The road to poverty reduction

Written by Sharad Raghavan | Updated: Mar 12 2011, 16:00pm hrs
Its well known among policymakers and economists alike that one of the most effective tools to alleviate poverty and implement social welfare is road construction. Now, thanks to a survey conducted by the Asian Institute of Transport Development (AITD), there is hard data to support this hypothesis. AITD conducted a survey in 2008 of the socio-economic impact of the upgradation of National Highway 2 on the surrounding rural community in the 250 km stretch between Agra and Dhanbad, comparing it with a survey conducted in the same area before the upgradation, in 2002. The findings reveal improvements in poverty levels, literacy, income, healthcare and employment, all areas the government is keen to work on.


The study found that the percentage of poor households on the basis of monthly per capita expenditure fell by almost 7%, from 44.03% to 37.28%. This falls short of the national average of 27.5% in 2004-05, but the fall in poverty in the survey area far exceeds the fall in the national average from 1999-2000 to 2004-05, which, in fact, rose from 26.10% to 27.50%. Aggregate landholding per household went up marginally from 0.58 hectares (ha) to 0.62 ha. The average number of consumer durables owned per household rose to 3.86 from 1.84. All of this implies greater financial security among the households near the highway.

The study is comprehensive, providing separate statistics on the effect the highway upgradation has had on the aggregate population, the poor households and the non-poor households. Among the poor households, the upgradation has had mixed results. While average landholding and the share of income from agriculture both fell, by 0.01 ha and 4.19%, respectively, the average number of consumer durables owned per household increased to 2.23 from 0.93, a significant rise.

As expected, the effect of the road improvement was greater among the non-poor households. Average landholding increased to 0.87 ha from 0.57 ha. The number of consumer durables owned per household also increased, to 4.81 from 1.84. The share of income from agriculture among the non-poor households saw a significant jump to 48.35% from 42.65%. The road upgradation clearly had a positive impact on the poverty and economic welfare of the people in the region, poor and non-poor alike.

Literacy & Education

The upgraded highway has naturally improved connectivity in the region and this, in turn, has had a resounding impact on literacy and education. The aggregate literacy level in the region has risen from 55.58% to 61.86%. This change is more than the change in the national average literacy level in rural areas from 2003 to 2007, which rose from 59.50% to 65%. This is significant, considering the survey area covers some of the poorest regions in India.

However, the survey raises an important issue. It shows that the literacy level among poor households fell from 55.25% to 51.98%. This is not adequately explained in the survey, though a fall in literacy levels needs to be examined closely. Female literacy, a major indicator of social welfare, also rose sharply, by 12.16% to 51.89%. This change is more than double the change in the national average, which rose from 48% in 2003 to 54% in 2007. Significantly, this figure among the poor households rose 13.21%, to 42.55%. Aggregate school enrolment rose to 90.38%, up almost 7%. In this area, too, females have benefited greatly, with the percentage of school-going girls increasing from 78.51% to 90.06%. That is, only 9.4% of the girls in the area are not going to school, a remarkable success. It must be reiterated that these figures for the survey area are all the more significant for the poverty and backwardness prevalent in the area.


Being better connected has had an impact on employment as well. The aggregate percentage of the working population has gone up 5.57% to 34.23%. Lower than the national average of 44.4% in 2004-05, this figure gains importance in light of the fact that the national average grew only 2.3% from 1999-2000 to 2004-05. Naturally, a rise in the working population has a direct impact on poverty and economic welfare. The proportion of working women in the female population has gone up by almost 9%, compared to a rise of only 3.1% in the national average from 1999-2000 to 2004-05. A related point is that employment in non-agricultural sectors has also risen, by 6.87%. This illustrates the obvious point that roads, by providing greater connectivity and access, allow the population to diversify their means of livelihood and enhance their income.

A remarkable set of figures in the study shows that the number of weekly trips from the village have increased following the road upgradation. The number of trips to visit the local mandi went up a staggering 300%, an obvious boost to the local economy. The number of trips for health purposes also increased 321%. Which brings up the benefits to healthcare the road upgradation has provided.


Access to healthcare is a benchmark of a developed society. Needless to say, constructing roads and improving existing roads will enhance this accessibility. The aggregate percentage of people who visited the doctor following the road upgradation increased 6.86% to 20.07%. This figure increased marginally, by 3.79%, amongst the poor, but saw a greater increase, of 8.80%, among the non-poor households. The same holds for hospitals as it does for schools; making more of them isnt enough, they must also be well connected.

These figures are concrete testaments to the efficacy of roads in alleviating poverty and improving social welfare by offering better connectivity and more opportunities. A comprehensive network of roads enhances the effect of development activities, such as building school and hospitals, and allows them to reach a larger radius.

The government would do well to heed these results and fast-track all its pending road projects. Theyre well worth it.