ADB Board of Directors approved a loan of $200 million to finance a 311-kilometer, two-lane road that will connect the state's northern region to the national highway network. The project will also build capacity in the state's Road Construction Department, which suffers from an acute lack of engineers with road-building project management skills.

Created in 2000 out of the southern half of Bihar state, Jharkhand has abundant natural and mineral reserves, and prominent industrial cities, but it also has the highest rural poverty incidence in India. Much of the poverty is concentrated in the state's north, where the neglected road network is one of the key constraints to development. The improved road will reduce travel time and costs, and contribute to the expansion of economic activities and poverty reduction in the area that the road serves.

'Jharkhand is behind most other Indian states in terms of road connectivity, and that means high transportation costs and long travel times even for short distances,' said Hideaki Iwasaki, Principal Transport Specialist in ADB's South Asia Department. 'This project will mean that travel time and costs will be reduced by as much as half, which will provide better access for local communities to markets and social services such as education and health, and also encourage industrial development.'

ADB's loan, from its ordinary capital resources, covers 83% of the total project cost of $240 million. The loan has a 25-year term, including a grace period of five years, with interest determined in accordance with ADB's LIBOR-based lending facility. The government will cover the remaining cost of $40 million. The Road Construction Department is the executing agency for the project, which is due for completion at the end of June 2014.