$350 million World Bank loan for Karnataka’s roads

March 25th, 2011 - 1:43 pm ICT by IANS  

Washington, March 25 (IANS) The World Bank has approved a $350 million loan to India to accelerate the development of Karnataka’s core road network through the Second Karnataka State Highway Improvement Project (KSHIP II).

The Karnataka government has identified about 25,000 km of the most important traffic corridors and designated them as the state’s core road network.

Accelerating the development of this Network is critical at a time when road development in Karnataka is lagging behind the state’s economic growth and does not adequately meet either the current or the projected transport demand, the Bank said.

The Second Karnataka State Highway Improvement Project (KSHIP II) will finance improvements in 1,231 km of roads into two lanes, designed to facilitate better movement for people and businesses.

It will also support the state government diversify its financing base by leveraging this loan to attract private sector financing through the PPP mode and co-financing with domestic banks and financial institutions.

“While Karnataka has made impressive economic progress, the Government of Karnataka recognizes the need for improving infrastructure, particularly road infrastructure, to make growth more inclusive,” said Roberto Zagha, World Bank Country Director in India.

“In fact, a recent survey highlights the positive socio-economic impact of building roads that can help reduce poverty,” he said.

“The acceleration of the road development programme and attention to road safety as envisaged in this project will help the state realize faster social and economic benefits and spur more investments.” he added.

This Project follows the first $360 million Karnataka State Highway Improvement Project (KSHIP I) implemented from 2001 to 2007 which has improved and maintained 2,385 km of State Highways and Major District Roads.

Under this Project, while the share of state highways which are under good condition has increased from 5 percent to 35 percent, the travel time in key road corridors has decreased by 37 percent.

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 18 years.

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