Development Effectiveness Brief: India

ADB operations began in India in 1986. Between 1986 and year end 2010, ADB approved
143 loans amounting to $23.0 billion and 306 technical assistance projects amounting to
$227 million on a cumulative basis for India. More than 75% of this assistance covers the
transport, energy, and urban sectors. In recent years, ADB has also been providing support for Development
Effectiveness
improving water resource management, promoting financial inclusion, and facilitating public–
private partnerships in infrastructure. Today, ADB operations cover 22 states of India. India
has been among the top three borrowers of ADB’s Ordinary Capital Resources (OCR) loans
since 2007. ADB remains committed to supporting the Government’s efforts towards making
Brief

India
India’s growth inclusive and environmentally sustainable.

About the Asian Development Bank

ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing
member countries reduce poverty and improve the quality of life of their people. Despite the
region’s many successes, it remains home to two-thirds of the world’s poor: 1.8 billion people
who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is
committed to reducing poverty through inclusive economic growth, environmentally
sustainable growth, and regional integration.
A Partnership for Inclusive Growth
Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main
instruments for helping its developing member countries are policy dialogue, loans, equity
investments, guarantees, grants, and technical assistance.

Asian Development Bank

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Development
Effectiveness
Brief
India
A Partnership for Inclusive Growth
© 2011 Asian Development Bank

All rights reserved.

Published in 2011.

Printed in the Philippines

Publication Stock No. ARM112938

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Contents

India and ADB: A Partnership for Inclusive Growth 1

ADB’s Contribution to Development and Poverty Reduction 5

Revitalizing Cities and Making Them More Inclusive  5

Improving Connectivity 15

Powering India’s Growth  17

Improving Water Resources Management and Supporting Adaptation

to Climate Change 19

Creating Fiscal Space  20

Catalyzing Private Sector Participation 20

Supporting Private Sector Development  24

Operational Effectiveness: Improving Efficiency and Performance 25

Future Challenges 29

iii
 List of Tables, Figures,
and Boxes

TABLES

Table 1: India—Loan Approvals ($ million)  4

Table 2: KUDCEMP—Outputs and Outcomes  7
Table 3: RUIDP–I—Outputs and Outcomes  13

FIGURES

Figure 1. Sector Distribution of Ongoing Projects (as of 31 December 2010) 2

Figure 2. ADB Loans to India, 1986–2010 3
Figure 3. Technical Assistance Projects By Sector, 2000–2010 3
Figure 4. Disbursement Ratio (project loans) 26

BOXES

Improved access to water  7

Transformation of the Gyana Jyothi fishermen’s colony 9
Looking ahead to fulfill aspirations  11
Providing quality health care for all  14
Impact of rural roads  16
Innovative features of ADB’s second-generation
public resource management loans  21
Support for the government’s public–private partnership initiative  22
Bringing health care closer to home  23

ANNEX

Table 1: Development Outputs from ADB-Supported Projects in India  31

Table 2: Operational and Organizational Effectiveness:
ADB Operations in India in 2009 32

iv
Abbreviations

BPL below poverty line

CER certified emissions reductions
CPS Country Partnership Strategy
DoMHFW Directorate of Medical Health and Family Welfare
FYP Five Year Plan
IIFCL India Infrastructure Finance Company Limited
KUDCEMP Karnataka Urban Development and Coastal Environmental Management Project
KUIDFC Karnataka Urban Infrastructure Development Finance Corporation
KUIDP Karnataka Urban Infrastructure Development Project
MPRDC Madhya Pradesh Road Development Corporation
MPRMP Mizoram Public Resource Management Program
NHAI National Highway Authority of India
OCR ordinary capital resources
PGCIL Power Grid Corporation of India Limited
PPP public–private partnership
ROB rail over-bridge
RUIDP Rajasthan Urban Infrastructure Development Project
SMS Sawai Man Singh
SHG self-help group
STP sewage treatment plant
TA technical assistance
TPRM tripartite portfolio review meeting
UGD underground drainage system
UID Unique Identification Number
ULB urban local body
WUA water users’ association

v
 India
Development Indicators

Non-MDG
Population in millions 1,186.0
(2010)
Annual population growth rate (%) 1.4
(2008–2010)
Adult literacy rate (%) 66.0
(2007)
Percent of population in urban areas 29.3
(2007)
MDG
Percent of population living on less than $1.25 a day 41.6
(2005)
Percent of population living below the national poverty line 27.5
(2004)*
Under-5 mortality rate per 1,000 live births 72.0
(2007)
Percent of population using an improved drinking water source 89.0
(2007)

*Percent of population living below the poverty line, as set by the Tendulkar Expert Group constituted by the Planning Commission,
is estimated at 37.2% for 2004.
MDG = Millennium Development Goal.
Sources: ADB. 2010. Basic Statistics 2010. Manila.; Government of India, 2011. National Accounts Statistics 2011.
The World Bank. 2010. World Development Indicators Online.

vi
 India and ADB: A Partnership
for Inclusive Growth
Emerging India The potential of such an e-governance
initiative to improve the targeting and delivery
On 29 September 2010, Ranjana Sonawane, of government programs and facilitate
a 30-year-old housewife from the remote empowerment cannot be overemphasized
village of Tembhli in Maharashtra, became in India—a democracy of 1.2 billion, with
the first Indian to get a Unique Identification unparalleled cultural, religious, linguistic, and
Number (UID), which will make it easy for her geographical diversity, where the past coexists
to open a bank account, get direct payment with the modern, and where one finds both
for the work she does under the National great affluence and extreme deprivation. India
Rural Employment Guarantee Scheme, and accounts for 2% of the world’s gross domestic
receive her food entitlement from the Public product (GDP), 7% of its billionaires, and 30%
Distribution System. Indeed, the Government of its poor.
of India’s national initiative to issue 600 million
UIDs, referred to as Aadhaar (which in Hindi Joining in 1966, India was one of the founding
means “foundation” or “support”), can be members of the Asian Development Bank
truly transformational. The biometric and (ADB). Operations commenced in India in
tamperproof registration number will give 1986. The program of economic reforms
each Indian access to various public services launched by the Government of India following
and enforce rights to employment, food, the balance of payments crisis of 1991 has
and financial inclusion according to his or helped unleash the productive potential of
her income and socioeconomic profile from the Indian economy. Growth between the
anywhere within the country. 1950s to the 1970s was 3.5%, rising to 6%
in the 1990s, and 9% between fiscal year (FY)
2005–2007.1 The Indian economy has also
undergone rapid structural change.2 Foreign
exchange reserves were about $300 billion as
of end of February 2011, adequate for more
than 10 months of imports. The main drivers
of growth have been the sustained increase in
investment and savings, a progressive opening
Photo 2A up of the economy through reforms, and a
dynamic private sector.

Due to sound macroeconomic management

by the government, the Indian economy
weathered the recent global financial crisis
quite well and is now on a path to full recovery.
GDP growth bounced back from 6.8% in
FY2008 to 8.0% in FY2009. Current growth
Ranjana and her son, Hitesh, proudly hold up their UIDs
at their home in Tembhli village in Maharastra. Photo cour-
projections are 8.6% for FY2010 and 9.0%
tesy of Indian Express

1
Fiscal year (FY) covers 1 April to 31 March. FY2010 refers to the period 1 April 2009 to 31 March 2010.
2
Between FY1990 and 2009, the share of the services sector in gross domestic product increased from 44.4% to 54.6%,
that of industry increased marginally from 26.7% to 28.2%, while that of agriculture fell from 28.9% to 17.1%.

1
Development Effectiveness Brief: for FY2011.3 In addition to its programs of Figure 1 Sector Distribution of
India infrastructure development, the government Ongoing Projects
is undertaking reforms in e-governance; (as of 31 December 2010)
tax policy and administration; financial
Agriculture, Environment
inclusion, including mobile banking; and Natural Resources,
Urban Development
and skills development—all of which have and Multisector,
$0.2 billion, 2%
$1.7 billion, 17%
huge development potential. If India is indeed Energy, $2.5 billion, 24%
able to sustain these growth rates and make
the growth process more inclusive and
sustainable, then a very large number of people
can be lifted out of poverty. The world’s success
in attaining the Millennium Development
Goals (MDGs) depends significantly on
India’s performance—and this makes ADB’s
partnership with India particularly important.
Transport and
Communications, Finance and

ADB–India
$3.7 billion, 36% Public Sector Management,
$2.1 billion, 21%

Development Partnership Total = $10.2 billion

Between 1986 and year end 2010, ADB Source: Asian Development Bank.
approved 143 loans amounting to $23.0 billion
and 306 technical assistance (TA) projects The rest of this section discusses how ADB
amounting to $227 million on a cumulative has been continually aligning its program
basis.4 As of 31 December 2010, there were and business practices with India’s evolving
67 ongoing loans amounting to $10.2 billion development priorities to ensure a high
(Figure 1) and 81 TA projects amounting to degree of relevance and responsiveness. The
$81.8 million. India has been among the top next two sections elaborate on the results of
three borrowers of ADB’s ordinary capital selected projects and the effort being made to
resources (OCR) loans since 2007.5 enhance ADB’s operational effectiveness. The
last section focuses on future challenges.
The partnership between India and ADB
is, however, more than simply about loan
approvals and dollar amounts, or the length of
roads built or kilometers of water pipes laid. It is Ensuring relevance
ultimately about changing lives. As illustrated in Between 1986 and 1996, ADB provided
the next section, unless the basic infrastructure assistance mainly for national programs through
services of clean water, reliable power, and central public utilities in the transport and energy
dependable roads—which many of us take for sectors. Credit lines were also provided through
granted—can be provided to underdeveloped national development finance institutions.
regions and underserved sections of India in a Following the 1996 Country Operational
cost-effective manner, growth will not be Strategy, ADB began to shift focus to state-level
truly inclusive. operations in the transport, power, and urban
sectors. Public sector reform management
ADB is guided by the principles of the 3R’s programs were also undertaken to assist some
(relevance, responsiveness, and results) as it states to pursue fiscal consolidation. ADB’s
designs and implements its India program. India program has matured and expanded

3
Government of India. 2011. Review of the Economy 2010/11. Economic Advisory Council to the Prime Minister.
New Delhi.
4
Total cumulative approvals amount to $25.7 billion (and 122 loans) on a multitranche financing full facility basis.
5
India had been among the top three borrowers of ordinary capital resources (OCR) loan from ADB between 2008
and 2010. During this period, it had accounted, on average, for 23% of ADB’s lending.

2
significantly under the Country Strategy and Over the last 7 years, ADB assistance has India and ADB: A Partnership
Program of 2003,6 which was aligned with the been extended to states, such as Assam, for Inclusive Growth
10th Five Year Plan of India,7 and the current Bihar, Chhattisgarh, Jammu and Kashmir,
Country Partnership Strategy 2009,8 which has Jharkand, Orissa, Uttarakhand, and several in
been designed to support the 11th plan’s efforts the North Eastern region (Tripura, Mizoram,
toward promoting inclusive growth.9 Nagaland, Sikkim, and Meghalaya), which
suffer from one or more of the following
Over the past decade, ADB has expanded constraints: high poverty, low levels of
operations beyond the power, transport, and social development, weak capacity, and
urban sectors into agribusiness infrastructure inadequate infrastructure.
development, integrated water resources
management, with a focus on climate change The India TA program has also evolved in line
adaptation, and financial inclusion (Figure 2). with the loan program (Figure 3). TA support

Figure 2 ADB Loans to India, 1986–2010

3.5
3.0 40% 39%
31%
2.5 28%
24% 29%
($ billion)

2.0 24% 26%

1.5 18% 19%
14%
1.0
0.5 5%
3%
0% 0%
0.0
Agriculture, Energy Finance and Transport Urban Development
Environment Public Sector Management and Communications and Multisector
and Natural Resources

1986–1998 1999–2004 2005–2010

Note: Data labels show sector-wise share (%) in total approvals by period.
Source: Asian Development Bank.

Figure 3 Technical Assistance Projects

by Sector, 2000–2010
30
23%
25 21%

20
($ million)

13% 14%
15 24%
11%
10 15% 8% 9% 17%
13% 11% 11%
9%
5
1%
0%
0
Agriculture, Energy Finance Multisector Public–Private Public Sector Transport Urban
Environment Partnership Management
and Natural Resources

2000–2004 2005–2010

Note: Data labels show sector-wise share (%) in total approvals by period.
Source: Asian Development Bank.

6
ADB. 2003. Country Strategy and Program (2003–2006): India. Manila.
7
Government of India. 2002. 10th Five Year Plan Document. Planning Commission. New Delhi.
8
ADB. 2009. India Country Partnership Strategy (2009–2012). Manila. (available at [Link]/Documents/CPSs/
IND/2009/[Link]?p=doccsps).
9
Government of India. 2007. 11th Five Year Plan Document. Planning Commission. New Delhi.

3
Development Effectiveness Brief: is being used to build capacity, improve project and designing more innovative lending
India preparedness and implementation (section on products. The Innovation and Efficiency
Operational Effectiveness: Improving Efficiency Initiative, which was operationalized in August
and Performance), assist the government’s 2005, simplified consulting and procurement
public–private partnership (PPP) initiative (see procedures; simplified cost sharing and
boxed story on page 22), and undertake scoping expenditure eligibility criteria; and introduced
studies and knowledge products. Support several new financial instruments, such as the
received from the United Kingdom’s Department multitranche financing facility, which has been
for International Development Trust Fund for used intensively in India since it provides long-
India since 2001 has helped immensely in term and flexible financing for clients while
strengthening the poverty focus of ADB’s India reducing commitment fees.11
operations and facilitating expansion to weaker
states and new sectors as discussed above—a ADB has provided timely assistance in response
good example of how close partnership between to natural calamities. For example, extended
donor agencies can increase the effectiveness missions, i.e., field offices, were set up in
with which scarce aid resources are utilized.10 Gujarat as part of the Gujarat Earthquake
Rehabilitation and Reconstruction Project
(2001, $500 million) and in Tamil Nadu and
Being responsive Kerala under the Tsunami Emergency Assistance
Project (2005, $100 million) to expedite
ADB has also been responding to India’s rehabilitation work.12
demands for streamlining business processes

Table 1 India—Loan Approvals ($ million)

1986–2004 2005 2006 2007 2008 2009 2010
OCR – Sovereign 14,487.2 367.3 1,260.0 1,232.1 1,777.6 1,711.0 2,119.2
OCR – Nonsovereign (NSO)* 237.7 50.0 225.0 79.3 930.0 100.0 0.0
Total 14,724.9 417.3 1,485.0 1,311.4 2,707.6 1,811.0 2,119.2
* The total includes both private and public sector nonsovereign operations.
OCR = ordinary capital resources.
Source: Asian Development Bank.

10
To date, 66 technical assistance (TAs) amounting to $64 million have been funded from this Trust Fund.
11
Five new instruments were added: multitranche financing facility, refinancing, local currency lending to public
enterprises, syndications and reinsurance, and sub-sovereign lending to municipalities and state-owned enterprises.
The local currency loan product was also introduced to enable ADB to raise local currency for projects through bonds
and swaps.
12
ADB. 2008. Tsunami Recovery in India – 3 Years On. Manila.

4
 ADB’s Contribution
to Development
and Poverty Reduction
Infrastructure development is critical to Urban Sector Partnership
ensuring that India maintains steady growth
performance in coming years. ADB has with Karnataka
supported relevant programs at both the When the Karnataka Urban Development and
national and state levels, which have combined Coastal Environmental Management Project
the provision of finance and creation of (KUDCEMP) 1999–2009, $145 million, began
high-quality infrastructure with long-term in 1999, the 10 coastal towns of Karnataka
institutional development and reforms, (Table 2) suffered from severe water shortage,
innovations in project design and delivery lack of sewage disposal systems, and weak
modalities, capacity building, transfer of best planning and implementation capacity at the
practices, and setting of quality benchmarks as level of urban local bodies (ULBs).15 The brunt
elaborated below.13 of these problems was predictably borne
by the poorer segments of society. Today,
municipal water supply has more than doubled
(in terms of hours supplied) in these towns,
and nearly 1 million people have potable
Revitalizing Cities water because of the construction of water
treatment plants, expansion in the network
and Making Them of water pipes, and reduction in leakage. The
network of underground drains (UGDs) and
More Inclusive sewage treatment plants (STPs) constructed
in Mangalore, Udupi, Bhatkal, and Karwar
The contribution of urban areas to India’s GDP are helping in the proper treatment, reuse, as
is expected to increase from about 63% in 2001 well as safe disposal of waste generated by
to about 75% by 2021. This will be contingent these fast-growing towns. Development of a
on the availability of adequate, quality urban centralized UGD network helps to reduce the
infrastructure and services so that Indian discharge of untreated wastewater into natural
cities can handle the increased population drainage channels, thereby safeguarding the
pressure efficiently and equitably. ADB’s urban quality of various water sources. Moreover,
sector operations have been designed and once the STPs run to full capacity, the methane
implemented with this basic objective in mind.14 generated will be enough to meet their

13
Annex Table 1 summarizes the sector outputs produced based on project completion reports issued between 2004–
2009. This section focuses on discussing the development outcomes of some of these projects.
14
Between 1997 and 2010, ADB approved 23 urban loans amounting to $2,886 million, and covering 16 states.
Field visits were undertaken to some of the towns covered under the urban loans to Karnataka (KUDCEMP)
and Rajasthan (RUIDP–I) to prepare the case studies presented here.
15
The other two urban loans provided to Karnataka include the Karnataka Urban Infrastructure Development
Project (from 1995 to June 2004, $80 million), and the North Karnataka Urban Sector Investment Program (2006,
$270 million).

5
Development Effectiveness Brief: entire power needs. Mangalore has gone a PPP model. This will not only help to conserve
India step further and will be selling the treated water but also reduce the operation and
wastewater of the STP in Kavoor to a local maintenance liability (estimated at $4 million/
Special Economic Zone under an innovative year) for the city ULB.

Sewage treatment plants (STPs) constructed in Mangalore, Udupi, Bhatkal, and Karwar are helping in the proper treatment
and reuse of waste water in these fast-growing towns of Karnataka

Water intake and treatment plants built under KUDCEMP have helped augment supply of water to Mangalore
and surrounding towns

6
 ADB’s Contribution
to Development
Improved access to water and Poverty Reduction

Sarojini lives in her ancestral home in

the Attavar Gudde municipal ward of
Mangalore. For the past three generations,
her family depended on a public tap, which
supplied water for only 1 hour a day to the
neighborhood. “I would get up at 3 a.m.
or 4 a.m. daily and queue up at the public
tap. We often had to wait for hours, not
knowing when the water will actually be
supplied.” Today, Sarojini has a tap in her
own bathroom, and no longer needs large
storage containers. She is better able to
plan her day and focus on her work. This
change was made possible by KUDCEMP Sarojini can plan out her day better because she now has direct
under which the Thumbe water supply plant access to regular water supply
was built on the river Netravathi, and the
network of pipes upgraded and expanded. This has doubled water supply to most parts of Mangalore,
benefiting nearly 650,000 people, including Sarojini.

Table 2 KUDCEMP—Outputs and Outcomes

Project towns: Karwar, Ankola, Dandeli, Bhatkal, Sirsi, Kundapura, Mangalore, Puttur, Udupi, and Ullal in Karnataka
Loan amount $175 million (Original) Main components: Water Supply, Sewerage, and Solid Waste
$145 million (Revised)
ADB share in project cost: 70%
Share of government of
Karnataka: 30%

Outcomes Indicators Targets Achieved to Date

Improved Basic Urban Services Population with improved
access to
(i) water supply 1.0 million 1.10 million (100% achieved)
(ii) sewerage 0.5 million 0.25 million (50% achieved)
(iii) solid waste management 0.6 million 0.70 million (Fully achieved)
facilities
Output Target Achieved to Date
Water Supply Pipelines laid 1,976 km 1,995 km (Fully achieved )
Construction of water 212 mld 322 mld (Fully achieved)
treatment plants
Sewerage Sewer lines laid 310 km 395 km (Fully achieved)
Construction of sewage 71 mld 106 mld (Fully achieved)
treatment plants
Solid Waste Management Construction 200 MT/day 286 MT/day (Fully achieved)
of sanitary landfills
km = kilometers, KUDCEMP = Karnataka Urban Development and Coastal Environmental Management Project, mld = million liters per day,
MT/day = metric tons per day.
Source: Asian Development Bank.

7
Development Effectiveness Brief:
India

Treated water of the STP at Kavoor in Karnataka will be sold to a local Special Economic Zone under a PPP arrangement

Setting high service standards

As per the 2006–2007 Annual Report of the Central Pollution Control Board, only 10
towns across India have landfill sites compliant with Municipal Solid Wastes Rules of
2000, Government of India. Four of these were covered under KUDCEMP.

The ULBs are pleased with the high standards of basic municipal functions, introduction of
set by the solid waste management systems fund-based double-entry accrual accounting
built under KUDCEMP. Plastic lining ensures system, and capacity building for improving
that the leachate does not mix with the transparency and accountability in 47 towns
groundwater. By covering layers of garbage of Karnataka. These initiatives have helped
with clay and gravel, and subjecting the runoff increase property tax mobilization in most of
to bacterial treatment, the operators ensure the participating towns by about 25%. All ULBs
that there is no bad odor and that the runoff have now set up websites; and public grievance
is safe enough for discharge into natural cells, which are operated with the involvement
channels. Some towns are now beginning of nongovernment organizations. Given the
a door-to-door system of collection and success of this component of KUDCEMP, it was
separation of wastes to make effective use of scaled up to cover the remaining 218 towns
the solid waste management systems. of the state under the World Bank’s Karnataka
Municipal Reforms Project.

Institutional Reform
Institutional reform and capacity building are
Transfer of Best Practice
core components of all ADB projects. The KUDCEMP has also raised the aspirations
Nirmal Nagar (“beautiful town”) component of ULBs. As a result, Mangalore, Udupi,
of KUDCEMP supported the computerization Kundapura, and Puttur, which have a combined

8
population of about 0.75 million, are now system and providing uninterrupted water ADB’s Contribution
working out a PPP arrangement with the supply. The private sector’s involvement is to Development
and Poverty Reduction
support of ADB’s TA project (Pilot Projects expected to improve the efficiency and cost
for PPP) whereby private companies will be effectiveness of water supply management
responsible for operating the water supply and distribution.

Institution building
The Karnataka Urban Infrastructure Development Finance Corporation (KUIDFC) was
created in 1993 when preparation of ADB’s first urban development project (KUIDP)
started. Over the last 17 years, it has grown in strength and become the nodal agency
for executing all externally aided projects as well as those supported under the
Jawaharlal Nehru National Urban Renewal Mission in Karnataka. KUIDFC plans, designs,
finances, and implements urban projects across the state. It also provides technical
assistance to municipalities for operating completed facilities.

Transformation of the Gyana Jyothi

fishermen’s colony
Like the other poor families of Gyana Jyothi fishermen’s colony in Malpe town, Vasanthi and her
husband, Gopal, have benefited immensely from KUDCEMP. Before the project began, they lacked
access to sanitation or proper garbage disposal facilities. Consequently, their colony and the nearby
beach were very dirty. Disease was rampant, especially among small children, and very few tourists
came to the beach.

The clean streets of Gyana Jyothi fishermen’s colony in Malpe town of Karnataka and its healthy and happy children
testify to the difference made by the construction of an underground drainage network and provision of low-cost
toilets under KUDCEMP

continued on next page

9
Development Effectiveness Brief: Box continued
India
Under KUDCEMP, low-cost toilets were provided to poor people like Vasanthi and Gopal, enabling them
to live with dignity and respect. These toilets have also been linked to an underground drainage system.
As a result, the paved road running through the colony is spotlessly clean. The happy faces of the
residents, young and the old alike, testify to the remarkable difference that access to basic infrastructure
services can make.

The women of Gyana Jyothi colony do not ever want Malpe beach to become dirty again. Members
of the Lakshminarayana self-help group (SHG), which was formed through seed loans provided under
KUDCEMP, clean the beach every morning and collect garbage before tourists arrive. This SHG has
also set up a pay toilet for tourists and locals. The additional income helps fund the SHG, and more
importantly, engenders a sense of empowerment and pride among its members.

The lives of Vasanthi and Gopal have been transformed because of the low-cost toilet provided under KUDCEMP

Members of the Lakshminarayana SHG voluntarily clean the Malpe beach and run a paid toilet for tourists

10
 ADB’s Contribution
Mysore and Mangalore were ranked as the second and eighth best city, respectively, to Development
and Poverty Reduction
in India in terms of sanitation, according to the National Rating Exercise 2009–2010,
carried out by the Ministry of Urban Development. The stakeholders give a lot of credit
for this to ADB’s urban projects. The Municipal Commissioner of Mangalore, Mr. K.N.
Vijayprakash, says, “We are confident that in a few years, Mangalore will become the
first city in India to have 24/7 water supply and state-of-the-art solid waste management
systems. It will also be able to commercially reuse its entire domestic wastewater.
Mangalore has the strong potential to become India’s cleanest city.”

Looking ahead to fulfill aspirations

Even though the SHG component of KUDCEMP came to an end in 2006, the residents of Ashraya
Colony, Thiruvail, have not only embraced it but are carrying it forward.a Razia, a member of the SHG of
Ashraya Colony, took loans of Rs50,000 (about $1,100) from the SHG to repair her house and ensure
that her daughter can focus on her studies at the local school. She has also bought a second-hand
computer so that someday, her daughter can join India’s dynamic information technology sector. Other
members of Razia’s SHG have borrowed money to set up small hotels and tailoring shops. As Razia
emphasizes, access to a clean sanitation system, improvement in the water supply, and availability of
credit have given them the opportunity to focus on improving their lives and building a brighter future
for their children.

Razia discusses her SHG’s accounts at a weekly meeting. Pre-schoolers studying at an anganwadi (government
Availability of credit has helped the group in setting up sponsored child-care center) in Ashraya colony,
small businesses such as hotels and tailoring shops in Thiruvail, Karnataka
the neighborhood of Thiruvail, Karnataka

a
About 200,000 poor people (or about one-fifth of the total population of the project towns) have benefited directly from
the community development and livelihood components of KUDCEMP. Nearly 3,000 SHGs involving 40,000 low-income
families were formed. As shown in boxed stories above these SHGs have become self-sustaining.

11
Development Effectiveness Brief:
India
Urban Sector Partnership of-the-art STP at Delawas, built under RUIDP–I,
treats and cleans nearly 62.5 million liters per
with Rajasthan day (mld) of the effluent and sewage produced
in Jaipur. The treated water is released into
ADB’s engagement with Rajasthan dates channels and used by farmers free of cost to
back to 1998 when the Rajasthan Urban irrigate their fields. Methane captured from the
Infrastructure Development Project (RUIDP–I), STP is used to generate clean electricity to run
1998–2009, $250 million, covering the six cities the entire plant. This saves nearly $330,000 per
of Ajmer, Bikaner, Jaipur, Jodhpur, Kota, and annum for the Jaipur Municipality. The STP has
Udaipur, was approved.16 The difference made made such a difference from the perspective
by this project is captured in Table 3. of urban sanitation and public health that
the government of Rajasthan has now built a
Prior to 1998, untreated sewage water in Jaipur mirror STP right next to it, using funds from the
contaminated the groundwater and, with no National Urban Renewal Mission. Once
alternative, farmers were forced to use it for this is commissioned, the capacity of the
growing crops and vegetables. Today, the state- Delawas plant will double to 125 mld.

The Delawas Sewerage Treatment Plant, built in Project officer, Mr. Jangid, demonstrates the functioning of
Sanganer, Rajasthan, under RUIDP-I, treats about 62.5 mld the Delawas STP
of effluent and sewage generated by Jaipur City

The methane tapped from the Delawas STP is used to generate clean electricity to run the entire plant

16
The follow-up Rajasthan Urban Sector Development Investment Program (RUSDIP, $273 million), approved in 2007,
covers 15 cities.

12
 ADB’s Contribution
Table 3 RUIDP–I—Outputs and Outcomes to Development
Project towns: Ajmer, Bikaner, Jaipur, Jodhpur, Kota, and Udaipur in Rajasthan and Poverty Reduction

Loan amount $250 million (Original) Main components: Water supply, wastewater management,
$250 million (Revised) storm water drainage, urban transport, and slum improvement.
ADB share in project cost: 70%
Share of government
of Rajasthan: 30%
Outcomes Indicators Targets Achieved to Date
Improved basic urban services Population with improved
access to
(i) water supply 7.0 million 7.0 million (Fully achieved)
(ii) wastewater management 5.2 million 3.5 million (67% achieved)
(iii) storm water drainage 4.0 million 3.2 million (80% achieved)
(iv) urban transport 3.0 million 3.0 million (Fully achieved)
(v) slum improvement 100,000 100,000 (Fully achieved)
Output Target Achieved to Date
Water supply Pipelines laid 1,771 km 1,763 km (99% achieved)
Construction of water 163 mld 641 mld (Fully achieved)
treatment plants
Spot tube well sources 108 mld 57 mld (49% achieved)
Wastewater management Sewer lines laid 1,188 km 1,171 km (99% achieved)
Construction of sewage 170 mld 166 mld (98% achieved)
treatment plants
Solid waste management Construction of sanitary landfills 1,200 MT/day 1,200 MT/day (Fully achieved)
Drainage Rehabilitate major open drains 71 km 73 km (Fully achieved)
Urban transport Construct rail over-bridges 14 ROBs 13 ROBs (93% achieved)
(ROBs)
Rehabilitate and widen roads 108 km 96 km (89% achieved)
Slum improvement Improve basic urban services 220 slums 129 slums (59% achieved)
in slums in Ajmer, Jodhpur,
and Kota
Heritage works Land-use control and 17 heritage sites Fully achieved
environmental improvements
Fire services Construction of fire station 10 fire stations Fully achieved
buildings, procurement of
equipment and vehicles,
and training of personnel
km = kilometers, mld = million liters per day, MT/day = metric tons per day, RUIDP–I = Rajasthan Urban Infrastructure Development Project.
Source: Asian Development Bank.

ADB has been flexible in the use of loan The Sawai Man Singh (SMS) Specialty and
resources in order to respond better to Referral Hospital and the Mahila Chikitsalaya
the needs of the people of Rajasthan. In (Women’s Hospital), two modern hospitals in
November 2005, several years into the Jaipur, were built at very reasonable cost under
implementation of RUIDP–I, ADB agreed to RUIDP–I. Interviews with stakeholders confirm
use some of the potential loan savings for that these hospitals have made quality health
funding expansion and rehabilitation of health care accessible for low-income earners and the
care facilities in Jaipur, Kota, and Udaipur as poor who come here from all across Rajasthan.
requested by the state government.

13
Development Effectiveness Brief:
India
Providing quality health care for all
Munni Devi traveled from Dighi, about 100 kilometers from Jaipur, to get her mother-in-law’s
broken arm treated at the SMS Specialty and Referral Hospital in Jaipur. Completed in 2009, the
hospital has 12 major operating theaters; pre- and post-operative doctor and nurse rest rooms;
and outpatient departments (i.e., mainly for low-income people) for ENT, gastroenterology,
cardiology, neurology, orthopedic, and sample collection. It has centrally air-conditioned
waiting halls and two-level basement parking facilities. Each day, nearly 4,000 to 5,000
relatively poor and needy patients are treated here. “Pensioners, destitute women, widows,
freedom fighters, and the poor can avail of treatment free of charge,” says Dr. Saxena, head of
the Department of Medicine at the hospital, who was involved in its planning and design.

Similarly, the Mahila Chikitsalaya (Women’s Hospital), which provides specialty antenatal and
postnatal care, and counseling for women on pregnancy, contraception, child health,
HIV/AIDS, and tuberculosis, has improved health facilities for needy women and children.
The hospital has a staff of 33 specialists and caters to about 300 patients a day.

The Sawai Man Singh Specialty and Referral Hospital in Jaipur, built under RUIDP-I, treats 4,000–5,000 patients
each day

Women from low-income households are treated free at the Mahila Chikitsalaya (women’s hospital), Jaipur, which
provides antenatal and postnatal care, and counseling on pregnancy, contraception, and HIV/AIDS

14
 ADB’s Contribution
to Development
Institution building and Poverty Reduction

A dedicated office for implementing the Rajasthan Urban Infrastructure Development

Project (the project office) was set up in 1998. Like the Karnataka Urban Infrastructure
Development Finance Corporation (KUIDFC), this project office has also gained in
strength and experience over the years. It is applying the lessons learned during
planning, engineering, financing, implementing, and monitoring of more than 200
contracts under RUIDP–I to not only the follow-on Rajasthan Urban Sector Development
Investment Program (RUSDIP) but also to a variety of other government-funded urban
development projects in Rajasthan.

Sanganeri Gate, Jaipur and several other heritage sites have been preserved and restored under RUIDP–I

Improving Connectivity maintenance, and improvement of road safety.

This has helped transform NHAI into an efficient
highway management organization with strong
Improved road and rail connectivity is a managerial and financial autonomy, extensive
prerequisite for supporting economic growth. private sector involvement, and capacity to deal
Since 1988, ADB has provided several loans with social and environmental issues.
for the roads, ports, and railway subsectors.
Its assistance for the road sector, including Since 2002, ADB has provided two loans
national highways, state roads, and rural roads, amounting to $1.15 billion under the National
has expanded rapidly since 2000. Between Rural Roads Programs for strengthening the
2000 and 2004, ADB provided four loans rural roads network of five states—Assam,
amounting to $2 billion for expanding about Chhattisgarh, Madhya Pradesh, Orissa, and
2,500 kilometers (km) of national highways into West Bengal. Field visits and some preliminary
four lanes in support of the National Highway evaluation work show that these projects boost
Development Program. ADB has been working the local economy by improving the access of
closely with the National Highway Authority of the rural population to markets, and health and
India (NHAI) since 2000 by providing technical educational facilities, and reducing travel time
assistance for institutional development, and cost.
commercialization of operations and
15
Development Effectiveness Brief:
India
Impact of rural roads
An ongoing study on ADB’s Rural Roads Project in Madhya Pradesh reveals greater
improvement in a variety of development outcomes in villages covered under the project
as compared to those in a sample of control villages, that is, villages not serviced by the
ADB project or any other road project, but similar to them in socioeconomic characteristics.
For example, while project villages saw a 61% increase in buses serving them, control
villages experienced a 23% decline in the same. While post-primary dropout rates among
girls declined by 7.24% in the case of control villages, the decline was 9.68% in the case
of project villages. The attendance of teachers increased by 5.48% in project villages but
declined marginally by 0.3% in control villages. While the proportion of farmers who
accepted crop diversification increased in both types of villages, the increase was greater
in project villages (4.52%) versus that in control villages (1.34%). Similarly, the percentage
of agricultural produce spoiled in transit declined by 9.68% in road project villages but
increased by 2.64% in control villages. Crucially, the percentage of “below poverty line” (BPL)
families declined in both types of villages. However, the percentage of BPL families declined
by 4.65% in project villages versus 2.87% in control villages.

The precise channels through which a project impacts development outcomes are difficult to
identify and measure. Since there are many forces at play, this kind of evidence by itself does
not prove that ADB’s road project alone contributed to improving development outcomes.
Even control villages experienced some reduction in poverty and improved outcomes on various
development indicators. What is crucial is that the improvement registered in project villages
was greater. It would, therefore, be fair to infer that other things remaining the same, the
presence of good roads interacts with other channels and improves development outcomes.

Seema, who studies in grade 9, cycles 10 km everyday on state highway (SH71) to her school in Budadawood village,
Muzaffarpur district

16
ADB has supported strengthening of the state and programming systems for road ADB’s Contribution
roads networks in Bihar (2008 and 2010, $720 development and maintenance; a management to Development
and Poverty Reduction
million in all); Chhattisgarh (2003, $180 million); information system; and road asset
Jharkhand (2009, $200 million); Madhya management, procurement, and maintenance
Pradesh (2002 and 2007, $500 million in all); systems. MPRDC is now able to design and
Uttarakhand (2006, $550 million); and West implement projects at much higher standards.18
Bengal (2001, $210 million).17 This assistance
has helped in establishing and developing
strong institutions, preparing road master plans,
modernizing business processes, strengthening
road planning and asset management systems, Powering
enhancing road safety, and facilitating public–
private partnerships (PPPs). India’s Growth
In Madhya Pradesh, for example, ADB Since 1986, ADB has engaged closely with
has provided assistance for all the three sub- the development of the power sector at
segments of the road sector. It has funded both the national and state levels. At the
the expansion of 365 km of national highways national level, ADB has been assisting the
into four lanes, construction of 6,000 km Power Grid Corporation of India Limited
of rural roads, and rehabilitated nearly (PGCIL) in expanding and modernizing the
3,500 km of state roads. The Madhya national electric transmission system to reduce
Pradesh Road Development Corporation transmission system losses and to increase
(MPRDC), which was established as the State interconnectivity in order to even out supply–
Highway Authority under the first ADB loan, demand mismatches across states and regions.
has developed into a highly professional Since 1995, ADB has provided four loans
organization with modern business processes, amounting to $1.52 billion to PGCIL.19
including computerized financial management
and accounting systems; planning, budgeting, ADB has also been supporting policy reforms
and funding investments for transmission
and distribution in states, such as Gujarat
(2000, $350 million); Madhya Pradesh (2001,
$350 million); and Assam (2003, $250 million).
The policy components of these loans have
supported the states in implementing power
sector reforms, such as establishment and
operationalization of independent state
electricity regulatory commissions; unbundling
state electricity boards into separate companies
for generation, transmission, and distribution;
and improving overall sector governance. The
investment component of these loans has been
Today, pucca village roads together with bicycles for used to strengthen transmission and distribution,
school-going girls have become a symbol of women’s
empowerment in Bihar
and provide increased consumer metering.

17
The construction of roads in North Bihar, for example, has made it easier for the women to supply milk collected locally
on a regular basis to the Bihar Government State Co-operative Milk Producers Federation Ltd as the collection centers of
this cooperative are now easily accessible. Villages, which used to get cut off during monsoons, now remain connected
owing to improved road conditions.
18
For further details of ADB assistance to Madhya Pradesh, please refer to ADB. 2009. Partnerships in Development:
Madhya Pradesh Meets the Infrastructure Challenge. Manila.
19
These include the Power Transmission Sector Project ($275 million, 1995); Power Transmission Improvement Sector
Project ($250 million, 2000); Power Grid Transmission (Sector) Project ($400 million, 2004); and National Power Grid
Development Investment Program ($600 million, 2008).

17
Development Effectiveness Brief: Through the Madhya Pradesh Power Sector transmission lines and substations, and helped
India Development Project (2001–2007), ADB to reduce transmission and distribution losses
helped to establish and operationalize the from about 47% at the time of loan approval
State Electricity Regulatory Commission to about 40% at project completion. Revenue
and restructure the vertically integrated collection efficiency increased from 80% to 91%
State Electricity Board into six successor under the project. Given the good performance
companies—a generation company, a of the above loan, Madhya Pradesh secured a
transmission company, three distribution second $620 million loan in 2007 to continue
companies, and a power trading company. with strengthening of transmission and
ADB also funded the construction of several distribution systems and other sector reforms.

Improved availability of power supply for irrigation helps Rajen Narain, a farmer in Manekedi village of Madhya Pradesh,
harvest three crops a year as compared to one crop in previous years

ADB support has helped strengthen the power transmission and distribution network of Madhya Pradesh and brought
down losses

18
ADB will also increase funding for renewable ADB’s Contribution
energy development (including solar power) to to Development
and Poverty Reduction
help India along a low-carbon growth path. For
example, under the ongoing Himachal Pradesh
Clean Energy Development Investment Program
($800 million, 2008), ADB is funding the
construction of four run-of-river hydroelectric
power projects with aggregate generating
capacity of 858 megawatts. One of the
projects funded by this program has signed an
agreement to sell certified emissions reductions
(CERs or “carbon credits”) to the Future Carbon
Fund, a fund established and managed by
ADB on behalf of fund participants, to provide
up-front financing for future delivery of CERs.
ADB is also building the capacity of Himachal
Pradesh Power Corporation Limited to handle
Clean Development Mechanism methodologies
and procedures for project registration and
verification of emissions reductions. Breakwaters constructed with disaster-resistant technology
help to provide protection for vulnerable coastal
communities

Improving Water technology and natural protection measures,

such as the development and grass planting
Resources Management of dunes, and planting of mangrove and
other trees for stabilizing and protecting the
and Supporting coastlines of Karnataka, Maharashtra, and Goa.
It will also develop the institutional capacity
Adaptation to for coastal protection and management, and
involve the private sector and local communities
Climate Change in the planning, design, and maintenance of
the projects.
India, with 2.4% of the world’s total area and
16% of the world’s total population, accounts The Chhattisgarh Irrigation Development
for only 4% of the total available fresh water. Project (2006, $46.1 million) is helping to
As ADB expands its engagement in the water enhance the irrigated agricultural productivity,
sector in India in areas as varied as irrigation water use efficiency, and sustainability of
efficiency improvement and integrated about 150 existing minor and medium-sized
water resources management, coastal zone irrigation schemes in the state. Through the
management, and flood control, strategic use empowerment of water users’ associations
of water resources while factoring in climate (WUAs) and setting up of farmers’ field schools,
change adaptation concerns is critical.20 the project has already achieved 78% increase
in kharif (wet season) rice yield, 60% increase
For example, the Sustainable Coastal in irrigated kharif cropping intensity, and
Protection and Management Program (2010, facilitated the introduction of new rabi (dry
$250 million) will use environment-friendly season) crops, such as peanuts and maize.

20
ADB is also providing TA support to the Ministry of Water Resources to operationalize some of the key priorities (e.g.,
improving management of sub-basins, preparation of climate change adaptation plans) of the National Water Mission.

19
Development Effectiveness Brief:
India The 2010 study, Climate Change Adaptation Focused Sustainable Water Resources
Strategy for Himachal Pradesh, undertakes a detailed examination of the status of
water resources in this Himalayan state, the various sources of demand and supply
of water, and the risks posed by climate change. It proposes detailed action plans
for improving overall water resources management and climate change adaptation,
including establishment of an effective institutional framework for integrated
water resources management; building water resources data and information
systems; improving sub-basin management, catchment and agricultural planning;
and preparing plans for disaster management. This study is now being followed
by a detailed assessment of how the water of the Satluj River Basin can be tapped
sustainably to meet competing needs for drinking water, hydropower generation,
agriculture, and industry.

These results, obtained on 25 pilot schemes, Assam’s debt management capacity. It has also
are currently being expanded to about 170,000 assisted in the switch-over of the property tax
hectares to help boost farmers’ income. The assessment method from rental to an area-
project also supported the adoption of a new based valuation system, which has improved
Participatory Irrigation Management Act, which transparency and collection of property tax.
allows equal participation of women and
disadvantaged groups in elections to WUAs and With the moderation in fiscal deficit in most
management committees. states since the formulation of the Fiscal Reform
and Budget Management Acts at the central
and state levels, ADB’s recent program loans in
India are combining fiscal consolidation with
improvements in service delivery in areas, such
Creating Fiscal Space as health and education. The Mizoram Public
Resource Management Program (MPRMP),
To date, ADB has provided public resource which was approved in 2009, is helping to
management (PRM) loans to five states— improve service delivery in the critical education
Gujarat (1996, $250 million); Madhya Pradesh and health sectors in a cost-effective manner
(1999, $250 million); Kerala (2002, $200 while pursuing fiscal consolidation. Two
million); Assam (2004 and 2008, $250 million); important and innovative schemes in education
and Mizoram (2009, $100 million). These and health, supported under the MPRMP, are
programs help the states in creating fiscal space discussed in the boxed story on page 21.
by improving public financial management,
increasing revenue mobilization, reducing
high-cost debt, restructuring public sector
enterprises, and building capacity. This fiscal
space enables states to increase spending on Catalyzing Private
key development programs.
Sector Participation
In Assam, for example, ADB assisted the
state in transforming its fiscal deficit of Given the huge investment required for funding
$288 million in 2003–2004 to a surplus of India’s infrastructure deficit—estimated at
$311 million by 2008–2009. About 12 unviable about $515 billion over the 11th Plan period
and loss-making public sector enterprises were and $1 trillion over the 12th Plan (2013–
also closed down in a phased manner after 2018)—there is urgent need to attract much
clearing all salary arrears and retraining all the greater private sector funding and expertise.
affected staff. The loan has helped improve While the 11th Five Year Plan seeks to raise

20
 ADB’s Contribution
to Development
Innovative features of ADB’s and Poverty Reduction

second-generation public resource

management loans
A major factor constraining the quality of education in Mizoram is the presence of a large
number of underqualified teachers. Under the Mizoram Public Resource Management
Program (MPRMP), ADB is helping to improve the quality of education in schools by replacing
about 888 underqualified teachers with qualified ones. Under the program, $15 million
has been provided to design and fund a Voluntary Retirement Scheme (VRS) for the
underqualified teachers. The economic impact on those opting for VRS is being softened
through training and safety net provisions, such as reserving jobs for their children if they are
suitably qualified.

Like many other states, Mizoram has also been grappling with the challenge of rationalizing
public expenditures on health on the one hand, while providing the required level of health
care to its people on the other. As per the Mizoram Health Care (MHC) Scheme, which was
launched on 9 April 2008, any person who is a citizen of India, resides in Mizoram, and
belongs to a family where the head has an election ID card, is eligible for health care coverage.
The policy covers the expenses of hospitalization (limited to the general ward) and surgical
procedures up to the upper limit of Rs100,000 per family in any of the networked hospitals
in Mizoram. Treatment outside Mizoram for outpatient and inpatient cases may be allowed
subject to the approval of the Medical Board. As of end of December 2010, 25,853 families
have already been registered under the MHC Scheme from seven districts.

Given the importance of the scheme in providing cost-effective health care to the poor, a
corpus of $25 million has been set up under the MPRMP to meet the expenses of operating
the MHC scheme. Capacity building is also being provided for improving its management. It
is envisaged that over time, the government of Mizoram will be able to reduce its financial
support to public hospitals while improving health coverage and service delivery.

the share of the private sector in infrastructure helped IIFCL in strengthening its credit risk
investment from about 24% (actual in the 10th assessment procedures and pricing policies, and
plan) to 36%; the 12th plan aims to raise it in designing a detailed environmental and social
further to 50%. Expanding the availability of safeguards framework. It is estimated that
long-term funds for infrastructure is critical to ADB support is enabling IIFCL to leverage
attain these targets. about 5 to 7 times its own resources by
increasing the confidence of other lenders
ADB has, therefore, provided $1.2 billion to and attracting private sector participation in
the India Infrastructure Finance Company PPP projects.
Limited (IIFCL) for providing long-term funds
for financing PPP projects selected through ADB’s funding for IIFCL fits in well with the
a transparent and competitive process, and other “upstream” support being given to the
cutting across sectors (roads, power, airports, government’s major PPP initiative (Boxed story
ports, and urban infrastructure).21 It has also on pages 22 and 23).

21
This includes the two India Infrastructure Project Financing Facility loans (IIPFF-I: $500 million, 2007; and IIPFF-II:
$700 million, 2009).

21
Development Effectiveness Brief:

Support for the government’s public–private

India

partnership initiative
Since 2007, ADB has been supporting the Government of India’s public–private partnership
(PPP) program through six technical assistance (TA) projects amounting to $12.3 million. The
ADB–government of India PPP Initiative, “Mainstreaming PPPs In India” is run from the central
PPP cell in the Department of Economic Affairs jointly by government and ADB staff. This
cell manages PPP-enabling tools, such as the India Infrastructure Project Development Fund,
Viability Gap Funds, risk appraisal processes, and policy development. Through
ADB’s TA support, PPP cells have been established in 15 states and 6 central infrastructure
line ministries.

The joint ADB–Government of India initiative addresses all aspects of the PPP environment,
including capacity building, transfer of best practices, and development of a pipeline of
projects. Specific activities supported under this Initiative include awareness building and
training workshops; development of state-level PPP websites and management information
systems; preparation of PPP draft policies and guidelines for states; establishment of a pre-
qualified legal advisory panel to help project sponsors; setting up of a transaction advisory
panel to advise on all aspects of a PPP project from structuring to bid process management;
and preparation of sector tool kits for the urban water and sewerage, urban transport,
education, health, and the rural sectors. ADB has also provided TA support to revise the
provision of urban amenities in rural areas scheme so that cost-effective rural infrastructure
can be provided through the PPP modality.

A pipeline of projects has been created for challenging sectors, such as the urban (water,
sewerage, and solid waste management), health, education, power distribution, and the
rural sector. More than 30 pilot projects are currently being structured across such sectors.
Several projects are already at bid stages. Nearly 452 PPP projects are being developed across
the country through all the PPP cells.

The PPP X-Change was launched in Mumbai on 28 January 2010, to share ideas, information and innovations
being developed under the joint government of India–ADB PPP Initiative, “Mainstreaming PPPs in India”

22
 ADB’s Contribution
to Development
Bringing health care closer to home and Poverty Reduction

Mobile Health Van Public–Private Partnership Project—Uttarakhand

Contrary to popular perception,
the public–private partnership (PPP)
modality is not meant only for large
infrastructure projects, such as
airports and expressways. The ADB–
Government of India PPP initiative is
helping to ensure that regular health
services are provided to remote villages
in the hilly state of Uttarakhand.
The Directorate of Medical Health
and Family Welfare (DoMHFW) of
Uttarakhand had procured 13 mobile
health vans in 2007 to provide health
services to the people living in far-
flung and hilly areas. Unfortunately,
the vans were not used for more than
a year since the state government
could not operate them in a cost-
effective and efficient manner. It
then decided to try out the PPP
option. Specialists engaged by ADB ADB support helped structure a PPP contract for delivering
have helped the state government regular health services to remote parts of the mountainous
state of Uttarakhand using mobile health vans
in structuring this mobile health
initiative in PPP mode, drafted the bid
documents, and conducted the bid process management for DoMHFW. Today, these health
vans regularly tour the remote corners of each district and help doctors in the primary health
centers in conducting proper diagnostic tests using modern medical equipment for patients
living below the poverty line. Between April 2009 and 2010, these 13 vans have assisted in
conducting 1,633 health camps and covered 125,369 patients. Also, 12,347 ultrasounds,
11,352 X-rays, 3,113 electrocardiograms, and 40,717 pathology tests have
been conducted.

ADB operations in relatively new sectors are production areas through contract farming
also marked by innovative design and reform. and producer companies.22 Similarly, the
For example, the Agribusiness Infrastructure Khadi Reform and Development Program
Development Project (2010, $170 million), ($150 million, 2008) is strengthening nearly
covering Bihar and Maharashtra, will use a 300 khadi (traditional hand spun and
PPP-based integrated value chain approach for handwoven cloth) institutions at the grassroots
developing agribusiness (cold chains, modern level through capital and technology infusion,
storage facilities) and link infrastructure (roads as well as better design and marketing of
from production areas to collection points) products. The program can potentially benefit
for improving the marketing of horticultural about 1 million spinners and weavers, more
products and creating backward links with the than three-fourths of whom will be women.

22
In order to attract private sector investment to this new sector, a capital grant will be provided to the concessionaire
with the bidding parameter being the total amount of capital grant required for the bidder to accept the contract.

23
Development Effectiveness Brief: It will facilitate greater private participation
India by establishing the use of the khadi mark,
discontinue the archaic cost chart system, and
establish a majority private-owned marketing
organization using PPPs to end the controlled
production and marketing of khadi items.

Supporting Private
Sector Development
ADB’s nonsovereign operations in India began
in 1987. Since then, it has approved a total of
$2.1 billion in cumulative financial assistance
for 35 nonsovereign projects (including
nonsovereign loans to state-owned enterprises
and commercial loans approved under ADB’s
B-loan program). Transactions supported by
ADB’s Private Sector Operations Department
range from the construction of a liquefied
natural gas terminal and compressed and piped ADB has supported several wind power projects through its
natural gas distribution network to financing private sector window
for banks and other financial institutions. ADB’s
recent private sector operations in India have
focused on clean energy interventions. emissions by 7 million tons over 20 years. In
2009, ADB approved $40.0 million in equity
For example, loans to the Tata Power Company investment under its private sector window
Limited (2007, $79.3 million) and to the CLP for Public–Private Partnership for Renewable
Group of Hong Kong, China ($105 million, Energy Development. This will support the
2008) are helping to set up wind power development of a portfolio of 500 megawatts
generation facilities of about 283 megawatts, of renewable energy projects focused on wind
which will help reduce carbon dioxide power and small hydroelectric power.

24
Operational Effectiveness:
Improving Efficiency
and Performance
Ensuring relevance and responsiveness of ADB the loan. ADB has not considered similar loans
operations is not enough in itself unless projects over the past decade.
are implemented efficiently and with a
results focus. However, the CAPE’s overall assessment was
that “ADB’s sector performance was successful
since most ADB assistance helped build much-
Learning from the Past needed infrastructure and contributed toward
improving sector policy and institutional
Learning lessons from closed and ongoing environments. Energy and public resource
projects is critical to improving the development management sector operations were assessed
effectiveness of ADB’s overall program. The to be successful. ADB operations in the
2007 India Country Assistance Program transport, urban, and financial sectors have
Evaluation (CAPE) reviewed 45 projects that been rated partly successful, albeit on the high
were approved and closed between 1986 side. Operations in these sectors were usually
and 2006.23 Only three of these were rated well positioned and relevant.”
as unsuccessful, with the rest being rated
as partly successful (24), successful (17), or
highly successful (1). The unsuccessful projects
included two in the telecommunication sector,
Learning by Doing
and one in the finance sector, which provided ADB has been working closely with the
a line of credit to three banks for supporting Government of India to improve portfolio
the development of urban and environment performance. The detailed quarterly tripartite
projects in reform-oriented states.24 The portfolio review meetings (TPRMs) being
rationale and design of the telecommunication organized since September 2005, and
projects, approved in 1988 and 1989 when attended by the Department of Economic
ADB was still very new in India, were weak. The Affairs (DEA), Ministry of Finance; ADB; and
telecommunication sector boomed subsequently executing agencies of ADB projects across
on the strength of government deregulation all sectors and states, help immensely in the
and private sector participation. ADB, therefore, timely resolution of implementation problems
exited the sector. The finance loan failed because and sharing of development experience and
there was unforeseen downward movement knowledge across different sectors and states.
in domestic interest rates, which made ADB’s The effectiveness of TPRMs can be gauged
terms and conditions unattractive. Two of three from the fact that between 2004 and 2010,
banks canceled their participation within 3 years contract awards increased from $550.5 million
of the loan approval. Even the third bank was to $1.79 billion, while loan disbursements
unable to come up with a sufficient list of rose from $381.0 million to $1.69 billion.
eligible subprojects, leading to early closure of India’s disbursement ratio (which is the ratio of

23
ADB. 2007. Country Assistance Program Evaluation for India. Manila.
24
The unsuccessful projects were the Telecommunications Project (Loan 886-IND; $135 million, 1988), the Second
Telecommunications Project (Loan 954-IND; $118 million, 1989), and the Urban and Environmental Infrastructure
Facility (Loan 1720-IND; $80 million, 1999).

25
Development Effectiveness Brief: disbursement achieved in the year to the total studies of two to three projects are presented
India net effective undisbursed loan funds at the end in each TPRM to discuss best practices and
of that year) has shown a marked improvement facilitate learning across executing agencies.
since 2005 and has been higher than the ADB- Given the tremendous improvement in the
wide average ever since (Figure 4). loan portfolio brought about by these TPRMs,
the DEA and ADB have recently initiated similar
In addition to tracking inputs, i.e., contract TPRMs for improving the design and delivery
awards and disbursement, TPRMs are of technical assistance (TA) projects. The first
also increasingly focusing on tracking and such TPRM was held on 25–26 August 2010.
monitoring outputs and results. Detailed case

Figure 4 Disbursement Ratio (project loans)

(comparing performance of India and ADB-wide performance)

35

30

25

20
%
15

10

2003 2004 2005 2006 2007 2008 2009 2010

India ADB-wide

Source: Asian Development Bank.

The first tripartite meeting to review the performance of TA projects was held in August 2010 in Delhi

26
 Operational Effectiveness:
Improving Efficiency
Usefulness of tripartite portfolio review meetings— and Performance

Feedback from clients

During the tripartite portfolio review meeting (TPRM) held in Ahmedabad on
17–18 June 2010, Mr. A.D. Kapaley, Director of the National Rural Roads Development
Agency, said, “I have been attending TPRMs for the last 6 years and it has been a great
learning experience for me and my colleagues. These meetings have promoted cross-
learning among the executing agencies and helped improve overall performance of ADB-
assisted projects by shifting the focus from monitoring contract awards and disbursement
to outputs and outcomes of the projects. TPRMs facilitate sharing of success stories
among project staff. ADB’s efforts in organizing visits of staff to more successful projects;
training personnel of executing agencies on procurement, disbursement, and safeguards
issues; and conducting business opportunity seminars for contractors and builders are all
very helpful for us.”

Regular TPRMs have strengthened portfolio performance by facilitating cross-learning for staff from different executing
agencies and states

The detailed “Project Readiness Checklist,” resettlement; and preparation of bidding

developed jointly by ADB and the government documents for all contracts to be awarded
in July 2008, requires the up-front fulfillment during the first year of implementation.
of criteria, such as formation of project Adherence to this checklist has helped to
management units; commitment from ensure that projects are at an advanced stage
the relevant entity on counterpart funds; of preparation when they are approved, thus,
preparation of plans for procurement, reducing the gap between loan approval to
environment management, relief and signing and effectiveness.25

25
Between 2007 and 2009, the average gap (in months) between loan approval and signing had come down from
4 months to 2 months, and that between loan approval and effectiveness was reduced from 6 months to 4 months.

27
Development Effectiveness Brief:
India
Capacity Building and Training projects, especially in relatively small and remote
places, remains a major challenge. The India
ADB is devoting more resources for capacity Resident Mission has been collaborating with
building, training, and business development organizations, such as the Builders’ Association
seminars to reinforce the virtuous cycle of India, the Construction Federation of India,
of learning facilitated by TPRMs. Between and the Consultancy Development Center, to
2008 and 2010, capacity-building programs organize business opportunity seminars to
organized by the India Resident Mission disseminate information about ADB projects
have trained nearly 1,927 staff from various and facilitate networking with staff of ADB’s
executing agencies on procedures pertaining executing agencies.26
to procurement (524), consultant selection
(265), disbursement (465), and safeguards As a result of all the initiatives discussed,
(493), and on topics, such as project India’s portfolio performance has improved
management (40) and contract administration significantly. The number of active projects
(140). Twenty-six staff of executing agencies at risk has declined to zero over the last 4
attended presentations on ADB’s nonsovereign years despite a nearly 1.7 times increase in
operations products in 2010, while another 32 the number of active loans (from 38 in 2007
participated in the Urban Forum that was held to 67 in 2010). Overall portfolio parameters
in January 2011. Such initiatives are particularly have been consistently better than ADB-wide
important since ADB operations have extended averages for the past 3 years, especially when
to several new states and sectors where compared across project loans.
capacity is weak and familiarity with ADB’s
procedures and processes is low. Other indicators of operational and
organizational effectiveness for ADB’s India
Attracting and retaining good contractors operations are provided in Annex Table 2.
and consultants to bid for and work on ADB

Projects at Risk Portfolio Indicators

(as of 31 December 2010) (as of 31 December 2010)
Number of Loans at Risk Disbursement Ratio—OCR Project Loans (%)
Loans
Year India ADB-wide
(under Imple- Number of
Year mentation) Loans Percentage 2007 25.5 19.8
2007 38 3 7.9 2008 27.4 20.5
2008 44 4 9.1 2009 24.5 19.5
2009 53 3 5.7 2010 30.4 20.3
2010 67 0 0.0

India—Loan Disbursements ($ million)

1986–2004 2005 2006 2007 2008 2009 2010
OCR – Sovereign 7,305.2 641.0 701.4 1,363.5 1,507.7 1,338.9 1,699.0
OCR – Nonsovereign 290.2 57.3 10.5 129.7 147.9 212.0 139.2
Total 7,595.4 698.3 711.9 1,493.2 1,655.6 1,550.9 1,838.2
Source: Asian Development Bank.

26
Between 2007 and 2009, business opportunity seminars covered 213 contractors, 452 consultants, 278 suppliers and
manufacturers, and 42 staff from various executing agencies.

28
Future Challenges

Despite the good performance of the Indian and spur on economic activities in weak states
economy in recent years and its innate and rural areas on the one hand, and creating
strengths, one cannot underestimate the a facilitating environment where private sector
challenges facing it. While poverty incidence initiative can thrive on the other. ADB has
fell from 36% in 1993–1994 to 27.5% in already begun to move in this direction.
2004–2005, the pace of reduction was less
than 1% per year.27 More than 300 million First, ADB is tailoring its lending and nonlending
people continue to remain below the poverty products to meet the varying needs of the
line. Of these, 221 million live in rural areas. different clients effectively. While significant
Education and health indicators remain very capacity building and project preparatory
poor. Environmental challenges and the risks technical assistance is provided to new or weak
posed by climate change are truly daunting. capacity clients, ADB will increasingly explore
nonsovereign financing options for clients with
The 11th Five Year Plan identifies several a strong balance sheet and technical strength.
challenges—creating jobs; improving delivery of It will continue to support the government’s
essential services to the poor; building up the PPP initiative by mainstreaming PPPs into its
rural economy; developing human resources; infrastructure projects, wherever feasible, and
balancing the environment–growth trade-off; by assisting in the design and financial closure
and bridging the divides between regions, of bankable projects.
sectors, and genders. The Government of
India cannot address these challenges alone. Second, in order to ensure that its large
The Finance Minister of India, Mr. Pranab ongoing operations stretching across 20 states
Mukherjee, during the 2010 Budget speech and multiple sectors continue to perform
rightly noted that, “With development and well, ADB will maintain its focus on improving
economic reforms, the focus of economic project readiness and portfolio performance.
activity has shifted towards the nongovernment In addition to the ongoing TPRMs and the
actors bringing into sharper focus the role capacity building work, further decentralization
of government as an enabler. An enabling of important tasks to the India Resident
government does not try to deliver directly Mission, as well as strengthening of its staff
to the citizens everything that they need. resources and available expertise, is under way.
Instead it creates an enabling ethos so that
individual enterprise and creativity can flourish. Third, the development lessons that are
Government concentrates on supporting and generated through ADB’s growing operations
delivering services to the disadvantaged sections need to be better disseminated, not just within
of the society.” India, but also to other developing member
countries. ADB will, therefore, ensure that
The task ahead of ADB is very clear. It there is a tangible transfer of best practice
needs to tap its entire array of lending and and knowledge to its clients across states and
nonlending services innovatively to support sectors. More resources will be devoted to the
the government’s efforts at both ends of the preparation of high-quality knowledge products
spectrum, i.e., helping to develop infrastructure and to tracking results (i.e., outputs and

27
Government of India. 2007. 11th Five Year Plan Document. Planning Commission. New Delhi.

29
Development Effectiveness Brief: outcomes) of ADB operations in a systematic that ADB’s India operations continue to
India and conceptually robust manner. gain in strength and value addition in the
coming years.
Since ADB began operations in India nearly
25 years ago, its overall program has evolved Ultimately, ADB’s partnership with India is
and improved significantly in terms of scale about working jointly with the government
(i.e., volume of approvals and disbursements), toward ensuring that the fruits of growth and
reach (operations in more than 20 states the opportunities created become accessible
and multiple sectors), and lending modalities to the poor and needy. It is about ensuring
(support for PPPs, use of multitranche that all children, like those at the local school
financing facilities, strategic use of technical in Ashraya colony, Thiruvail in Mangalore
assistance resources). These gains need to be district, (cover photo), have access to basic
consolidated and built upon. Ensuring the 3R’s infrastructure and public services so that they
(relevance, responsiveness, and results) is not have an opportunity to fulfill their aspirations
a one-shot affair but an ongoing and inter- and, in turn, help build a strong and
linked learning process will help guarantee prosperous India.

30
Annex

Table 1 Development Outputs from ADB-Supported Projects in India

Outputs Achieved
2004–2009
ENERGY
Installed energy generation capacity (MW equiv.) 318
Transmission lines installed or upgraded (km) 10,458
Distribution lines installed or upgraded (km) 16,223
New households connected to electricity (number) 1,420,912
Greenhouse gas emission reduction (tCO2-equiv/yr) 1,957,000
FINANCE
Microfinance accounts opened/ end borrowers reached (number) 42,707
Microfinance loans provided (amount in $ millions) 107
Funds created or replenished (number) 7
Funds created or replenished (amount in $ millions) 3
TRANSPORT
Expressways built or upgraded (km) 244
National highways, provincial, district, and rural roads built
or upgraded (km) 4,197
Beneficiaries from road projects as per PCR (number) 49,400,000
WATER
Water supply pipes installed or upgraded/ length of network (km) 3,687
New households served with water supply (number) 111,000
Already connected households with improved piped water supply 288,000
Wastewater treatment capacity added (in m3/day) 225,825
Households served with new sanitation (number) 47,902
km = kilometers, m3 = cubic meters, MW = megawatts, tCO2-equiv/yr = tons of carbon dioxide equivalent avoided per year.
Note: The data in the table include those compiled from PCRs completed between 2004–2009 only.
Source: ADB estimates.

31
Development Effectiveness Brief:
India Table 2 Operational and Organizational Effectiveness: ADB Operations in India in 2009
Indicator 2009 Value
Operational Quality and Portfolio Performance
Average annual combined ratings of PPERs, PVRs, and PCRs (% successful)a,b 60% (6 of 10)
Project performance rating at implementation (% satisfactory)b 93% (126 of 135)
Finance Mobilization
Overall disbursement ratio for sovereign operations (%)c 24%
Proportion of DVA cofinancing relative to ADB loans and grants approved annually (%)b 0.4%
Proportion of Financing for Strategy 2020 Core Operational d

Proportion of financing for Strategy 2020 core operational areas (%) 95% (1,731 million)
Proportion of projects supporting private sector development (%)b 52% (25 of 48)
Proportion of projects supporting regional cooperation and integration (%)b 2% (1 of 48)
Proportion of projects supporting environmental sustainability (%)b 33% (16 of 48)
Proportion of projects with gender mainstreaming (%) b,e
20% (4 of 20)
Knowledge Management
Ratings of TCRs (% successful)b 79%
Partnerships
Proportion of sovereign operations with NGO and/or CSO participation (%)f 87% (13 of 15)
New program-based approaches approved (number) g
0
Proportion of CPS and CPR missions conducted jointly with at least one other development
partner (% annually)h 0
Business Processes and Practices
Average sovereign operations processing time (months from fact-finding to approval) 20
Average time from approval to first disbursement in sovereign operations (months) i
11
Proportion of sovereign operations administered by field offices (%) 31% (11 of 35)
ADB = Asian Development Bank, ADF = Asian Development Fund, CPS = country partnership strategy, CPR = country portfolio review,
CSO = civil society organization, DVA = direct-value added, MAKE = Most Admired Knowledge Enterprises, NGO = nongovernment orga-
nization, OCR = ordinary capital resources, PCR = project completion report, PPER = project performance evaluation report,
PVR = PCR validation report, TCR = technical assistance completion report.
Notes
For previous years, visit results dashboard (just type RDB in the address bar).
Unless stated, sovereign operations refer to OCR loan, ADF loan, and ADF grant projects but excludes loan projects financed from countercy-
clical support facility.
a Where available, PPER ratings are taken as the final rating. If no PPER is prepared, an available PVR rating is used. Otherwise, PCR ratings
are used. Counting of “successful” projects rated in PCRs, PVRs, and PPERs is based on the year of their circulation. Baseline and later
values have changed as more PPERs and PVRs become available.
b 3-year average, 2007–2009.
c Disbursement ratio is defined as the ratio of total disbursement in a given year and/or period over the net loan amount available at the
beginning of the year/period, plus loans that have become effective during the year/period, less cancellations made during the
year/period.
d Refers to all sovereign, nonsovereign, and ADF grant-funded projects plus other private sector operations.
e Proportion of projects with significant gender mainstreaming includes projects identifying gender as a theme and other projects with
effective gender mainstreaming. Projects financed by supplementary loans and grants are not included. Uses different methodology
compared to other Strategy 2020 indicators.
f Refers to OCR and ADF loans only.
g Does not include program loans, sector development programs or projects and multitranche financing facility subprojects.
h Proportion of CPS/CPR missions refer to missions from headquarters.
i 5-year average, 2004–2008.
Source: ADB estimates.

32
Development Effectiveness Brief: India
ADB operations began in India in 1986. Between 1986 and year end 2010, ADB approved
143 loans amounting to $23.0 billion and 306 technical assistance projects amounting to
$227 million on a cumulative basis for India. More than 75% of this assistance covers the
transport, energy, and urban sectors. In recent years, ADB has also been providing support for Development
Effectiveness
improving water resource management, promoting financial inclusion, and facilitating public–
private partnerships in infrastructure. Today, ADB operations cover 22 states of India. India
has been among the top three borrowers of ADB’s Ordinary Capital Resources (OCR) loans
since 2007. ADB remains committed to supporting the Government’s efforts towards making
Brief

India
India’s growth inclusive and environmentally sustainable.

About the Asian Development Bank

ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its developing
member countries reduce poverty and improve the quality of life of their people. Despite the
region’s many successes, it remains home to two-thirds of the world’s poor: 1.8 billion people
who live on less than $2 a day, with 903 million struggling on less than $1.25 a day. ADB is
committed to reducing poverty through inclusive economic growth, environmentally
sustainable growth, and regional integration.
A Partnership for Inclusive Growth
Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main
instruments for helping its developing member countries are policy dialogue, loans, equity
investments, guarantees, grants, and technical assistance.

Asian Development Bank

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1550 Metro Manila, Philippines
[Link]
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