Road to growth: the economic impact of road infrastructure on economic growth of India’s Northeastern Region under the Act East Policy

This study examines the economic impact of road infrastructure on regional growth in India's Northeastern Region (NER), with a focus on the Act East Policy's role in enhancing connectivity and economic development. Empirical analysis reveals that road quality significantly contributes to economic growth, as improved infrastructure boosts per capita Net State Domestic Product (NSDP). In contrast, excessive road density has a negative long-term effect on growth, suggesting that over-expansion of road networks without corresponding improvements in quality may lead to diminishing returns. The study further underscores the positive role of public spending in driving growth, particularly in sectors like infrastructure, healthcare, and education, while highlighting the inefficiencies associated with over-reliance on intergovernmental transfers. The findings challenge the assumption that population growth alone spurs economic development, emphasizing that infrastructure and governance are critical determinants. Policy recommendations include prioritizing road quality over quantity, targeting public investments effectively, reducing dependence on central transfers, and enhancing fiscal autonomy through local revenue generation. The Act East Policy emerges as a key driver of regional development, with a focus on improving road infrastructure to facilitate trade and connectivity with Southeast Asia. This holistic approach can unlock the NER’s economic potential and foster sustainable, inclusive growth.