Budget 2025-26: Rural roads scheme could get 10% topup; FY26 outlay hike likely

NEW DELHI: The Centre is likely to raise the outlay for its key roads scheme by nearly 10% in the budget for the next fiscal year to deepen its rural push, recognising the high multiplier effect of such productive spending on the economy.

The Pradhan Mantri Gram Sadak Yojana (PMGSY) scheme received a budgetary allocation of Rs 16,100 crore for this fiscal.

Connectivity in Remote Areas

This was higher from the revised estimate of Rs 14,800 crore in FY24. “The government intends to maintain its rural focus. The PMGSY or the Prime Minister Rural Roads in particular, will see a hike in outlay, considering its multiplier effect,” a person aware of the matter told ET.

The Modi administration remains focussed on building 62,500 km rural roads in five years by connecting 25,000 rural habitations under the fourth and the latest phase of PMGSY by revamping the ongoing programme, the person said. The target is on top of rural road projects already sanctioned or planned in the earlier phases. The government had announced the fourth phase of the rural roads scheme in the July budget The scheme is aimed at substantially improving road connectivity in remote areas, stimulating economic growth and alleviating poverty.

Subsequently, the government, in September, approved a Rs 70,125 crore package for the latest phase spanning five years.

Earlier this month, rural development minister Shivraj Singh Chouhan said under the fourth phase, sanctions had already been granted to construct 6,614 km of rural roads, of which 3,380 km would be built in West Bengal alone.

According to Chauhan, since the scheme’s launch in late 2000, rural roads stretching over 769,284 km have been built against the sanctioned length of 834,457 km.

A new phase is typically rolled out by widening the scheme’s scope and revamping the implementation method.

PROJECT COMPLETION
As of April 2, more than 90% of roads identified under the scheme have been built in 16 states and Union territories, with Goa touching 100%. In 13 others, 80-90% of construction has been completed.

However, completion ranged between 60% and 72% in Andaman & Nicobar, Ladakh and Puducherry.

On the multiplier effect, a 2018 World Bank study on the impact of PMGSY revealed that farm produce transported to markets for sale using roads built under the scheme had increased 8% than before.

The rate of primary employment in the non-farm sector had improved about 13% due to the improved road network and the share of people with primary employment outside their habitation had inched up 8%.

Even the share of babies delivered at homes declined by 30% in connected habitations, leading to improved child mortality in rural areas.