and customers.
This study not only underscores the economic multiplier effect of infrastructure investment but also points to broader societal benefits like reduced crime rates, lower pollution levels, and decreased traffic congestion in regions with new highway developments. The findings are based on comprehensive surveys and analyses across over a hundred districts, providing a robust dataset to support these conclusions.
The implications of this study are vast, potentially influencing policy decisions, budget allocations, and investment priorities at both central and state levels. As India continues to aim for higher economic growth rates, the strategic development of transportation infrastructure, particularly highways, appears to be a critical lever for achieving these objectives
