By Arun Kumar

Washington, Oct 22 (IANS) The World Bank has approved a credit worth $13 million in additional financing for the Mizoram State Roads Project to continue revitalizing and modernising the state's highway system.

The project will help improve the management and carrying capacity of the core state road network in order to lower transportation bottlenecks and costs, and stimulate economic activity in the northeast Indian state, the Bank said announcing the loan Wednesday.

The project will help widen and improve 180 km of state highways, and rehabilitate and maintain another 300 km. It will also finance improvements in equipment and training for the state Public Works Department.

The project has already, over the last eight years, helped reduce travel time by over 40 percent on 472 km of completed roads in the state, the Bank said.

"Improvements in basic infrastructure including highways are critical to stimulate economic development," said Roberto Zagha, World Bank Country Director for India.

"With growth there has been an increase in demand for better infrastructure. Continued investments in improving Mizoram's road infrastructure will support the region's growth and service delivery goals."

The Mizoram State Roads Project was initially approved in 2002 and has demonstrated transformative results. The road improvements under the project have reduced the cost of passenger travel between different towns.

For example, new roads built under the Bank-financed Project have reduced the distance between the state capital Aizawl and the second largest town, Lunglei, by about 70 km.

Not only has this brought down travel time by about three hours, but taxi fares between the two towns have fallen from Rs.300 (US$6.72) to Rs.270 (US$6.05) despite significant increase in fuel costs.

These costs are expected to further decrease once all the sections of the road are complete, the Bank said.

"The project has also demonstrated many economic benefits to local residents through increased land values, agricultural incomes, growth in the local handicraft market, and new businesses opening up along roads," said Ashok Kumar, World Bank project team leader.

The credits from the International Development Association (IDA), the World Bank's concessionary arm, have 35 years to maturity with a 10-year grace period; they carry a service charge of 0.75 percent.