Resource information
The infrastructure gap is one of the
most significant impediments to India realizing its growth
and poverty reduction potential. Although India s transport
network is one of the most extensive in the world,
accessibility and connectivity are limited. Only 20 percent
of the national highway network (which carries 40 percent of
traffic) is four-lane and one-fourth of the rural population
does not have access to an all-weather road. It is estimated
that the transport sector alone will require an investment
of nearly US$500 billion over the next 10 years. This paper
investigates the impact of the Golden Quadrilateral highway
project on the Indian organized manufacturing sector using
enterprise data. The Golden Quadrilateral project upgraded
the quality and width of 5,846 km of roads in India. The
analysis uses a difference-in-difference estimation strategy
to compare non-nodal districts based on their distance from
the highway system. It finds several positive effects for
non-nodal districts located 0-10 km from the Golden
Quadrilateral that are not present in districts 10-50 km
away, most notably higher entry rates and increases in plant
productivity. These results are not present for districts
located on another major highway system, the North-South
East-West corridor. Improvements for portions of the
North-South East-West corridor system were planned to occur
at the same time as the Golden Quadrilateral but were
subsequently delayed. Additional tests show that the Golden
Quadrilateral project s effect operates in part through a
stronger sorting of land-intensive industries from nodal
districts to non-nodal districts located on the Golden
Quadrilateral network. The Golden Quadrilateral upgrades
further helped spread economic activity to moderate-density
districts and intermediate size cities.
