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Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No: 56837-IN
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 37.1 MILLION
(US$60 MILLION EQUIVALENT)
TO
INDIA
FOR A
CAPACITY BUILDING FOR URBAN DEVELOPMENT PROJECT
June 17, 2011
Sustainable Development Unit
India Country Management Unit
South Asia Regional Office
This document has a restricted distribution and may be used by recipients only in the
performance of their official duties. Its contents may not otherwise be disclosed without World
Bank authorization.
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i
CURRENCY EQUIVALENTS
(Exchange Rate Effective April 29, 2011)
Currency Unit = Indian Rupees (Rs.)
US$1 = Rs.44.22
SDR 1 = USD1.621
FISCAL YEAR
April 1 – March 31
ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank M&E Monitoring and Evaluation
AFS Annual Financial Statement MIS Management Information System
ARCS Audit Reports Compliance System MOA Memorandum of Agreement
BSUP Basic Services to the Urban Poor MOHUP
A
Ministry of Housing and Urban Poverty
Alleviation
CAG Comptroller and Auditor General MOF Ministry of Finance
CA Chartered Accountant MOUD Ministry of Urban Development
CAA Constitutional Amendment Act MSW Municipal Solid Waste
CAS Country Assistance Strategy NCB National Competitive Bidding
CAAA Controller Aid Accounts Audit NRW Non Revenue Water
CAS Country Assistance Strategy NSS National Sample Survey Organization
CDM Clean Development Mechanism O&M Operations and Maintenance
CDP City Development Plan PAO Pay and Accounts Office
CGA Controller General of Accounts PD Project Directors
CSMC Central Sanctioning and Monitoring Committee PMB Programme Management Board
CQ Consultant Qualifications PMU Project Management Unit
DEA Department of Economic Affairs PPP Public Private Partnership
DFID Department for International Development, UK PSC Project Steering Committee
DGS&D Directorate General of Supplies and Disposal RAY Rajiv Awas Yojana
DPR Detailed Project Report RFP Request for Proposal
EWS Economically Weaker Sector RTI Right To Information Act
FM Financial Management SBD Standard Bidding Document
FMS Financial Management Specialist SLNA State Level Nodal Agency
FSI Floor Space Index SP Social Protection
GAAP Governance and Accountability Action Plan SRFP Standard Request for Proposals
GDP Gross Domestic Product SWM Solid Waste Management
GIS Geographic Information Systems TA Technical Assistance
GOI Government of India TOR Terms of Reference
GIZ German International Cooperation UIDSSM
T
Urban Infrastructure Development Scheme for
Small and Medium Towns
HR Human Resources UIG Urban Infrastructure and Governance
IBRD International Bank for Reconstruction and
Development
ULB Urban Local Body
IDA International Development Association ULCRA Urban Land Ceiling and Regulation Act
IHSDP Integrated Housing and Slum Development
Program
UNDB United Nations Development Business
IT Information Technology USAID United States Agency for International
Development
ITES Information Technology Enabled Services WBI World Bank Institute
IUFR Interim Un-audited Financial Reports WSP Water and Sanitation Program
JnNURM Jawaharlal Nehru National Urban Renewal Mission WSS Water Supply and Sanitation
LIG Low Income Group
Vice President: Isabel M. Guerrero
Country Director: N. Roberto Zagha
Sector Director: John H. Stein
Sector Manager: Ming Zhang
Task Team Leader: Songsu Choi
ii
INDIA
CAPACITY BUILDING FOR URBAN DEVELOPMENT
CONTENTS
Page
A. STRATEGIC CONTEXT AND RATIONALE .................................................... 1 1. Country and sector issues........................................................................................... 1 2. Rationale for Bank Group Involvement ..................................................................... 5
3. Higher level objectives to which the project contributes ........................................... 5
B. PROJECT DESCRIPTION .................................................................................... 5 1. Lending instrument .................................................................................................... 5 2. Project development objective and key indicators..................................................... 5 3. Project components .................................................................................................... 6
4. Lessons learned and reflected in the project design ................................................... 8
5. Alternatives considered and key choices made ......................................................... 8
C. IMPLEMENTATION ............................................................................................. 9 1. Partnership arrangements ........................................................................................... 9 2. Institutional and implementation arrangements (Annex 6). ...................................... 9 3. Monitoring and evaluation (Annex 3)....................................................................... 11
4. Sustainability............................................................................................................. 11 5. Critical risks .............................................................................................................. 12
6. Credit conditions ....................................................................................................... 14
D. APPRAISAL SUMMARY .................................................................................... 14 1. Economic and Financial Analyses ............................................................................ 14
2. Technical ................................................................................................................... 14 3. Fiduciary ................................................................................................................... 14
4. Social......................................................................................................................... 15 5. Environment .............................................................................................................. 15
6. Safeguard Policies ..................................................................................................... 16 7. Policy Exceptions and Readiness.............................................................................. 16
Annex 1: Country and Sector Background .................................................................. 17
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ..... 28 Annex 3: Results Framework and Monitoring ............................................................ 29 Annex 4: Detailed Project Description .......................................................................... 33
Annex 5: Project Costs ................................................................................................... 39 Annex 6: Implementation Arrangements ..................................................................... 40 Annex 7: Financial Management and Disbursement Arrangements ......................... 43 Annex 8: Procurement Arrangements .......................................................................... 52
Annex 9: Governance and Accountability Plan ........................................................... 65 Annex 10: Economic and Financial Analysis ............................................................... 70 Annex 11: Safeguard Policy Issues ................................................................................ 71 Annex 12: Project Preparation and Supervision ......................................................... 72 Annex 13: Documents in the Project File ..................................................................... 73
Annex 14: Statements of Loans and Credits ................................................................ 74 Annex 15: Country at a Glance ..................................................................................... 79
iii
INDIA
Capacity Building for Urban Development Project
PROJECT APPRAISAL DOCUMENT
South Asia Sustainable Development Sector Department
Date: June 17, 2011 Team Leader: Songsu Choi
Country Director: N. Roberto Zagha
Sector Manager/Director: Ming Zhang
Sectors: General water, sanitation and flood
protection sector (15%); Sub-national government
administration (85%)
Themes: Municipal finance (P); Municipal
governance and institution building (P);Other
urban development (P)
Project ID: P099979 Environmental screening category: Not Required
Lending Instrument: Technical Assistance Credit
Project Financing Data
[ ] Loan [X] Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Total IDA financing (US$ m.): 60.00
Proposed terms:
Financing Plan (US$m)
Source Local Foreign Total
BORROWER/RECIPIENT 0.00 0.00 0.00
International Development Association (IDA) 55.00 5.00 60.00
Total: 55.00 5.00 60.00
Borrower:
Government of India
Department of Economic Affairs
Ministry of Finance, North Block
New Delhi
India
110001
Tel: +91-11-23093182
Responsible Agencies: Ministry of Urban Development (MOUD)
Nirman Bhawan
New Delhi
India
Email: [email protected]
Ministry of Housing and Urban Poverty Alleviation (MOHUPA)
Nirman Bhawan
New Delhi
India
Email: [email protected]
iv
Estimated disbursements (Bank FY/US$m)
FY 2012 2013 2014 2015 2016
Annual 8.0 18.0 18.0 14.0 2.0
Cumulative 8.0 26.0 44.0 58.0 60.0
Project implementation period: Start June 1, 2011 End: June 30, 2016
Expected effectiveness date: October 1, 2011
Expected closing date: June 30, 2016
Does the project depart from the CAS in content or other significant respects? Ref.
PAD A.3 [ ]Yes [X] No
Does the project require any exceptions from Bank policies?
Ref. PAD D.7 Have these been approved by Bank management?
Is approval for any policy exception sought from the Board?
[ ]Yes [X] No
[]Yes [X ] No
[ ]Yes [X] No
Does the project include any critical risks rated ―substantial‖ or ―high‖?
Ref. PAD C.5 []Yes [X ] No
Does the project meet the Regional criteria for readiness for implementation? Ref.
PAD D.7 [X]Yes [ ] No
Project development objective: Ref. PAD B.2, Technical Annex 3
The project‘s development objective is that: selected Urban Local Bodies (ULBs) will have improved
their systems and skills for urban management and urban poverty reduction.
Project description : Ref. PAD B.3.a, Technical Annex 4
The Project will have three components:
1. Capacity Building for Strengthened Urban Management: This component will help States and Urban
Local Bodies to improve systems for (i) financial management (FM); (ii) urban planning; (iii) service
delivery; and (iv) governance in Urban Local Bodies.
2. Capacity Building for Effective Urban Poverty Monitoring and Alleviation: This component will help
States and ULBs (i) improve skills of practitioners; (ii) recognize and incorporate innovative programs
and best practices; and (iii) diagnose urban poverty and prepare alleviation strategies in ULBs. This
component will also strengthen MOHUPA‘s capacity for urban poverty monitoring and evaluation.
3. Implementation Support: This component will support implementation via outreach activities with
ULBs, as well as project procurement, FM and administration.
Which safeguard policies are triggered, if any? Ref. PAD D.6, Technical Annex 10
None
Significant, non-standard conditions, if any, for:
Ref. PAD C.7
Negotiations and Board presentation: None
Loan/credit effectiveness:
None
Covenants applicable to project implementation:
None
1
A. STRATEGIC CONTEXT AND RATIONALE
1. Country and sector issues
1. Background and key sector issues. Indian Urban Local Bodies (ULBs) play a
particularly important role in the country‘s economic life, with about sixty percent of India‘s
Gross Domestic Product (GDP) produced in urban agglomerations. Though the urban population
represents only twenty eight percent of the total population, India counts three of the world‘s
twenty-one mega-ULBs (Mumbai, 19mn; Delhi, 15mn; Kolkata, 14mn). Four other ULBs have a
population between four and ten million (Chennai 6.5mn; Hyderabad 5.7mn; Bangalore 5.7mn;
and Ahmedabad 4.05mn) and twenty eight other ULBs have a population between one and four
million. In total there are over 5,000 ULBs, 300 of which have a population greater than
100,000. Looking to the future, the urban population is expected to increase from 282 million in
2000 to 590 million people in 2030. Larger ULBs will continue to look for ways to strengthen
their participation in the global economy, while smaller ULBs will absorb most of the rural-
urban migration and seek to strengthen linkages to the rural economy.
2. Indian policy makers face two key challenges in achieving the benefits associated with an
urban agglomeration economy: (i) managing the urban space and (ii) alleviating urban poverty.
3. Managing the urban space. While Indian ULBs continue to attract millions of people,
they have not fully achieved the development and economic benefits that urbanization could
bring. This is evident from the high land prices, inadequate housing, congestion and weak
service delivery in urban areas. Today, Indian ULBs are becoming centers of economic growth
and yet have challenges of poverty alleviation. International benchmarks show Indian ULBs to
be lagging on service delivery, and few Indian ULBs are creditworthy to access capital markets
for funds for urban infrastructure. The areas that require urgent focus are water supply and
sanitation, urban transportation, environment, affordable housing and the development of the
capacity of ULBs to function successfully in a decentralized environment. Slums (informal
settlements) have grown very fast over the last two decades, reaching about twenty five percent
of urban housing over the last two decades. In some ULBs, such as Mumbai, the slum population
is over one half of the total. These impediments are the result of weaknesses in the policy,
financing and institutional frameworks that govern key aspects of urban management, i.e. urban
finance, land use planning and regulation, and service delivery. Together, they negate the
benefits of agglomeration economies in Indian ULBs by distorting land and housing markets,
rendering ULBs non-creditworthy, and leaving them with expensive, yet poorly functioning,
urban services.
4. Weak finances: ULBs suffer from a range of financial constraints: (i) a lack of buoyant
and dynamic revenue streams, inadequate and poorly mobilized local revenues (e.g. property tax,
user charges) and inadequate fiscal transfers from higher levels; (ii) weak asset/liability
management; (iii) inadequate financial management (FM), assurance and information systems,
and; (iv) non-transparent subsidy mechanisms. These foster a dependency on concessional or
public finance. In principle, central and state support for ULBs is supposed to be matched by
contributions from own source revenues and funds leveraged from private sector lender. In
reality though, local revenue sources like property taxes and user charges are not effectively
raised, and access to market finance is limited as ULBs lack credibility with potential lenders.
2
5. Outdated planning: Urban planning frameworks are weak in many local governments.
Planning is often done by multiple agencies with overlapping responsibilities and inadequate
coordination between them. Counterproductive urban planning regulations, including rigid
master plans, zoning regulations, floor space indexes (FSI) and development controls are overly
restrictive with respect to densities and spatial structure. Additionally, planning and land use
management weaknesses are at the core of slum formation: (i) current land use and spatial
planning (and enforcement) practices limit the supply of land available for building; and (ii)
building regulations (e.g. floor space requirements) limit the density and supply of homes. At the
same time, urban expansion and renewal often calls for restructuring city space, thus requiring
redevelopment of existing settlements and activity zones. Resettlement is not adequately
integrated into urban planning and appropriately factored into urban development institutions.
Urban planning has also traditionally been approached through a top-down, narrow sectoral
perspective. This has omitted topics such as environmental health and broader quality of life
issues. These need better integration into the planning framework and decision making process.
Further, an approach that includes the ULB and urban citizens as the key players in the planning
process needs to be evolved.
6. Weak service delivery institutions (Water and Sanitation Services, Solid Waste
Management): In the current institutional structure there is considerable overlap in responsibility
for the functions of policy making, regulation and service provision. These require accountability
and performance improvement. Service delivery is usually provided by departments within the
city administration, which often are not financially independent, client-oriented or professionally
specialized. There is a strong bias toward providing physical infrastructure (pipes, vehicles,
collection bins) rather than providing financially and environmentally sustainable services to
urban areas. Basic services are hampered by financial weaknesses, due to an inability to recover
operations and maintenance (O&M) costs, as a minimum, from users and inefficiencies in
service provision. Though under the Jawaharlal Nehru Urban Renewal Mission (JnNURM, see
below) service level benchmarks have been introduced, the weak capacity of the ULBs is an
impediment in the realization of optimum service delivery levels and efficiencies.
7. Governance and Intergovernmental constraints: The 74th
Constitutional Amendment Act
of 1993 (CAA) gives urban local bodies an independent status within the Constitution, with a
key role to play in the provision of services. Nevertheless, systemic institutional weaknesses
continue to be a challenge. The 11th
Plan (Approach Paper, December 2006) cites the need for
good governance and transparency. In the urban sector specific governance challenges affect
performance. ULBs lack functional jurisdiction as responsibilities for urban services are
fragmented and overlap considerably across state and local agencies leading to a lack of
coordination. In many states, devolution of functions and responsibilities from states to ULBs
has been done, but the transfer of funds and functionaries is partial and limited, while fiscal
dependence on state governments remains high. Most Municipal Acts do not provide appropriate
incentives for accountability. Citizen involvement in city decisions is low and needs further
improvement in transparency and a systematic approach. The reforms under JnNURM,
especially the Community Participation Law, and the introduction of an e-governance system are
some of the initiatives taken by Government of India (GoI) to enhance participation and
transparency in urban local bodies.
8. Alleviating urban poverty. Following national poverty trends, urban poverty has
decreased steadily over the last 25 years, but the absolute numbers of urban poor continue to
3
grow. Urban poverty rates declined from 43.6 percent in 1983 to 25.7 percent in 2005 (NSSO
1983-84 and 2004-05 rounds). This decline in total and urban poverty incidence has been
accompanied by an ―urbanization of poverty‖, as the urban poor account for a larger fraction of
the total poor today than they did decades ago. This phenomenon, combined with overall
population growth, has translated into increasing numbers of urban poor. Vulnerability—
understood as the extent of susceptibility to poverty—has also increased in urban areas as a
result of the rising pressure on urban amenities and facilities, growing informality in the labor
market and the erosion of traditional informal support networks.
9. Determinants of urban poverty and vulnerability. Urban poverty is a complex
phenomenon and there are specific characteristics of poverty and deprivation that are particular
to the circumstances in which the urban poor live. Although far from constituting a homogenous
group, the urban poor and vulnerable are generally characterized by a greater income volatility
associated with informal employment, higher exposure to shocks arising from expenditure
shocks such as increases in prices or expenditure on health needs, insecure living conditions, and
poor service delivery compared to their rural counterparts.
10. Access to social services among the urban poor. Quality of social service delivery is
generally poor in urban areas due to a variety of reasons. On the supply side, inadequate
institutional arrangements, insufficient financing, and poor quality and quantity of inputs
provided are important factors. On the demand side, factors affecting social service access
include limited awareness about the availability of services, differing levels of ‗urban literacy‘
(familiarity with local language, common urban technologies and institutions and prior
experience among the users of facilities), and the relatively high (implicit and explicit) costs of
different services.
11. Access to social protection programs among the urban poor. While India has a range of
central and state-specific social protection programs, the urban social protection system has been
traditionally less focused and consequently, under financed.
12. Government’s urban development strategy. The Government‘s overarching urban
development objective is to create economically productive, efficient, inclusive and responsive
ULBs, by focusing on six strategic outcomes: (i) universal access to a minimum level of
services; (ii) establishment of city wide frameworks for planning and governance; (iii) modern
and transparent budgeting, accounting and FM; (iv) financial sustainability for ULBs and service
delivery institutions; (v) utilization of e-governance; and (vi) transparency and accountability in
urban service delivery and management.
13. The Government‘s flagship urban development program is the Jawaharlal Nehru National
Urban Renewal Mission (JnNURM), which was launched in December 20051. The Mission
targets 65 ULBs (7 with populations greater than 4 million, 28 greater than 1 million and 30
other ULBs of religious, historic or tourist importance). JnNURM is reform and incentive based:
1 Concurrent with the two sub-missions of JNNURM i.e. UIG and BSUP, the Government launched the Urban
Infrastructure Scheme for Small and Medium Towns (UIDSSMT), with a similar policy and investment design,
covering all ULBs/towns as per 2001 census except those covered under JNNURM. Similarly, the MOHUPA runs
the Integrated Housing and Slum Development Program (IHSDP), with a similar policy and investment design as
BSUP, covering all ULBs/towns as per the 2001 census except the 65 mission ULBs of JNNURM. Throughout the
PAD references to JNNURM reforms are understood to include UIDSSMT and IHDSP.
4
in return for a commitment to adopt the obligatory reforms over a period of seven years, ULBs
may access funds for investment and capacity building. As of March 2011, the Government of
India (GOI) had committed to provide up US$ 14.43 billion in federal resources for these
investments for qualifying ULBs a seven year period. States and ULBs are then expected to
match the federal grants from own-source funds, the capital markets, public private partnerships
(PPP), and bilateral and multilateral agencies. The investment component of the Mission consists
of two sub-missions: (i) Urban Infrastructure and Governance (UIG), implemented by the
Ministry of Urban Development (MOUD), with investments including (a) water, sanitation,
sewerage and drainage; (b) solid waste management (SWM); (c) urban transport; (d) street
lighting; and (e) environmental protection; and (ii) Basic Services to the Urban Poor (BSUP),
implemented by the Ministry of Housing and Urban Poverty Alleviation (MOHUPA), with
investments supporting integrated development of slums. More recently GOI launched the Slum-
free City Planning Scheme (SFCP) of Rajiv Awas Yojana (RAY) a scheme working towards the
goal of a slum-free India.
14. The essential building block of JnNURM is the reform program. The major element of
the mandatory reform program relates to urban management; (i) adoption of modern accrual-
based double entry system of accounting; (ii) introduction of a system of e-governance using IT
applications, such as Geographic Information Systems (GIS); (iii) reform of property tax; and
(iv) levy of reasonable user charges for municipal services. In addition, the JnNURM has been
designed to assist in pro-poor development of Indian ULBs by enabling the provision of basic
services to the poor and supporting integrated development of slums. These include: (i) internal
earmarking of at least 25% funds within local body budgets for basic services to the urban poor;
(ii) reservation of at least 20-25% of developed land in all housing projects (both public and
private agencies) for Economically Weaker Sector (EWS)/ Low Income Group (LIG) category
with a system of cross-subsidization; and (iii) States and ULBs are required to formulate and
adopt an overarching policy on the provision of basic services to the urban poor addressing the 7-
point charter pertaining to: provision of security of tenure at affordable prices, improved
housing, water supply, sanitation, education, health and social security; the last three are to be
tackled in convergence with departments dealing with education, health and social security as
applicable. These reforms have been introduced to ensure that a dedicated budget is created at
the city and state level for urban poverty alleviation and slum upgrading; the urban poor have
access to land and are not squeezed out of the housing market due to mounting land prices; and
that poor are systematically provided with basic services based on agreed milestones.
15. The weak capacity in ULBs, however, is slowing the implementation of both the urban
management and poverty reduction reforms in many Mission ULBs, and thus hampering the
achievement of the strategic outcomes sought by the Government. The scope and complexity of
these urban capacity challenges is only now emerging. Many ULBs need a comprehensive
package of assistance covering both urban management and poverty reduction. Others,
particularly large urban areas, need more targeted assistance, e.g. in revenue management,
capital budgeting or tariff design. While ULBs generally have a good understanding of the need
to introduce reforms, many lack the capacity to prepare a credible step by step implementation
plan to carry out the reforms. While the high level officials like Municipal Commissioners are
often drawn from the national and State level administrative services and have considerable
technical expertise and public administration backgrounds, many ULBs lack staff with the
specialized professional training relevant to the management of ULBs and the services they need
to offer. This is not only a matter of project management capacity, but also of the lack of systems
5
and policy tools to take strategic decisions, plan ahead, involve citizens, and monitor services.
Basic information on the poor in ULBs is lacking, and systems are under developed to either
improve the information or ensure that it gets strategically interpreted and utilized. There is also
a tendency to treat urban poverty separately from the wider development of ULBs, which results
in short-term and fragmented interventions, rather than strategic city-wide plans and approaches,
and the systems to implement them. Most municipal officials have had little exposure to
domestic and international best practices, which hampers the professionalization of ULB
management.
2. Rationale for Bank Group Involvement
16. CAS linkage. The project is consistent with the Bank Group Country Strategy (CAS)
discussed by the Executive Directors on December 11, 2008. The CAS aims to foster rapid and
inclusive growth, sustainable development and service delivery. The proposed project would
directly contribute to these CAS objectives by strengthening capacity for urban management and
poverty alleviation, and by improving learning and innovation systems related to urban
development.
17. Rationale for Group involvement. The critical issue now for India‘s urban sector is to
implement a complex process of policy reform, institutional capacity, and investments through
the third tier of government in urban areas i.e. the ULBs. The Bank is already providing support
to urban development through lending, advisory work and knowledge building activities, and has
on-the-ground experience of the main capacity constraints. Bank support for the project links this
wide ranging experience directly with the Government‘s flagship programs for urban
development. In doing so it supports the development of a requisite framework for action on
capacity development that will assist the planning, delivery and monitoring of these efforts in
India‘s ULBs.
3. Higher level objectives to which the project contributes
18. The project will contribute to the achievement of GOI‘s objective of creating
economically productive, efficient, equitable, inclusive and responsive ULBs. Achieving this
objective will help sustain high rates of economic growth, accelerate poverty reduction, and
improve services, especially to the urban poor.
B. PROJECT DESCRIPTION
1. Lending instrument
19. The lending instrument proposed is a free standing Technical Assistance (TA) Credit.
2. Project development objective and key indicators
20. The project‘s development objective is that: selected ULBs will have improved their
systems and skills for urban management and urban poverty reduction. Successful completion of
this project will result in: (i) more ULBs are able to better plan and manage resources and
services; (ii) more ULBs are equipped to analyze local conditions and formulate comprehensive
poverty alleviations strategies; (iii) more ULBs have access to knowledge and best practices on
urban development and (iv) urban poverty policies and program guidelines that are informed by
6
international and domestic best practices and by data that has been systematically collected and
analyzed.
21. The project will target 20 ULBs looking to improve both urban management and
poverty reduction. A demand-driven approach is part of the project design, which is manifested
in an element of self-selection among the ULBs. Notwithstanding this, regional variation will be
sought, as will variation in city size. Similarly, lagging states may be targeted, though this will
be subject to some constraints as some of these states have small urban populations and others
are already receiving assistance from other donors. A certain amount of state clustering will also
be incorporated for greater efficiency in implementation, and to improve ULB-level capacity for
participating in the intergovernmental finance system. Finally, depending on local circumstances
and expressed need, additional ULBs may participate in the project and opt for more targeted
interventions, e.g. capacity building only for service delivery.
22. A detailed results framework to measure the impact of capacity building activities has
been designed as part of the project and is presented in Annex 3. The project outcome will be
that: 20 ULBs will be implementing (i) at least two urban management reforms, covering FM,
urban planning, service delivery and governance; and (ii) urban poverty reduction strategies.
3. Project components
23. The project will have three components.
(i) Capacity Building for Strengthened Urban Management (US$37.5 million). This
component will support TA across several urban management topics. ULBs will select the
desired package of assistance, based on an assessment of needs which will be undertaken with
support from the Project Management Unit (PMU, see below). This demand driven, menu
approach is in response to the variable capacity building needs faced by ULBs.
Financial and FM Reform: The project would support ULBs in the key areas of
improving budgeting and planning, expenditure management, procurement planning and
execution, revenue mobilization (including property tax, development charges and user
charges), asset/liability management, accrual accounting, internal controls, auditing, FM
information systems, procurement, capacity enhancement of municipal accountants, and
IT standardization. Implementation and operational planning including developing
strategies for project execution, and monitoring and review including effective quality
control procedures will also be supported.
Framework for Urban Planning: The project would support ULB reforms to the urban
planning process and land management, including pro-poor planning approaches.
Service Delivery: The project would support institutional design in ULBs for service
delivery, tariff and subsidy design, the financing framework (including access to capital
markets, public private partnerships (PPPs), and carbon finance), service delivery for the
poor, strengthening project planning, implementation, performance planning and
benchmarking, and monitoring, training and professionalization of service delivery and
efficient management of social impacts.
7
Framework for Governance: The project would seek to improve the quality of the
interactions between local officials and citizens through support for citizen awareness and
participation (e.g. citizen scorecards, stakeholder forums government) and skills
development for elected officials. In addition, to improve transparency, public
consultations, citizens‘ forums and measures such as disclosure of finalized audited
financial statements would be supported.
(ii) Capacity Building for Effective Urban Poverty Alleviation and Monitoring ($18.5 million) These capacity building initiatives reflect the need to strengthen MOHUPA, share urban poverty
alleviation experiences, and design strategies on urban poverty alleviation. It is anticipated that
this component will further assist in the effective implementation of RAY.
Challenge Fund for Urban Poverty Alleviation. Grant funding will be provided to ULBs
working on urban poverty alleviation via two windows: (i) to recognize and award
particularly innovative practices in this area; and (ii) to government departments and
institutions and parastatals interested in adopting and scaling up one or more of the ―best
practices‖ identified through the first window. The sub-component will also provide
funding for the administration of the Challenge Fund.
Creation of a Practitioners Network. Support will be provided to the Challenge Fund to
constitute a network of practitioners with the objective of promoting information sharing
and capacity building. The network will include government officials from the selected
ULBs, academics and other actors active in the area of urban poverty alleviation both
nationally and internationally, and is envisioned to serve as a platform for both peer-to-
peer learning and the delivery of formal training. The network will also facilitate the
dissemination and discussion of best practices identified and/or developed through the
Challenge Fund.
Development of Training Materials on Urban Poverty and Service Delivery. Support will
be provided to 4 National Resource Centers to develop training modules on urban
poverty reduction and service delivery.
Preparation of ULB level Poverty Reduction Strategies. Support will be provided to
ULBs to prepare diagnostics and poverty reduction strategies which build upon the
existing and future planning instruments such as City Development Plans and Slum-free
City Action Plans. Support will also be provided to improve databases and other tools
needed for targeting and monitoring of service delivery in urban areas.
Strengthening of MOHUPA: The technical assistance will support policy analysis and
development as well as build a comprehensive monitoring and evaluation (M&E) system
in MOHUPA in coordination with the Resource Centers and ULBs.
(iii) Implementation Support (US$4 million):
This component will support a national PMU for providing overall technical and
managerial assistance during implementation. The PMU will assist in supporting the
project, in the areas of (i) pipeline development; (ii) quality assurance; (iii) procurement
8
and procurement advisory services; (iv) FM; (v) reporting; (vi) M&E; and (vii) project
administration.
4. Lessons learned and reflected in the project design
24. Past Bank-financed urban development projects in India focused on asset creation and
expanding access to services. The current Bank projects take a different approach, recognizing
that policy reform and institutional capacity must be addressed in a comprehensive fashion to
ensure the efficiency and effectiveness of investments in infrastructure and service delivery.
(Karnataka Municipal Reform Project, approved March 2006; $216mn; Third Tamil Nadu Urban
Development Project, approved July 2005; $300mn; Karnataka Urban Water Sector
Improvement Project, approved July 2005; $39.5mn; Andhra Pradesh Urban Reforms and
Municipal Services Project, approved Dec 2009; $300mn). Though the Capacity Building for
Urban Development project focuses exclusively on institutional development, it also reflects the
essential lesson of linking project activities to the larger policy framework.
25. Technical Assistance projects (TA) projects have had mixed results for several reasons:
(i) over-ambitious and complex designs have hampered the achievement of development
objectives; (ii) weak links to reform programs have weakened the results chain; and (iii) supply
driven TA has resulted in low demand. The project has incorporated these lessons into the
design. This project focuses on achieving outcomes in selected ULBS, where those outcomes
are linked to the aims of the GOIs flagship programs. The implementation design also calls for
the PMU to undertake significant outreach activities to ensure that States and ULBs are taking
advantage of capacity building opportunities under the project. Additionally, where "process
steps" involved for accessing TA are cumbersome, disbursements may fail to meet expectations
and the effectiveness of intervention may be diluted. Involving multiple tasks and agencies may
result in delays in reaching physical and financial targets. The design of the project framework
seeks to streamline the management of numerous requests to allow easy access and fast
disbursement of the TA funds.
5. Alternatives considered and key choices made
26. Flexible multi-sector v. single-sector: Given the inter-linked, multi-sectoral range of the
reform challenges facing the urban sector, a single sector design (e.g. service delivery) was
considered too narrow and restrictive. To enhance the sustainability of this initiative, the design
of the facility is diversified, multi-sectoral and open to States and ULBs that fit within the terms
of the agreed development/ reform agenda. 27. State and ULB focus: Consideration was given to focusing project outcomes on
improving capacity in the States as well as ULBs. While it was agreed that States may need to
enhance capacity, it was decided to orient project outcomes to ULBs, where capacity weaknesses
are sharpest.
9
C. IMPLEMENTATION
1. Partnership arrangements
28. The project has been developed within a capacity building framework in which other
donors are currently participating. The Water and Sanitation Program (WSP) and the World
Bank Institute (WBI) have participated in the conceptualization and design of the project, and,
through their regular programs, will support complementary capacity building activites during
implmentation. Other bilateral donors (Asian Development Bank (ADB), German International
Cooperation (GIZ), and United States Agency for International Development (USAID) also have
complementary capacity building programs under way.
29. The UK Department for International Development (DFID) has been particularly active
in capacity building, especially in lagging states. Building on these lessons learned, it has
committed approximately US$20 milliion to support a policy unit in MOHUPA, the
development of state and ULB poverty reduction units, skills development for local officials and
the development of pro-poor approaches on finance, planning and service delivery. These
proposals are complementary to the World Bank Group‘s proposed project, particularly to help
forge the state-local linkages required to approach the local government challenges in a federal
system.
2. Institutional and implementation arrangements (Annex 6).
30. Following current practice, MOUD and MOHUPA will be the implementing agencies
under the project, with specifically designated accountabilities. The respective Joint Secretaries
(JnNURM Mission Director for MOUD and RAY for MOHUPA1) from the two ministries will
be the Project Directors (PDs). The project will be implemented through a structure of two
Programme Management Boards (PMBs), each chaired by the respective Secretary of MOUD
and MOHUPA, and also comprising representatives from the Department of Economic Affairs
(DEA) and the Planning Commission. Each PMB will provide overall oversight and guidance, as
well as approve major work plans and activities, for each component under the responsibility of
the respective Ministry (see below). Each PMB will be supported by a Project Steering
Committee (PSC), which will be chaired by the respective Joint Secretaries from each ministry,
and will also have representation from the DEA and the Planning Commission. Both the PSCs
will in turn be assisted by a single common national level PMU, which will be established under
the project for providing technical and managerial assistance during project implementation
servicing and reporting to both ministries via their respective PMBs and PSCs. The
organizational schematic for the project is shown in the chart below and detailed implementation
arrangements are summarized in Annex 6.
1 After the present JnNURM Mission period is over the MoUD may nominate an officer not below the rank of Joint
Secretary.
10
Chart: Implementation Arrangements
31. The project will associate with States and ULBs that are eligible for JnNURM, IHSDP,
UIDSSMT and RAY support. In practice, as noted above, the participating States and ULBs will
be selected to achieve a mix of large and small ULBs, as well as regional variation.
32. Component 1: Capacity Building for Strengthened Urban Management. Implementation
of this component will be under the purview of MOUD, utilizing its PMB and PSC. Proposals
for TA under this component will be reviewed by MOUD and sanctioned by its PMB. In
reviewing these proposals MOUD will draw on the PMU. The MOUD may also call upon State
Level Nodal Agencies (SLNAs, which already exist under JnNURM) to assist the ULBs in
preparing capacity building projects and advising on procurement. This role is already within the
purview of the SLNAs. Once the technical sanction for the TA proposals are received from the
PSC and MOUD agrees to fund such proposals, MOUD would sign an MOU1 with the States
and ULBs which would outline the following key areas: (i) objective of the study; (ii) expected
outcomes; (iii) estimated cost and timeline; (iv) reporting requirements and (v) procurement and
FM arrangements including the process of selection of consultants, certification of work,
evaluation of the reports and outputs, and payment arrangements.
33. Component 2: Capacity Building for Effective Urban Poverty Monitoring and
Alleviation. This component will be under the purview of MOHUPA, utilizing its PMB and
PSC. Proposals for TA under this component will be reviewed by MOHUPA and sanctioned by
its PMB. Four resource centers will also be selected by MOHUPA on the basis of an evaluation
1 The MOU format would be designed by the Ministries within three months of project launch. The sample MOU
would be used as a base document and would be customized according to the relevant proposals.
11
of capacity and experience, and thus will oversee the development and installation of the training
modules in these institutions. Other activities associated with ULBs – Challenge Fund,
development of a practitioner‘s network, and poverty reduction strategies – will also be overseen
by MOHUPA and directed at the same target group of participating ULBs. Once the technical
sanction for the TA proposals are received from the PSC and MOHUPA agrees to fund such
proposals, MOHUPA would sign an MOU with the State and ULBs which would outline the
following key areas: (i) objective of the study; (ii) expected outcomes; (iii) estimated cost and
timeline; (iv) reporting requirements and (v) procurement and FM arrangements including the
process of selection of consultants, certification of work, evaluation of the reports and outputs,
and payment arrangements.
34. The Challenge Fund would be provided to entities based on the wining proposal as
approved by the Ministry as per the procedures agreed with the Bank. A sub-financing
agreement would be entered between the beneficiary and the Ministry which will govern the
usage of proceeds.
35. Component 3: Implementation Support. To strengthen the quality of the capacity building
proposals and the achievement of desired outcomes, and to improve internal controls, the project
will draw on the services of a Project Management Unit that will be financed under the project to
augment the capacity of both Ministries to manage the project. The PMU will provide
comprehensive management and administrative support to MOUD and MOHUPA for this
project. Quarterly work plans and implementation reports in respect to Component 1 will be
prepared by the PMU for the review and approval of the Joint Secretary (Mission Director)
MOUD/PD, CBUD Project. Similarly, for Component 2, quarterly work plans and
implementation reports will be submitted to the Joint Secretary (RAY) MOHUPA/PD, CBUD
Project. The TOR of the PMU include: (i) implementation support, including startup and pipeline
development; (ii) technical advisory services; (iii) quality assurance (iv) procurement and
procurement advisory services; (v) M&E and reporting; (vi) project administration; (vii) project
FM and (viii) reporting.
3. Monitoring and evaluation (Annex 3)
36. Broadly, the M&E system seeks to measure the outcomes associated with the various
capacity building components under the project as well as the overall program management
(institutional arrangements). Since under this program participating States and ULBs are not pre-
identified and could potentially join the program anytime through the period of implementation,
for the purposes of this M&E system certain assumptions have been made. These assumptions
will also be informed by the needs assessments / consultations / dialogue with States and ULBs.
State and ULBs would participate under this capacity building program over the implementation
period of 5 years, with no new States and ULBs joining the program after year 4 so that the
actual implementation gets completed in all States and ULBs by the end of the project period.
4. Sustainability
37. The project aims to improve sustainability in three ways: (i) at the ULB level through
skills development, scaling up of good practices and improved systems for poverty reduction
through good governance, better management, planning, and accountability, improved service
delivery and strengthened FM. The latter aims to help ULBs better manage revenue (including
12
accessing new sources such as capital markets, PPPs, carbon finance), and expenditure; (ii)
through a strengthened network of resource centers and practitioners; and (iii) in MOHUPA
through better policy support.
5. Critical risks
38. As a capacity building initiative supporting the GOI‘s urban strategy, the project presents
a somewhat different risk profile than a sector investment loan financing goods and works. These
risks and mitigation measures are addressed through the project design, as noted below.
39. Ensuring an appropriate management and accountability structure for the project. The
project follows a structure similar to JnNURM, wherein the two sponsoring ministries - MOUD
and MOHUPA - will Chair respective committees (PMB and PSC). The respective Joint
Secretaries/PDs will be assisted by a PMU, recruited under Bank procurement procedures and
funded from the credit. The PMU will submit quarterly work programs for the review and
approval of the Joint Secretaries. The TOR for the PMU has been approved by the Bank.
40. Ensuring support to Ministries in Procurement and FM: The PMU will assist the two
Ministries in procurement and FM.
41. Ensuring that the capacity building is delivered as planned with expected levels of
quality. A monitoring system will be established in the PMU to (i) track the contracting system
for consultants, including grievance procedures; and (ii) evaluate the quality of services
provided. The beneficiary States and ULBs will exercise quality control on the services
provided.
42. Additional risks associated with project outcomes are identified below.
Risks Risk Mitigation Measures Risk Rating with
Mitigation
To project development objective
JnNURM will come up for renewal in 2012
and may be revised
Substantial breadth and depth of the urban
management skills needed to support
implementation of JnNURM
11th Plan identifies need for urban development. Even if
JnNURM is modified, the commitment to efficient,
effective and inclusive ULBs will likely remain.
Focus on a small group of self-selected ULBs.
M
To component results
1. Capacity Building for Strengthening
Urban Management:
Skill and system acquisition: Range of FM
upgrading needed is quite large.
Institutional resistance to change: Potential
resistance to developing new institutional
framework. Difficulty for ULBs to develop
multi-sectoral, city-wide plans.
Finance profession well developed in India in the private
sector; good supply of professionals available to facilitate
skill and system transfer.
Very high demand for system improvement expressed in
consultation with prospective ULBs.
M
13
2. Capacity Building for Effective Urban
Poverty Monitoring and Alleviation:
2a Challenge Fund: May have difficulty in
identifying innovative practices and then
additional difficulty in scaling up.
2b. Network: Incentives for participation in
Network.
2c. Training Materials: Utilization and
integration into curriculum: Ability of
network institutions to incorporate new
curriculum into training programs. Ability
of institutions to manage learning cohorts
2d .Urban Poverty Reduction Strategies:
Possible difficulty in utilizing information
and implementing methodology.
2e. Strengthening MOHUPA to utilize
information for better informed policy.
The Challenge Fund is a pilot activity. The entity that will
be expected to manage the process will be expected to
provide ―handholding‖ during the initial rounds of
identification and award.
Again a pilot activity. Initial estimate is that there is
significant interest in learning and sharing experiences
among ULBs.
The institutions that will be selected will have considerable
experience in providing training, including collaboration
with WBI.
Pilots will be developed to incorporate lessons learnt.
Strengthening of MOHUPA is underway with the
establishment of a Policy and Program Support Unit staffed
by qualified professionals. ULBs will be able to look to
State and ULB nodal units for support in implementation.
M
3. PMU
Unit is unable to provide the range of
services requested in the TOR to support
the Project Directors.
Significant interest expressed by well qualified firms to
date in providing these services and skills.
L
Overall risk rating M
14
6. Credit conditions
43. Project Covenant: The Challenge Fund will disburse money only after the proposals are
cleared as per the Challenge Fund procedures and the required fiduciary assessment and
reporting arrangements are agreed with the proposed Beneficiary.
44. Project Covenant: Internal Audit to be in place throughout the life of the project and
conducted at periodic intervals.
45. Project Covenant: An FM Specialist to be in place throughout the life of the project.
D. APPRAISAL SUMMARY
1. Economic and Financial Analyses
46. No economic and financial appraisals have been carried out as the ULBs have not been
identified prior to loan negotiation. However, an economic analysis would be undertaken of
capacity building in a selected ULB during project implementation. 2. Technical
47. The project directly supports the Borrower‘s flagship program for urban development,
and more specifically, it strengthens local capacity for implementing critical urban policy
reforms. Additionally, the project will support the development of capacity in ULBs to plan,
implement and monitor investment projects consistent with the objectives of JnNURM and RAY
for improving service delivery. This will include strengthening capital budgeting procedures,
improving project planning, improving contracting, and developing supervision procedures.
3. Fiduciary
48. Financial Management (Annex 7) FM systems for this project will be based on
government systems of accounting and reporting with all the controls and oversight that exists in
the government system. It may be noted that FM systems for the Challenge Fund will be
designed and agreed separately, once the implementation arrangement for the same is agreed. As
a part of the due diligence, the FM assessment for the Challenge Fund would be conducted and
an action plan would be agreed with the MOHUPA, and based on the implementation of the
action plan the funds would be released for this sub-component. The assessment concludes that
the proposed FM systems are satisfactory to support the project (assuming satisfactoriness of
arrangements to support the Challenge Fund).
49. The two Ministries will operate two separate budget heads for expenditure under the
project. Financial Adviser of the two Ministries, assisted by Director (Finance) and Chief
Controller of Accounts will provide oversight over the financial management aspects of the
project. The FM Specialist in the PMU will be a professional accountant who will oversee the
FM aspects of the project and liaise with the Bank.
50. The funds flow system for the project will be simple and based on reimbursement of
expenditures based on quarterly Interim Un-audited Financial Reports (IUFRs). These IUFRs
will be reconciled annually with audited Annual Financial Statements (AFS).
15
51. Expenditures will be centralized1 (except for Challenge Fund) and will be made by the
MOUD/MOHUPA as applicable on activities, through the Pay and Accounts Office (PAO)
system. Quarterly reports submitted by the Ministries to the Controller General of Accounts
(CGA) will comprise the accounting records for the project. Accounting for the project will be
carried out on cash basis of accounting. The AFS for the project will be maintained by the PMU
based on expenditure reported to the CGA by the two Ministries. The PMU would maintain
detailed records which would be reconciled with PAO on a regular basis.
52. A single consolidated annual audit report will be submitted to the Bank. The audit will be
carried out by the Comptroller and Auditor General (CAG), based on Terms of Reference (TOR)
agreed with the Bank.
53. Internal control will be strengthened through procedures laid out in a Project FM Manual,
which will be predicated on controls in government system. In addition, internal audit will be in
place throughout the life of the project by a firm of Chartered Accountants empanelled with the
CAG, as per a TOR which will be agreed with the Bank.
54. Procurement (Annex 8). The procurement capacity will be built by hiring a PMU with a
dedicated procurement staff that will assist the implementing agencies in all procurement
activities, including advisory support to the ULBs for the procurement related reforms. No
procurement (other than the procurement of PMU) will take place until the PMU has been
established.
55. States and ULBs may elect to improve their capacity for procurement under the project.
Where the need is identified, the project may support working towards adoption of unified
procurement regulations that apply to any use of public funds for the purchase of goods, works,
and services, define appropriate management structures for procurement at the States and ULB
level and help create a timeline for adoption of e-government procurement. These initiatives are
geared towards improving the overall effectiveness of procurement by ULBs and help building
their capacities.
4. Social
56. No specific social safeguards issues have been identified. The project will, however,
provide TA for improving the capacity of ULBs to manage the social impact of urban
development. The project will support a pro-poor approach to urban planning, budgeting, and
service delivery. Governance improvements will give greater voice to urban stakeholders,
especially the poor.
5. Environment
57. The activities directly supported by the project are not likely to cause any significant
adverse environmental impacts and none of the safeguards are likely to be triggered. Indeed,
through capacity building, the project has the potential to ameliorate significant issues related to
the urban environment, e.g. lack of integrated planning, land use planning, environmental
1 It is envisaged that all payments would be done by the ministries at the Central level. (FM Annex).
16
sustainability of service delivery, and heightened citizen awareness and monitoring of
environmental issues.
58. The project is designated in ‗Category C‘ for environmental screening where the
responsibility for (potential, future) safeguard review and clearance has been transferred to the
Sector Unit.
6. Safeguard Policies
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment (OP/BP 4.01) [ ] [X]
Natural Habitats (OP/BP 4.04) [ ] [X]
Pest Management (OP 4.09) [ ] [X]
Physical Cultural Resources (OP/BP 4.11) [ ] [X]
Involuntary Resettlement (OP/BP 4.12) [ ] [X]
Indigenous Peoples (OP/BP 4.10) [ ] [X]
Forests (OP/BP 4.36) [ ] [X]
Safety of Dams (OP/BP 4.37) [ ] [X]
Projects in Disputed Areas (OP/BP 7.60)1 [ ] [X]
Projects on International Waterways (OP/BP 7.50) [ ] [X]
7. Policy Exceptions and Readiness
59. The project does not require any exception from Bank procedures and meets the South
Asia Region‘s criteria for readiness.
1 By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties'
claims on the disputed areas
17
Annex 1: Country and Sector Background
INDIA: Capacity Building for Urban Development Project
1. Urban sector background. Indian ULBs will be the locus and engine of much of the
country‘s economic growth over the next two decades. Since 1960 India‘s total population has
increased three fold, and the urban share has risen from seventeen percent to almost thirty
percent. This population is spread across over 5,000 ULBs including three of the world‘s twenty
one mega-ULBs, four ULBs with a population between four and ten million and another twenty
eight with populations of more than one million. Between 2000 and 2030 the UN projects that
India‘s urban population will increase from 282 million to 590 million persons (UN-HABITAT).
Mega-city growth has and will continue to play a key role in driving Indian urban population
growth. Therefore, it can be inferred that one facet of India‘s urban planning challenge is to
accommodate an additional 10 million urban dwellers per year, provide them with adequate
public services and infrastructure, create opportunities for economic development and ensure that
urbanization is environmentally sustainable. However, rising urban inequality and deceleration in
the pace of urban poverty reduction may hinder the achievement of the Plan target.
2. Managing the urban space. While Indian ULBs continue to attract millions of people,
they have not been able to completely achieve the development and economic benefits that
urbanization could bring. This is evident from the high land prices, inadequate housing,
congestion and weak service delivery in urban areas. The high cost of urbanization is a critical
constraint to urban development, the result of weaknesses in the policy, financing and
institutional frameworks that govern key aspects of urban management, i.e. urban finance, land
use planning and regulation, service delivery and governance.
3. Urban finance. The critical issue facing policy makers in the context of urban finance is:
how can ULBs become financially viable entities that can raise the financial resources required
to operate urban services effectively as well as undertake the capital investments to meet the
demand supply gap? Five interconnected problems in urban finance need to be addressed:
ULBs are not sufficiently empowered and in most cases, do not have the autonomy of
fiscal powers and full devolution of responsibility for delivering the urban services
expected of them;
There is a mismatch between ULB revenue capacity and their expenditure requirement:
they lack buoyant sources of own revenue because their tax bases and data are weak,
and they are unable to fully recover charges for services rendered;
Most of the ULBs are not creditworthy on a stand-alone basis and, in most cases, lack
an adequate supply of bankable projects that could be financed in domestic capital
markets;
Due to these structural failures, ULBs are dependent on an inadequately targeted system
of intergovernmental transfers, and borrowing from government owned financial
institutions. These impose very little financial discipline and thus reinforce the lack of
creditworthiness; and
ULB accounting system reforms and upgradation of systems are not yet fully in place.
This hampers the possibility of ULBs successfully accessing credit, allowing for
efficient budgeting and financial management.
18
4. A key reason for the financial weakness of ULBs in India has been the low levels of own
source revenues - primarily property taxes and user charges. Property tax remains a vastly under-
utilized source of revenue by ULBs, largely because property taxes rely on a valuation
methodology that does not reflect market values. Similarly, user charges are another greatly
under-utilized source of own revenue in ULBs. Water supply tariffs rarely cover O&M
expenditures and many other urban services (such as sewerage) traditionally do not have a user
charge associated with them. Expenditure management is also cause for concern. Expenditure
assignments tend to be highly fragmented, and the absence of clear assignments diminishes the
authority delegated to local government to make autonomous expenditure decisions. This is
evident, for instance, from the assignment of expenditure responsibility for water supply across
various states. The dichotomy wherein the capital expenditures are carried out by state level
utilities (parastatals) and O&M by ULBs creates a number of distortions. This leads to an
inability to do capital investment planning (since no single entity can be held accountable for the
system as a whole), a bias towards undertaking capital investments over improving O&M of
urban systems, and lack of incentives for cost recovery since the capital financing is not done in
transparent manner and reflected on ULBs‘ balance sheets.
5. The High Powered Expert Committee has estimated investment for urban infrastructure
over the 20-year period from 2012 to 2031 at USD 886 billion (Rs. 39.2 lakh crore at 2009-10
prices), which includes Rs. USD771 billion (Rs. 34.1 lakh crore) for a) asset creation, out of
which the investment for the eight major sectors is USD701 billion (Rs. 31 lakh crore); b) USD
92 billion (Rs. 4.1 lakh crore) for renewal and redevelopment including slums; and c) USD22
billion (Rs. 1 lakh crore) for capacity building. The O&M requirements for the new and the old
assets are projected at USD 450 billion (Rs. 19.9 lakh crore) over the 20-year period. ULBs need
to access financial markets but their weak creditworthiness is the main constraint. What these
various estimates serve to highlight is the fact that the enormous financing needs are unlikely to
be met by current budgetary flows/fiscal transfers (from state and central government) into this
sector and ULBs/Infrastructure entities would have to increasingly access debt/equity from
financial markets. However, this has proved to be difficult primarily due to two demand side
issues – weak ULB finances leading to lack of creditworthiness for borrowings and lack of a
strong pipeline of bankable urban projects. The primary reason for the insufficient pipeline of
bankable projects is the weak institutional capacity of ULBs and the unclear expenditure
assignments, especially for capital expenditures. This has resulted in only a handful of ULBs
raising bonds from the capital markets. The High Powered Expert Committee on Urban
Infrastructure has reported the issue of just 22 municipal bonds (including taxable, tax-free and
pooled finance) amounting to USD 276.79 million (Rs. 1224 crores).
6. Finally, the quality of FM in ULBs is widely recognized to be highly variable. While the
governing federal and state legislation is comprehensive in areas such as financial control,
budgeting and audit, there are significant weaknesses in implementation of the same at ULBs.
Also, aspects of participatory planning and public accountability are weak in the present
legislative framework. In most ULBs the current system of municipal accounting remains a
single entry system and on a cash basis. The current accounting practices lead to certain
problems: (i) no segregation between revenue and capital expenses; (ii) inability to prepare a
complete balance sheet; (iii) limited information about assets and liabilities; (iv) non-recognition
of depreciation and other non-cash expenses; and (v) omission of receivables and payables
distorting the true and fair performance reporting of the urban local bodies. Apart from
19
individual city efforts, not all states have implemented double entry accrual-based accounting in
all its urban local bodies.
7. Planning and land use regulations. A common trend across India is that most ULBs and
metropolitan agglomerations are relying on outdated master plans. Planning surveys, projections
of population, employment and land development do not provide an accurate basis for planning
future urban development. Most plans are snap-shots of what the future should look like. Most
plans do not sufficiently integrate economic assessments of the rapidly evolving structure of the
local economy.
8. Historically, Indian ULBs were not able to adequately access funds and decision making
power, which resulted in the current land use situation where planners impose a restrictive policy
regime to attempt to bring down costs, limit infrastructure investments and impose controls on
the spatial patterns of the city. Among the policies used to implement this system were a broad
range of regulations. For instance, to protect tenants from the sorts of rent increases that would
occur in such supply–constrained housing markets, binding rent controls were introduced in all
major ULBs.1 Finally, in an effort to ―decongest‖, almost all Indian ULBs enacted FSI
regulations, which effectively constrained building heights. FSI restrictions of one-fifth to one-
tenth of the level of other ULBs in the world are common in Indian ULBs, with the result that
India does not have as many high rise ULBs when compared to countries of comparable
population size.2 An FSI set significantly below the level of its market equilibrium has a number
of negative consequences and imposes large costs on the city‘s economy. It increases the
demand for land across the city as more land is required for the same amount of floor space, and
increases land prices. A uniform restriction on the FSI encourages non-productive use of
housing capital, raises equilibrium housing prices and lowers city growth. Estimates suggest that
the costs associated with low FSIs e.g. in Bangalore (India) may be as high as 3-6 percent of
household wealth.
9. Service delivery institutions. There is a strong bias toward providing physical
infrastructure (pipes, vehicles, collection bins, and flyovers) rather than providing reliable,
affordable, and financially and environmentally sustainable services to urban areas. This bias is
evident in water and sanitation where access to drinking water rose from 82% of the population
in 1991 to 90% in 2001, but few cities have water service twenty four hours a day, seven days a
week.3 Solid Waste Management (SWM) faces similar performance issues. A 2004 review of
the status of SWM at the end of three years under the government issued Municipal Solid Waste
(MSW) Rules revealed that in Class-1 ULBs the rate of compliance with MSW Rules ranged
1 In 1976 the Urban Land Ceiling and Regulation Act was implemented to prevent land speculation by putting a
ceiling of 500 square meters on vacant land that could be held in private ownership. All land holdings in excess of
the was to be returned to the government which could use it to house the poor. 2 Floor Area Ratios (FAR) (or Floor Space Indices, or FSI as they are referred to in India) are a common zoning
regulation that limits the amount of floor area that can be constructed on a particular plot. They are set at 2.0 or less
in many Indian ULBs, whereas they are 15 in Hong Kong and Portland, and 5 in Jakarta. For instance, in
Ahmedabad the FAR is 1.8, in Hyderabad it is 1.75, and in Chennai it ranges from 1.0 to 1.75. ULBs in developed
economies also had FAR restrictions that affected city development in the 19th
century. For instance, Montgomery
(2003) describes the situation in New York City in the 1800s showing how the restrictions affected the city‘s
development. However, the New York City FAR was more than three times higher than Mumbai‘s level over most
of the past 30 years. 3 Bridging the Gap between Infrastructure and Service Report by World Bank, January 2006
20
between 72% and 1% for the different aspects of SWM1. The issues in this sector are related to
technical viability, costs sustainability and institutional structures to manage them.
10. For both water and sanitation services and SWM, six principal constraints to improve
service delivery are apparent:
Sector level governance is compromised by overlapping institutions and lack of
accountability. By and large, multiple state and local government agencies are involved
in most aspects of municipal service delivery, and the policy making and service
delivery functions are mostly not separated. Basic services generally are provided by
departments within a municipal corporation, which leads to more overlap, and makes it
difficult to know either revenues or the costs of service provision. In this environment,
Regulatory arrangements are ineffective so that tariffs for basic services and quality
standards are neither set clearly nor robustly enforced. In this environment, existing
Regulatory arrangements have not resulted in clean/robust enforcement of tariffs for
basic services and quality standards.
Service is unreliable: Despite installed water production capacity often sufficient to
provide a permanent water service, piped water is never distributed more than a few
hours per day, including the seven mega-ULBs of Delhi, Mumbai, Kolkata, Hyderabad,
Chennai, Ahmedabad and Bangalore. Most households, forced to cope with poor
quality water supply and sanitation service, spend time and money on substitutes and
treatment for waterborne diseases. User charges are low by international standards, but
the cost of the alternatives on which users must rely far exceeds the full cost of
providing good quality service.
Current management of service is not financially sustainable: Most urban basic
services operations survive on large operating subsidies and capital grants provided by
the states. Only a few mega-ULBs are able to recover the cost of water supply and
sanitation or solid waste services from user charges.
Current management of service is not environmentally sustainable: Most ULBs
compete with the agricultural sector to secure surface water rights and tend to deplete
local aquifers used as substitute sources. Almost no city contributes significantly to the
abatement of pollution in receiving bodies (despite the existence of waste water
treatment capacity) and aquifers are being depleted by households and businesses
developing their own sources.
The social dimension, involving basic services to slums or the very large informal
sector in SWM, has been difficult to address. Large ULBs have indicators which reflect
urban poverty and employment of its inhabitants in unorganized sectors including
collection and recycling part of the solid waste. For efficiency and social reasons, these
people need a more structured role in the overall SWM business. Ideally, they would be
helped to perform their existing role better and with some increased rewards.
11. Governance and intergovernmental constraints The CAA underscores India‘s formal
stance on accountability through decentralization. The government‘s intention is that decision-
1 Improving Management of Municipal Solid Waste in India Report by World Bank, May 2006
21
making process should be brought closer to the people so that they can express their preferences
more effectively, and hold local governments and service providers accountable. The CAA
identifies three types of urban local governments: municipal corporations for larger urban areas;
municipalities for smaller ones; and nagar panchayats for areas in transition between rural and
urban. The list of functions identified to be devolved to ULBs as part of CAA was enumerated
in the 12th
schedule and is shown in the box below.
Box 1: Twelfth Schedule of Constitution of India
1. Urban Planning
2. Regulation of Land use and construction of buildings
3. Planning for economic and social development
4. Roads and bridges
5. Water supply for domestic, industrial and commercial purposes
6. Public Health, sanitation conservancy and SWM
7. Fire services
8. Urban forestry, protection of environment and promotion of ecological aspects
9. Safeguarding the interests weaker sections of society
10. Slum improvement and upgrading
11. Urban poverty alleviation
12. Provision of urban amenities and facilities such as parks, gardens, playgrounds
13. Promotion of cultural, educational and aesthetic aspects
14. Burials and burial grounds, cremation, cremation grounds and electric crematoriums
15. Cattle pounds, prevention of cruelty to animals
16. Vital statistics including registration of births and deaths
17. Public amenities including street lighting, parking lots, bus stops and public conveniences
18. Regulation of slaughterhouses and tanneries
12. Despite the constitutional requirement, accountability in local urban governance remains
inadequate.
Incomplete functional assignment and devolution. The CAA requires state governments
to assign the 18 functions shown in Box 1 above to ULBs. The functioning of the third
tier depends on the devolution of resources (especially finance), transfer of subjects and
the passing down of administrative control over civil servants. Post this amendment,
states have met their legal obligations by passing conforming legislations, but the
empowerment of ULBs/nagar palikas1 into local governments from mere state agencies
has not been uniform across states..
Weak accountability: The current urban local government system is still far from
achieving accountability: (i) administrative and financing arrangements make local
service providers dependent on government, rather than accountable to citizens; and (ii)
new instruments for engaging citizens in prioritization are in their infancy.
Public disclosure: The ‗Right to Information Act‘ (RTI) of 2005 and the Public
Disclosure Law mark significant developments toward mandatory public reporting. In
the past, information was mostly used internally: the new arrangements hold the
promise of changing that system, and indeed has already begun. This will allow the
citizens and other stakeholders to use the same information for ensuring better
accountability. At the same time, this will also create incentives for the government to
provide more reliable, regular and pertinent information.
1 Nagar palika is an urban local body that administers a city of population 20,000 or more. Under the Panchayati Raj
system, it interacts directly with the state government, though it is administratively part of the district it is located in.
Generally smaller district cities and bigger towns have a nagar palika.
22
13. Urban Poverty and Vulnerability - Trends. Following national poverty trends, urban
poverty has decreased steadily over the last 25 years, but the absolute numbers of urban poor
continue to grow. Urban poverty rates declined from 43.6 percent in 1983 to 25.7 percent in
2005. This decline in total and urban poverty incidence was accompanied by an ―urbanization of
poverty‖, as the urban poor account for a larger fraction of the total poor today than they did
decades ago. This phenomenon, combined with overall population growth, has translated into
increasing numbers of urban poor.
14. Both urban poverty and vulnerability are concentrated in smaller urban centers, relative
to metropolitan ULBs. However, metropolitan ULBs have higher inequality, worse living
conditions and worse health outcomes among the poor compared to smaller urban centers.
15. Determinants of urban poverty and vulnerability. Factors that distinguish the urban from
the rural poor include:
Income volatility and informal employment. While urban areas offer the advantages of
concentration of economic activity through increased labor market and livelihoods
opportunities, some features of the urban labor market continue to remain a cause for
concern, including the persisting dualism with respect to the informality of contracts,
working conditions and pay; rising contractual and part-time subsidiary employment;
slower wage growth and rising inequality during the last decade.
The informality of the labor market with poor working conditions and low pay is a
significant determinant of their welfare. Poverty and vulnerability profiles from
nationally representative NSS surveys suggest that households primarily engaged in
casual labor, agricultural and allied activities and blue-collar production activities,
construction or transportation work are the most vulnerable, followed by self-employed
households while households engaged in regular wage work are the least vulnerable.
Vulnerability to shocks. Together with employment shocks, health, social and
environmental shocks appear to be prevalent among the urban poor with clear
consequences in terms of welfare. Health shocks (especially illness of the main earning
member) are the single most important source of idiosyncratic risk for households and
the most devastating in terms of their impact of overall household welfare. These are
followed, in terms of magnitude of their impact on household consumption, by expenses
associated with social obligations such as marriages and ritual celebrations, and by
shocks associated with environmental hazards such as floods.
The most common coping strategy in response to such shocks is borrowing, often at
high interest rates, and labor market adjustment (by increasing number of hours worked
and/or increased participation by women and children). While poverty may be
temporarily reduced by borrowing, debt leaves the poor more vulnerable to future
poverty.
Poor living conditions and insecurity of land tenure. Most urban poor reside in slums,
with very limited to basic infrastructure and services, or are homeless. The problem of
poor access is compounded by the reluctance of informal community dwellers to invest
in local infrastructure due to the insecurity of tenure, while those with no fixed
residence are largely invisible as far as the formal government mechanism for service
23
delivery is concerned. This reality imposes important challenges in terms of policy
design and actual service delivery to the urban poor.
16. Access to civic services among the urban poor. The rapid growth of the urban population
and the low investment in urban development has created deficiencies in basic amenities in the
towns and ULBs. On the supply side, inadequate institutional arrangements, insufficient
financing, and poor quality and quantity of inputs provided are important factors. On the demand
side, there is the need to better mobilize the voice of the urban poor in governance processes of
ULBs.
17. GOI Strategy. The realization of the 11th
Plan‘s ambitious goals depends fundamentally
on creating much more economically productive, efficient, equitable and responsive ULBs,
measured against six strategic outcomes: (i) establishment of city wide frameworks for planning
and governance; (ii) modern and transparent budgeting, accounting and FM; (iii) financial
sustainability for ULBs and service delivery institutions; (iv) transparency and accountability in
urban service delivery and management; (v) universal access to a minimum level of services; and
(vi) utilization of e-governance. In December 2005, the JnNURM was approved.1 Under
JnNURM, two sub-missions are organized with these objectives in mind: (i) Sub-mission for
Urban Infrastructure and Governance, which focuses on urban management reforms; and (ii)
Sub-mission on Basic Services to the Urban Poor that is devoted to urban poverty alleviation.
18. JnNURM is a comprehensive national urban policy reform agenda associated with the
provision of grant (investment) resources, which will become available to 65 ULBs spread across
all the states. JnNURM is structured to address three types of constraints to urban development:
(i) policy framework, i.e. the governing framework of urban development, including goals,
objectives, legislation and coordination among three levels of government; (ii) financial
framework, i.e. the manner, conditions and institutions through which funds flow; and (iii)
institutional framework, i.e. the capacity for ―doing‖ with respect to reaching goals and
objectives; adopting best practices; undertaking M&E; and generating, assimilating and sharing
knowledge. To become eligible for investment and capacity building resources, state and city
governments have to agree to a set of GOI specified mandatory urban sector reforms (Box 2).
Box 2: Jawaharlal Nehru National Urban Renewal Mission
The main elements of the mandatory reform program are as follows.
At the Level of ULBs, and Parastatal Agencies
Adoption of modern accrual-based double entry system of accounting;
Introduction of a system of e-governance using IT applications, such as GIS and MIS;
Reform of property tax with MIS;
Levy of reasonable user charges by ULBs and Parastatals;
Internal earmarking, within local bodies, of budgets for basic services to the poor;
Provision of basic services to the urban poor including security of tenure at affordable prices, improved
housing, water supply and sanitation.
At the Level of States
1 Concurrently with JNNURM the Government launched the Urban Infrastructure Development Scheme for
UIDSSMT, with a similar policy and investment design, covering all ULBs/towns as per 2001 census except those
covered under JNNURM. Similarly, the MOHUPA runs the Integrated Housing and Slum Development Programme
(IHSDP), with a similar policy and investment design as BSUP, covering all ULBs/towns as per the 2001 census
except the 65 mission ULBs of JNNURM. Throughout the PAD references to JNNURM are understood to include
UIDSSMT and IHSDP.
24
Implementation of decentralization measures as envisaged in CAA (CAA);
*Repeal of Urban Land Ceiling and Regulation Act;
*Reform of Rent Control Laws balancing the interests of landlords and tenants;
Rationalization of Stamp Duty to bring it down to no more than 5 per cent;
Enactment of Public Disclosure Law to ensure release of information periodically to stakeholders;
Enactment of Community participation Law in institutionalizing citizen‘s participation;
Assigning ‗city planning functions‘ to elected ULBs or associating them with such functions.
*These reforms are not mandatory for schemes relating to water supply and sanitation
19. Progress of JnNURM (Investment Component). As of March 2011, the central
government had allocated US$ 14.43 billion to JnNURM projects in over 700 ULBs. 2813
projects have been approved, with total commitments amounting to US$ 24.79 billion, of which
US$ 13.12 have been committed by the center. About 50 percent of the central funds have been
released into project accounts. The share of infrastructure-focused UIG and UIDSSMT in total
commitments is roughly 65 percent, and that of the pro-poor BSUP and IHSDP is 35 percent.
Table 1: Overview of Investment Window of JnNURM (USD billion) March 2011
UIG BSUP UIDSSMT IHSDP JnNURM
total
Central funds allocated /envisaged
6.88 3.57
2.49
1.49
14.43
Total commitment 13.22
6.48
2.82
2.27
24.79
Central government share of total commitment 6.11 3.21
2.28
1.52
13.12
Funds released by the Centre into project accounts
2.83
1.53
1.57
0.93
6.86
Number of projects approved (Number of dwelling units
for BSUP & IHSDP funding in parenthesis)
532 499
(1,066,161)
764 1018
(540,756) 2813
Number of projects completed (Number of dwelling units
in parenthesis)
105 Not
Available
(296,081)
126 Not
Available
(121,421)
N.A.
Source: MOUD and MOHUPA.
20. Progress of JnNURM (Reform Component). Table 2 shows the progress of JnNURM
reforms after six years. In terms of the progress with state level mandatory reforms, the Urban
Land Ceiling Regulation Act (ULCRA) was repealed in all but two states; 20 states have set up
district planning committees as part of the implementation of the 74th
Constitutional Amendment
Act; and 19 states have reported that they have enacted public disclosure law. The other state
level reforms (except for setting up metropolitan planning committees) are reported to have been
accomplished by more than one-third of the states, and most remaining states report progress
towards implementing these reforms.
21. There has been mixed progress on mandatory reforms at the city level. Most of the 65
mission ULBs have reported accomplishing earmarking of budgets for the poor, and migrating to
double-entry accounting, and more than one third have set up e-governance systems. Property
tax reform has been moderate – while one-third of the ULBs have reported to reach the target
coverage ratio, less than a quarter have been able to reach the required collection efficiency. The
reform of user charges which requires ULBs to recover the full cost of operations and
25
maintenance of services, has shown very slow progress, as only 6 ULBs have reported to
accomplish it.
22. Most optional reforms required actions at both the state and ULB levels. More than half
of the 65 mission ULBs have undertaken reforms for streamlining the building approval process,
simplification of conversion procedures, computerized land registration processes, byelaws for
rainwater harvesting, and promotion of PPPs. Several ULBs have reported progress on other
reforms, except for property titling which has not been implemented by any of the ULBs. The
MOUD is considering a pilot project in one of the ULBs to demonstrate the approach to and
benefits of property titling.
23. Although some of the reforms have been reported as fully accomplished, the depth of
implementation needs to be assessed. So far, monitoring agencies commissioned by the
Government have focused on tracking reforms, without assessing their impact, or checking
whether the necessary follow up actions (like passing regulations) were taken to concretize
reforms. Thus, it appears likely that by 2012, when JnNURM has been planned to conclude, the
leading states and ULBs will have accomplished, at least in principle, an overwhelming majority
of intended reforms, though the most difficult will remain incomplete (such as property titling).
While some of the lagging states and ULBs may have advanced on most of the intended reforms,
they are likely to require additional time to implement the reform agenda.
26
Table 2: Progress of Implementation of JnNURM Reforms
State Level Mandatory Reforms
1 Implementation of decentralization measures per CAA
1a Transfer of 12th schedule functions 11 of 31 states/ UTs have achieved the reform
1b Setting up of District Planning Committee 20 of 31 states/ UTs have achieved the reform
1c Setting up of Metropolitan Planning Committee 6 of 31 states/ UTs have achieved the reform
2 Assignment of city planning function to elected ULBs 12 of 31 states/ UTs have achieved the reform
3 Repeal of Uniform Land Ceilings Regulation Act (ULCRA) 29 of 31 states/ UTs have achieved the reform
4 Reform of Rent Control Laws 9 of 31 states/ UTs have achieved the reform
5 Rationalization of Stamp Duty 11 of 31 states have brought down stamp duty
to 5%
6 Enactment of Public Disclosure Law 19 of 31 states/ UTs have achieved the reform
7 Enactment of Community Participation law 12 of 31 states/ UTs have achieved the reform
City Level Mandatory Reforms
1 Accrual-based double entry accounting in ULBs 36 of 65 ULBs have achieved the reform
2 e-Governance, including GIS/MIS 21 of 65 ULBs have achieved the reform
3a Reforms in Property Tax to achieve 85% coverage 21 of 65 ULBs have achieved the reform
3b Reforms in Property Tax to achieve 90% collection
efficiency
15 of 65 ULBs have achieved the reform
4 Levy of reasonable user charges to cover full cost of O&M 6 of 65 ULBs now doing this 100%; another 8
ULBs are collecting 50% or more
4a Water supply 7 of 65 ULBs have achieved the reform
4b Solid waste 6 of 65 ULBs have achieved the reform
5 Internal earmarking of budgets for Basic service for the poor 50 of 65 ULBs have achieved the reform
6 Provision of Public services to the urban poor Qualitative reform - progress not measurable
Optional Reforms Reforms
1 Streamlining approval processes for construction and
development
32 of 65 ULBs have achieved the reform
2 Simplification of process for converting agricultural land 38 of 65 ULBs have achieved the reform
3 Introduction of property title certification system As none of the ULBs have achieved this
reform, a study and a Pilot Project may be
initiated by MoUD in the States
4 Earmarking at least 20-25% of development land in all
housing project for EWS and LIG
26 of 65 ULBs have achieved the reform
5 Introduction of a computerized processes for land
registration
35 of 65 ULBs have achieved the reform
6 Rain water harvesting 50 of 65 ULBs have achieved the reform
7 Recycled water 29 of 65 ULBs have achieved the reform
8 Administrative reforms to reduce establishment costs 14 of 65 ULBs have achieved the reform
9 Structural reforms 19 of 65 ULBs have achieved the reform
10 Encouraging PPP 44 of 65 ULBs have achieved the reform
Source: MoUD
24. Issues to be addressed by the Project. The project aims to help the Government
address the major constraints to urban development and specifically focuses on the capacity
building requirements for successful urban management and poverty reduction, taking as its
starting point the six strategic outcomes sought under JnNURM. The project is expected to:
Support States and ULBs in addressing a range of requirements related to FM, land
use and planning, service delivery, governance and poverty reduction.
27
Target 20 ULBs for a comprehensive package of assistance on urban management
and poverty reduction, bridging a significant gap in the past urban development
efforts.
Support a differentiated approach to capacity building across a range of urban
development requirements. In FM, for example, the required systems are generally
well understood and the skills are currently being developed under existing
programs. The capacity building requirement is ―how to‖ advice on implementation.
In urban poverty reduction, however, the capacity building requirement is quite
different. There is a much greater need for skills development, information
collection and analysis, and greater interaction on policy between MOHUPA and
ULBs.
Bring innovative practices to the forefront via the Challenge Fund and the network.
Improve M&E in MOHUPA and the targeted States and ULBs.
28
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies
INDIA: Capacity Building for Urban Development Project
Sector Issue Project Latest Supervision
(ISR) Ratings
(Bank-financed projects only)
OED
Rating
Bank-financed
Implementation
Progress (IP)
Development
Objective (DO)
Water and Sanitation Karnataka Urban Water Sector Improvement
Project (L4730-IN; $39.50 million; will close in
March 2011)
S
S
NA
Municipal Reforms
Karnataka Municipal Reform Project (L4818-
IN; 216 million; will close in 2012)
MS S NA
Economic Reforms TA for Economic Reforms (Cr. N045-IN; $45
million; closed in Dec 2007)
MU S MU
Promotion of private sector
investment in urban
infrastructure
Tamil Nadu Urban Development Project III
(L4798-IN; $300 million; will close in 2012)
MS S NA
Municipal Reforms Andhra Pradesh Municipal Development Project
(L7816-IN; $300 million; will close in 2015)
S S NA
Other development agencies
DFID Andhra Pradesh Urban Services for the Poor
(on-going)
NA
DFID Kolkata Urban Services for the Poor (Ongoing) NA
DFID Kolkata Environmental Improvement Project
(Ongoing)
NA
DFID Madhya Pradesh Urban Services for the Poor NA
DFID Bihar Strengthening Urban Management for
Inclusive Growth Programme
NA
DFID
Slum Improvement Project (completed) NA
ADB Kerala Sustainable Urban Development
(formerly Urban Infrastructure Development
and Environment II)
NA
ADB North Karnataka Urban Sector Investment
Program
NA
ADB Karnataka Urban Development and Coastal
Environmental Management Project
NA
ADB Rajasthan Urban Infrastructure Development NA
ADB Urban Water Supply and Environmental
Improvement in Madhya Pradesh
NA
ADB Multi-sector Project for Infrastructure
Rehabilitation in Jammu and Kashmir
NA
ADB Uttarakhand Urban Sector Development
Investment Program
NA
USAID Financial Institutions Reform and Expansion
Project (ongoing, various states)
NA
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), MS (Moderately Satisfactory), U (Unsatisfactory), MU (Moderately
Unsatisfactory), HU (Highly Unsatisfactory)
29
Annex 3: Results Framework and Monitoring
INDIA: Capacity Building for Urban Development Project
1. The project will put in place a system for measuring and tracking achievement of project
intermediate and development outcome indicators. The framework for the same is as given in
Table 4 below.
Table 4: Results Framework PDO Project Outcome Indicators Use of Project Outcome
information
Selected ULBs will have
improved their systems and
skills for urban management
and urban poverty reduction.
20 ULBs will be implementing: (i) at least two urban
management reforms covering FM, urban planning,
service delivery and governance; and (ii) urban poverty
reduction strategies.
Progress review of introduction of
new institutional mechanisms for
urban management and poverty
reduction will be used to assess if
any mid-course corrections /
actions are required, including
strengthening PMU‘s operations /
closer engagement with ULBs,
etc.
Intermediate Outcomes Intermediate Outcome Indicators Use of Intermediate Outcome
Indicators
Component 1: Participating
ULBs have improved capacity
for urban management.
20 ULBs demonstrate any two of the following:
Present finalized accounts under the new (accrual based)
accounting systems.
Improvement in one aspect of FM, e.g. property tax,
capital budgeting or medium term financial planning.
Introduce land use planning processes
Begun estimating the Operation and Maintenance cost of
service provision for the main services (water supply,
solid waste)
Introduced a citizen interface measure (such as a citizen
charter).
PY-3: Evaluate degree of
difficulty in implementing
reforms
Component 2: (i) Resource
centers have capacity to
deliver training on urban
poverty reduction to ULB
officials and
(ii) innovative practices at
ULB level are acknowledged,
rewarded and replicated
(iii) ULBS have capacity to
undertake urban poverty
diagnosis and have capacity
to develop poverty reduction
strategies
(iv) ULBs MOHUPA has
capacity for urban poverty
analysis and policy
development M&E.
New curriculum being used in courses by 4 Resource
Centers for ULB officials
Network and Challenge Fund fully operational
20 ULBs have prepared poverty reduction strategies.
MOHUPA has undertaken analysis of land issues in
urban poverty reduction.
PY-3: Evaluate relevance of
curriculum to expressed needs of
ULB officials
PY-3: Evaluate uptake on
Challenge Fund and evaluate
utilization of network.
PY-3: Evaluate degree of
difficulty in implementing
reforms.
PY-2: Evaluate utilization of
analysis
Component 3: Effective
project management
PMU is able to foster States and ULB participation and
able to assist States and ULBs in successfully
completing procurement and capacity building activities.
30
2. Arrangements for results monitoring: Institutional Arrangements and Data
Collection. As regards institutional arrangements for results monitoring, the PMU will assist in
putting the results monitoring framework into operation on behalf of MOUD and MOHUPA. As
and when capacity building activities are initiated in States and ULBs, the PMU would collate
the baseline data from the capacity needs assessments of the ULB and then on completion of the
capacity activities, the improvements achieved vis-à-vis baselines. This process would also be
facilitated by the fact that the PMU would be carrying out both the initial capacity needs
assessment as well as a ‗completion report‘ to assess the impact of completed capacity building
activities at each ULB, besides collating periodic status reports from ULBs implementing the
capacity building activities.
3. The detailed results monitoring arrangements, including target values for the results are
as presented below. Such results monitoring would form part of the regular reporting
requirements to the Bank from MOUD and MOHUPA and have been also included in the TOR
of the PMU.
31
Arrangements for Results Monitoring
Target Values Data Collection and Reporting
PDO Outcome
Indicators
Baseline
(cumulative
values)
PY-1 PY-2 PY-3 PY-4 PY-5 Frequency &
Reports
Data Collection
Instruments
Respons
ibility
20 ULBs will be
implementing: (i) at least
two urban management
reforms covering FM,
urban planning, service
delivery and governance
and (ii) urban poverty
reduction strategies.
0
0 4 8 16 20 Twice a year, with
individual ULB
assessments as per
implementation
cycles.
Status reports by
PMU / MOAs
signed by ULBs
under JnNURM
PMU
Component indicators
1.Capacity Building for Strengthened Urban Management
No. of participating
ULBs able to finalize
their accounts under
accrual accounting within
a period of one year of
close of FY after initial
installation of new
accounting system, six
months after second year
and four months from
third year onwards;
0
0 2 4 10 20 Twice a year, with
individual ULB
assessments as per
implementation
cycles.
Assessment by
PMU / Periodic
status reports by
ULBs to PMU
PMU
No. of participating
ULBs able to
demonstrate improved
property tax
management, capital
budgeting procedure or
medium term planning.
0 0 4 8 16 20 Twice a year, with
individual ULB
assessments as per
implementation
cycles
Assessment by
PMU / Periodic
status reports by
ULBs to PMU
No. of participating
ULBs have begun
estimating the cost of
0 0 4 8 16 20 Twice a year, with
individual ULB
assessments as per
Assessment by
PMU / Periodic
status reports by
PMU
32
service provision for the
main services (water
supply, solid waste).
implementation
cycles.
ULBs to PMU
No. of participating
ULBs that have
introduced a citizen
interface measure (such
as a citizen charter);
0 0 4 8 16 20 Twice a year, with
individual ULB
assessments as per
implementation
cycles.
Assessment by
PMU / Periodic
status reports by
ULBs to PMU
PMU
2.Capacity Building for Effective Urban Poverty M&E
No of participating
Resource Centers
utilizing new curriculum
0 4 4 4 4 4 Twice a year Periodic status
reports by PMU
No of participating
ULBs where Challenge
Fund has made awards
0 0 4 8 16 20 Twice a year, with
individual ULB
assessments as per
implementation
cycles.
Assessment by
PMU / Periodic
status reports by
ULBs to PMU
No of participating
ULBs that have
developed poverty
reduction strategies
0 0 4 8 16 20 Twice a year, with
individual ULB
assessments as per
implementation
cycles.
Assessment by
PMU / Periodic
status reports by
ULBs to PMU
Degree (percent) of
operationalization of
diagnostic and reduction
strategy
0
40 100 100 100 100 Twice a year Periodic status
reports by
MOHUPA
3. Overall Project Management (PMU)
No. of participating
ULBs wherein all
capacity building related
procurement was
completed for the ULB
within 8 months of
approval of capacity
building support under
the program.
0 6 13 20 20 20 Twice a year, with
individual ULB
assessments as per
implementation
cycles.
Assessment by
PMU / Periodic
status reports by
ULBs to PMU
PMU
33
Annex 4: Detailed Project Description
INDIA: Capacity Building for Urban Development Project
1. The project will provide support for capacity building at the national, state and local
levels in the areas of urban management and poverty monitoring and alleviation. Financial
support for a PMU will also be provided. As a capacity building project, eligible expenditures
will include goods and services. ULBs may elect to undertake the following activities in
accordance with the State policies and felt needs.
Project components
Component 1: Capacity Building for Strengthened Urban Management ($37.5 million)
2. Finance and FM reform. This module will assist ULBs in institutionalizing links
between planning and budgeting processes, revenue enhancement and expenditure management,
developing asset management strategies, and putting in place effective financial controls. Each
city‘s current systems would be analyzed and based on the same key areas of improvements
required would be worked and an action plan for achieving the same would be worked out,
developed into a workable/implementable proposal which would be supported by this
component. The PMU is expected to assist in this activity to help the ULBs analyze the
requirements and crystallize the requirements. Key area of capacities targeted will include:
Budgets: Preparation and tabling of multi-year budgets, and specifically budgeting for
services for the poor;
Tracking: Developing internal processes for tracking inter-governmental transfers;
Implementing accounting reforms and ensuring compliance with uniform norms and
standards for financial reporting, legislative compliance, implementing computerized
accounting systems, , introducing accrual accounting, financial reporting systems,
introducing MIS, introducing/ensuring IT standardization in line with the Integrated FM
Frameworks introduced in the ULB;
Resourcing: Expenditure management, revenue mobilization (including property tax and
user charges), capital markets access, procurement including PPPs, asset/liability
management.
Implementation and operational planning: Procurement planning and execution
(procurement plans, adoption of e-procurement, contract detailing and packaging);
assessment of capacity of contractors / consultants / suppliers and implementing agencies,
developing strategies for project execution; capacity building for project monitoring,
procurement, FM, implementation review and monitoring, quality control procedures and
formats, and developing contract management frameworks (key players, roles,
authorities, reporting arrangements, bills preparation and clearance procedures, quality
certification etc).
34
3. Framework for planning In order to make planning for the city at large and within
sectors more strategic, systematic and realistic, the TA will provide assistance in any of the
following areas:
Improved city-wide urban planning: improved and better researched and participatory City
Development Plans (CDPs) and Master plans, addressing the current legal and systemic
constraints to integrate planning across different parts of ULBs and multiple institutions;
better land use planning and land management strategies; planning for urban development
and redevelopment; metropolitan planning and local economic development. Specific
planning challenges for example, include modernizing physical planning approaches and
processes; enabling property title certification, improving land records management and
the creation of project development plans.
Sector planning for different sectors, including broad strategies, definition of focus areas,
linkage with land use plans, and planning for services for the core city, peripheral areas,
slums/poorer areas; optimizing benefits of scale (such as having common solid waste
landfills; sewage treatment plants for a group of ULBs); selection of options that are:
economically beneficial, technically feasible, financially affordable (capital & O&M),
environmentally and socially sustainable.
4. Service delivery. The proposed TA would support institutional design and establishment
of systems for service delivery, including:
Developing project management capacity and systems for project planning and
preparation: professionalization in municipal management and service delivery, including
training and developing business practices and incentives; preparation of Detailed Project
Reports (DPRs), implementation M&E (including service scorecards).
Process re-engineering: To enhance the efficiency of delivery systems, including
improved coordination and streamlining of organizational structures. These would be
backed by Performance Improvement Plans with indicators and benchmarking; Business
Plans for the overall asset development, operations, maintenance and sustainable service
provision; preparing clear-cut road maps or business plans to commit to improved service
levels with clear indicators (e.g. staffing ratio, collection improvements, energy
consumption, non-revenue water (NRW) reduction etc; providing sector finance
overviews, for example in water supply and sanitation operations, reflecting true picture
of costs, which is needed to make sound management and investment decisions and
designing tariffs; developing financial models for assessing various investment /
operational scenarios.
Tariff frameworks and subsidy design: establishing computerized billing, collection
systems.
5. Framework for governance. This component focuses on governance, which although
interrelated to FM reform, planning and service delivery, nonetheless requires specific attention
as systemic institutional obstacles prevent effective and accessible service delivery, development
and accountability. The focus is on systemic institutional weaknesses: ULBs‘ lack of functional
35
jurisdiction and their fragmented and overlapping responsibilities for services across state and
local agencies; incomplete devolution from states to ULBs; fiscal dependence on State
Governments; and an absence of effective mechanisms for citizen involvement and transparency
in city decisions. Key elements in dealing with these aspects will include the following:
Support for the establishment and empowerment of citizen forums: This will focus on one
or a combination of existing arrangements such as ward committees, or ULBs, to introduce
new systems and approaches, such as sub-ward committees (area sabhas, or developing
platforms for customer interface for service delivery agencies) where citizens are consulted
or could raise concerns, individually or as interest groups;
Development and role clarification of municipal committees. Most executive and
functional committees have been underutilized as instruments of local policy decisions,
and have become insulated from councils and citizens;
Sensitization of elected officials: This will happen through training of councilors on local
government policy, planning and strategy development, meeting procedures and effective
participation in committees, budget analysis, constituency, media and public relations, as
well as engaging in intergovernmental activities, i.e. working with or negotiating with
other spheres of government;
Monitoring of services, and associated assistance to civil society: The monitoring of
service levels across a range of public services is a fundamental element of reform, and
needs to be as specific as possible, with quality, quantity and reliability all clearly
benchmarked. Rigorous performance disclosure processes need to be introduced therefore
to ensure that a full and fair picture of the ULB on a periodic basis is made available to all
stakeholders, providing financial, operational and performance information. Consultants
will therefore assist States and ULBs or other service agencies to disseminate to
citizens/customers relevant information.
Component 2: Capacity Building for Effective Urban Poverty Monitoring and Alleviation
($18.5 million)
6. This component seeks to build capacity at the central, state and local levels for policy
formulation, implementation and monitoring in the area of urban poverty alleviation. For this
purpose the proposed project will support the following activities: (i) promotion of knowledge
systematization and learning, (ii) capacity building for strategic policy formulation and
implementation and (iii) strengthening of information and monitoring systems. This component
will further support the effective implementation of RAY.
7. Knowledge systematization and learning. There is a significant amount of
experimentation and innovation taking place within the urban landscape in the areas of service
delivery and, more generally, poverty alleviation. However most of these efforts are nascent at
this stage, and are relatively small in scale compared to the size and needs of the population they
are trying to serve. Moreover there is little systematization of the lessons learned through these
various initiatives and, consequently, limited cross-fertilization, both spatially and across agents
36
working on urban poverty alleviation. The proposed TA will support two sets of activities aimed
at fostering knowledge and information exchange and learning.
Challenge Fund for Urban Poverty Alleviation: Grant funding will be provided to
institutions working on urban poverty alleviation under two windows. The first window
(Recognition Window) will identify and grant awards (small scale goods or services) to
particularly innovative practices in this area. This window will initially be open to both
government and non-government actors. The second window (Replication Window)
will provide resources and technical support to government teams interested in adopting
and scaling up one or more of the ―best practices‖ identified through the first window.
The Replication Window will sequentially target local governments throughout the life
of the project. This sub-component will also provide funding for the administration of
the Challenge Fund.
The total financing under the Challenge Fund is US$5 million. The Fund would be used
for providing grants to entities whose proposals are vetted and approved by the Ministry
as per the agreed Operations Manual for the sub-financing which would be developed in
the first year of the project. The maximum grant per entity would be US$500,000.00.
The grants would be used for services, small number of goods and small quantities of
incremental operating expenditures incurred in the city government if it is a part of the
proposal. The funds can be disbursed by the Ministry to the entities once the Bank has
completed the required fiduciary due diligence and have agreed on the reporting
requirements.
Creation of practitioners’ network: Support will be provided to the Ministry to
constitute a network of practitioners with the objective of promoting information
sharing and capacity building. The network will include government officials from the
participating ULBs, academics and other actors active in the area of urban poverty
alleviation both nationally and internationally, and is envisioned to serve as a platform
for both peer-to-peer learning and the delivery of formal training. The network will also
facilitate the dissemination and discussion of best practices identified and/or developed
through the Challenge Fund.
8. Capacity building for strategic policy formulation and implementation. Local-level
capacity for policy formulation, planning and implementation in the areas of service delivery
and, more generally, poverty alleviation is weak due to several factors. High turnover among city
managers makes effective medium-term planning difficult, while lack of adequate information
and tools and poorly defined professional profiles seriously hinder the ability of technical
personnel to administer and monitor poverty alleviation programs. The proposed TA will support
three sets of activities aimed at building capacity among city managers and technical staff for
policy formulation and implementation.
Development of Training Materials on Urban Poverty and Service Delivery. Support
will be provided to 4 National Resource Centers to development training modules on
urban poverty reduction and service delivery. These modules could be used as stand-
alone training materials or as a complement to the current curriculum for training of city
managers sponsored by WBI. In addition, a new curriculum for lower level ULB
officials (e.g. Community Development Officers) will also be developed with a strong
37
focus on planning, implementation and monitoring of urban poverty alleviation
programs. It is expected that experiences supported and lessons learned through the
Challenge Fund be systematized and incorporated into the curricula for city managers
and technical staff as case studies.
Preparation of ULB-level Poverty Reduction Strategies. Assistance will be provided to
States and ULBs to adopt ULB Poverty Alleviation strategies, including approaches to
assess the needs of the urban poor and the efficacy/adequacy of existing programs.
Specifically the exercise is expected to generate key information on the number,
location, basic characteristics and living conditions of the urban poor, as well as a
review of existing programs and their adequacy and effectiveness in view of the local
poverty profile. Support will be provided to strengthen the capacity of ULBs, with a
focus on improvement of existing databases and other monitoring tools necessary for
both the development of needs assessment and regular program management, and
improvement of targeting mechanisms for service delivery in urban areas. Support will
be provided to these same ULBs to prepare poverty reduction strategies, which build
upon the information, produced by the diagnostic exercise and are aligned to and
complementary with existing and future planning instruments such as CDPs and Slum-
free City Plans of Action. Strong emphasis will be placed on having city officials and
staffs provide direct inputs into and are ultimately responsible for the preparation of the
strategy.
Strengthening of MOHUPA. Support will be provided to MOHUPA for strengthening
policy analysis and development related to the urban poor, e.g. land and the provision of
affordable housing. The TA will strategically support certain activities including the
design and implementation of an MIS, sample surveys, and process and impact
evaluations.
9. First year pipeline and subsequent roll-out of activities. The first year12
a pipeline of
activities includes the following:
Appointment of PMU
Initiate the Challenge Fund
Curriculum design for National Resource Centers
Initiation of poverty reduction strategies
Direct support to select ULBs on urban management.
Table 6: Project Roll-out (First Year Activities)
QE1
(Oct-Dec 2011)
QE2
(Jan-Mar 2012)
QE3
(Apr-Jun 2012)
QE4July-septm
2012
Appointment of
the PMU
Initiation of the
Challenge Fund
12
Project Year 1 (first year) implying the 1st twelve months from the start of the project, which may or may not
coincide with the GoI‘s financial year or the calendar year
38
Initiation of
poverty reduction
strategies
Direct support to
select ULBs on
urban
management
Support to
National
Resource Centers
10. Component 3: Implementation Support ($4.0 million). This component will support a
national Project Management Unit (PMU) for providing overall technical and managerial
assistance during implementation. The PMU will assist the project, in the areas of (i)
implementation support; (ii) technical advisory services; (iii) quality assurance; (iv) procurement
and procurement advisory services; (v) FM; (vi) reporting; (vii) M&E; and (viii) project
administration. (See Annex 6 – Implementation Arrangements).
39
Annex 5: Project Costs
INDIA: Capacity Building for Urban Development Project
Project Cost By Component and/or Activity Local
US $million
Foreign
US $million
Total
US $million
Capacity Building for Strengthened Urban
Management
37.5 0 37.5
Capacity Building for Effective Urban Poverty
M&E
15.0 3.5 18.5
Project Management Component 2.5 1.5 4
Total Baseline Cost 55 5 60
Physical Contingencies 0 0 0
Price Contingencies 0 0 0
Total Project Costs 55 5 60
Interest during construction 0 0 0
Front-end Fee 0 0 0
Total Financing Required 55 5 60
Note: While most expenditure is expected to be local currency, a provision of US$ 5 million of
foreign currency expenditures has been made.
40
Annex 6: Implementation Arrangements
INDIA: Capacity Building for Urban Development Project
1. Following current practice, MOUD and MOHUPA will be the implementing agencies
under the project, with specifically designated accountabilities. The respective Joint Secretaries
(JnNURM Mission Director for MOUD and RAY for MOHUPA) from the two ministries will be
the Project Directors. The project will be implemented through a structure of two Programme
Management Boards (PMBs), each chaired by the respective Secretary of MOUD and
MOHUPA, and also comprising representatives from the Department of Economic Affairs
(DEA) and the Planning Commission. Each PMB will provide overall oversight and guidance, as
well as approve major work plans and activities, for each component under the responsibility of
the respective Ministry (see below). Each PMB will be supported by a Project Steering
Committee (PSC), which will be chaired by the respective Joint Secretaries/Project Directors
from each ministry, and will also have representation from the DEA and the Planning
Commission. Both the PSCs will in turn be assisted by a single common national level PMU,
which will be established under the project for providing technical and managerial assistance
during project implementation servicing and reporting to both ministries via their respective
PMBs and PSCs.
2. The project will associate with States and ULBs that are eligible for JnNURM, IHSDP,
UIDSSMT and RAY support. In practice, the participating ULBs will be selected to achieve a
mix of large and small ULBs, regional variation, and inclusion of lagging states.
Chart: Implementation Arrangements
41
3. Implementation of Component 1: Capacity Building for Strengthened Urban
Management. Implementation of this component will be under the purview of MOUD.
Proposals for TA under this component will be reviewed by MOUD and sanctioned by its PMB.
In reviewing these proposals MOUD will draw on the PMU.
4. Implementation of Component 2: Capacity Building for Effective Urban Poverty
Monitoring and Alleviation. This component will be under the purview of MOHUPA. Proposals
for TA under this component will be reviewed by MOHUPA and sanctioned by its PMB. It will
also select 4 Resource Institutions on the basis of an evaluation of their capacity and experience,
and thus will oversee the development and installation of the training modules. Other activities
associated with ULBs – Challenge Fund, development of a practitioners‘ network, ULB
diagnostics, and poverty reduction strategies – will also be overseen by MOHUPA and directed
at the same target group of 20 participating ULBs.
5. Component 3: Implementation Support. To strengthen the quality of the capacity building
proposals and the achievement of desired outcomes, and to improve internal controls, the project
will draw on the services of a Program Management Unit that will be financed under the project.
As delegated by MOHUPA and MOUD, the PMU will provide comprehensive management and
administrative assistance to MOUD and MOHUPA for this project. Quarterly work plans and
implementation reports will be prepared by the PMU for the review and approval of the Mission
Directors.
6. The TOR of the PMU shall be to assist the Boards and Mission Directors in the
following functions:
Support implementation, startup and pipeline development: (i) developing a
pipeline of prospective States and ULBs who might need capacity building support
along with the details of TA requirements; (ii) actively disseminating and
promoting capacity building service to States and ULBs; (iii) for those States and
ULBs wishing to access capacity building support and meeting the eligibility
criteria, carrying out detailed capacity needs assessments in any or all of the four
focus areas of the project; (iv) providing assistance to ULBs in priority setting,
identification of best practices, and proposal preparation for review by the PMB;
and (v) developing and maintaining a website devoted to the project‘s
implementation, including a list of participating ULBs, areas of support, proposals
under preparation and contracts awarded; and (vi) ensuring compliance with the
Participation Agreements described above.
Technical Advisory Services and Quality Assurance: (i) enlist and maintain a panel
of technical experts/agencies (national and international) on various capacity
building areas, to assist the States and ULBs; (iii) review consultant outputs at
various stages and provide advice to States and ULBs.
Procurement and Procurement Advisory Services: (i) give expert inputs in
formulation of TOR/ RFP and selection process; (ii) assist in short-listing
consultants and manage the selection process; (iii) establish contract database,
42
develop and maintain website and help in managing contracts through the peirod of
implementation; (iv) maintain overall list of contracts; and (v) help ULBs
implement frameworks for monitoring and reporting on the effectivness of
spending.
Monitoring and Evaluation: (i) track the project monitoring indicators; (ii) maintain
project related baseline information derived from capacity assessments for the
ULBs participating in the project; (iii) carry out impact assessments to record
outcomes achieved under the project; and (iv) provide progress reports to MOUD
and the World Bank.
Project Management and Administration: (i) review proposals from ULBs prior to
submission to the PMB; (ii) assist ULBs and MOUD in completion of
documentation required by the PMB and PSC; (iii) Monitor contract
implementation and payments to consultants by the two Ministries, including a
greivance mechansims for non-payment; (iv) ensure disclosure of project related
documents.
Project FM: (i) prepare accounting and financial reporting of all moneys received
under the project, (ii) submission of project accounts to audit in a timely way and
for onward submission of audit reports to the Bank and (iii) ensure funds flow,
accounting, audit, financial reporting and control are maintained as envisaged in the
FM Manual.
43
Annex 7: Financial Management and Disbursement Arrangements
INDIA: Capacity Building for Urban Development Project
1. As discussed in other annexes of the PAD, this project will have the following three
components:
(i) Capacity Building for Strengthened Urban Management (US$37.5 million). This
component will support TA across several urban management areas like Financial
Management Reform, Framework for Urban Planning, Service Delivery and
Framework for Governance. This component will be implemented by MOUD.
(ii) Capacity Building for Effective Urban Poverty Monitoring and Alleviation
(US$18.5 million). These capacity building initiatives reflect the need for building
information systems, sharing experiences, and designing strategies on urban poverty
alleviation. This component will be implemented by MOHUPA
(iii) Implementation Support (US$4 million). This component will support a national
PMU for providing overall technical and managerial assistance during
implementation. The PMU will be based in MOUD.
SUMMARY FM ASSESSMENT
Overall Accounting and FM System
2. FM systems for this project will be based on government accounting system with all the
controls and oversight that exist in the government system. Budget heads have been created in
both Ministries and based on approvals received through the respective PSCs; the funds would
be accessed using the government fund release procedures. It may be noted that the FM
systems for the sub-component of Challenge Fund will be designed and agreed separately,
once the implementation arrangement for the same is agreed. As a part of the due diligence,
FM assessment for the Challenge Fund would be conducted, an action plan would be agreed
with the client, and based on the implementation of the action plan; the funds would be
released for this sub-component.
3. Budgeting: The two Ministries will operate two separate budget heads for expenditure
under the project. Suitable budget heads along with the required provision have been approved
by the ministries.
4. Disbursement: Disbursements for the project will be simple and based on reimbursement of
expenditures based on quarterly IUFRs. These IUFRs will be reconciled annually with audited
AFS. Any difference between the expenditure reported in the IUFRs and those reported in the
annual audit reports will be analyzed and those expenditures which are confirmed by the Bank as
being not eligible for funding (refundable to IDA) would be adjusted in the subsequent
disbursements.
5. Staffing: The Financial Advisor of MOUD and MOHUPA, assisted by Director (Finance)
and Chief Controller of Accounts will provide oversight over the FM aspects of the project. The
44
Financial Management Specialist (FMS) in the PMU will be a professional accountant to oversee
the FM aspects of the project and liaise with the Bank as well as support the FM reforms in ULB.
6. Accounting: All expenditures will be made by MOUD and MOHUPA using the Pay and
Accounts Office (PAO) system in place in Central Line Ministries. Accounting for the project
will be carried out on cash basis of accounting. The Annual Financial Statement (AFS) for the
project will be maintained by the PMU based on expenditure reported to the CGA by the two
Ministries. While the main accounts would be maintained by PAO, detailed accounts would be
maintained by PMU for reporting
7. Reporting: Quarterly Interim Unaudited Financial Reports (IUFRs) will be submitted to the
Bank within 45 days of end of each quarter. The formats of IUFRs has been prepared and agreed
with the client.
8. Statutory Audit: A single consolidated annual audit report will be submitted to the Bank.
The audit will be conducted by the C&AG, based on TOR agreed with the Bank. Once the
negotiation is completed the TR would be formally shared with the C&AG.
9. Internal Audit: Internal control would be predicated on controls in the government systems.
In addition, internal audit will be in place throughout the life of the project. The auditor will be
selected from the panel of CA firms empanelled with the C&AG and audit will be conducted as
per agreed TOR with the Bank. The audit will be carried out by auditors acceptable to the Bank.
10. FM Manual: FM Manual has been developed for the project, which includes arrangements
for budgeting, funds flow, accounting, reporting, disbursement and audit, which have been
approved by the respective Ministries for this project.
11. The assessment concludes that the proposed FM systems are satisfactory to support the
project (assuming satisfactoriness of arrangements to support the Challenge Fund as well).
RISK ASSESSMENT AND MITIGATION
Risk Rating Risk Mitigating Measures
Incorporated into Project Design
Residual Risk
Rating
Actions to be taken
Inherent Risk
Country
Level
Moderate. The rating is in line with FM risk for India.
Entity Level
High.
(This is the first
Bank project
being
implemented by
these two
ministries and a
new PMU
would be set
up).
The risk will be mitigated by
having an experienced and
qualified finance professional in
the PMU and documented
financial procedures in the
Financial Management Manual
(FMM).
Substantial.
Financial Management
Specialist in PMU:
This will be a
Covenant in the Legal
Agreement. The person
should be in place
within 90 days of
Effective Date.
45
Risk Rating Risk Mitigating Measures
Incorporated into Project Design
Residual Risk
Rating
Actions to be taken
Project
Level
High
(The risk
associated with
the
administration
of the Challenge
Fund has not
been assessed
yet.)
This project will be implemented
by MOUD and MOHUPA,
assisted by PMU. PMU will be a
new set up with adequate
personnel with specialized skills
in various aspects of project
management, which would
mitigate this risk to certain extent.
Substantial
Overall Residual Inherent Risk Substantial
Control Risk
Budgeting
Moderate Budget to be provided as per
detailed work plans provided by
ULB‘s and monitored by the,
MOUD and MOHUPA.
Moderate The budgets heads
have been created.
Accounting
and
Financial
Reporting
Substantial Country systems will be adopted
and reports submitted by the
Ministries to CGA will be used for
preparing project accounts. These
arrangements are documented in
the FMM.
The risk associated with
Accounting and Reporting may
change depending on the
arrangements for Challenge Fund.
Moderate
FM arrangements for
the Challenge Fund
need to be designed and
disbursements for this
sub-component will be
done only after the FM
Assessment for CF is
completed. This is, to
be appropriately
reflected in the legal
agreement.
Internal
Control
Substantial Internal audit will be instituted. In
addition, all the controls
associated with the government
system will be in force. Internal
audit will also cover the Challenge
Fund.
Moderate Legal agreement to
include :
Internal Auditors will
be in place within 180
days from Effective
Date.
Internal Audit will be
in place throughout the
life of the project and
an Audit Committee
will be maintained
during the project
period.
Funds Flow
Moderate The risk is moderate because the
mechanism chosen for funds flow
is a simple one wherein funds will
flow directly to MOUD and
MOHUPA through their budget
allocations. There is no further
fund flow to downstream entities
like ULBs, except for Challenge
Fund, which is yet to be designed.
Low The disbursements for
the Challenge Fund
(CF) will be done only
after FM Assessment
for CF is completed.
This is reflected
appropriately in the
legal agreement.
Auditing
Moderate
(as existing
Audit of consolidated financial
statements of the project will be
conducted by the CAG based on
Low
TOR of Statutory
Auditors are agreed
with CAG
46
Risk Rating Risk Mitigating Measures
Incorporated into Project Design
Residual Risk
Rating
Actions to be taken
audit
arrangements
will be used for
the project)
agreed TORs.
Overall Residual Control Risk Moderate
Overall FM Risk of the Project Moderate
FM ASSESSMENT IN DETAIL
Implementing Entity
12. MOUD and MOHUPA will be the implementing agencies under the project, with
specifically designated accountabilities. The respective Joint Secretaries (JnNURM Mission
Director for MOUD and RAY for MOHUPA) from the two ministries will be the Project
Directors (for details refer annex 6).
13. The PMU envisaged for this project will function under the supervision and guidance of the
respective ministries and assist them in implementation of the project. PMU includes a FM
Specialist who would be responsible for carrying out the following key tasks (i) prepare annual
budget requirement for the project ; (ii) maintain detailed accounting records for the project; (iii)
timely reconciliation of project expenditure with the Pay and Accounts Office (PAO); (iv)
compile quarterly financial reports and annual financial statements of the project and ensure
timely submission to various stakeholders; (v) facilitate internal and statutory audit of project
accounts and ensure submission of the same to various stakeholders as per agreed timelines; and
(vi) ensure funds flow, accounting, financial reporting and controls are maintained as envisaged
in the Financial Management Manual. The FMS is also expected to work with the ULBs on
accounting and FM reforms.
Staffing
14. The Financial Advisor of MOUD and MOHUPA, assisted by Director (Finance) and Chief
Controller of Accounts, will provide oversight over the FM aspects of the project. Project
specific FM coordination will be carried out by the FMS at the PMU, who will be a professional
accountant with qualifications and experience acceptable to the Bank. The position of FMS will
be maintained throughout the project.
Budgeting
15. The costs related to GOI‘s package will be budgeted as an identifiable budget line item in
the respective budgets of MOUD and MOHUPA. The detailed budget heads have been agreed
with the project and the same has been incorporated in the respective budget of the two
ministries.
Accounting
16. Accounting for the project will be carried out on cash basis of accounting. All expenditures
47
will be made by MOUD and MOHUPA using the Pay and Accounts Office system in place at
Central Line Ministries. All expenditures will be recorded at the time of payments.
17. The PMU will prepare AFS for the project based on consolidation of monthly expenditure
reports provided by the two ministries to the CGA. Project AFS will comprise the following:
Statement of Sources and Application of Funds.
Schedules Annexed to Project Financial Statements:
1. Statement showing appropriate major heads of expenditure. (by Project
Component and by Agency)
2. Reconciliation of Claims to Total Applications of Funds. The Project
Financial Statements include reconciliation between expenditure reported as
per the Statement of Sources and Application of Funds13
and expenditure
claimed from IDA through IUFR based disbursement.
Payment Mechanisms (other than Challenge Fund)
18. Technical Assistance and Capacity Building): States and ULBs will develop proposals for
TA and Capacity Building in the identified areas of strengthening and reforms, and submit to
MOUD/MOHUPA respectively for depending on the area of reforms. The respective Ministries
would evaluate these proposals with inputs from the PMU and based on this process would select
proposals which would be finally approved by their respective PSC. Once the proposals are
approved, the respective ministries would sign a MOU14
with the ULB. The entire process to be
followed by each Ministry is outlined in the diagram given below:
13 The statement will provide a reconciliation between expenditure reported as per the Statement of Sources and
Application of Funds and expenditure claimed from the World Bank through IUFRs. 14
MOU would outline the following key areas: (i) objective of the TA, (ii) expected outcomes, (iii) estimated cost
and timelines, (iv) reporting requirements, (v) procurement and FM arrangements including the process of selection
of consultants, certification of work, evaluation of the reports and outputs and (v) how payments would be done.
48
Payments: The design of the project envisages centralized payments. There would be no further
fund flows envisaged to downstream entities like ULBs (except for Challenge Fund). As the
contract would be issued by the respective Ministries (MOUD/MOHUPA) the payments also
would be made by the Ministries at the Central level. The initiation of payment would be done
from the ULB who would send a certificate authorizing payment along with the required reports
to the Ministries which will be assessed by the PMU. Thereafter, the Ministries through PAO
would process the payments. The project will use country systems for payments and accounting
and all expenditures would be made by the Ministries centrally using the Central Government
Pay and Accounts Offices. This will ensure applicability of budget controls and mainstream
project accounting.
Payment Mechanism (Challenge Fund)
19. Challenge Fund (CF): It may be noted that FM systems for the sub-component of
Challenge Fund will be designed and agreed separately, once the implementation arrangement
for the same is agreed. IDA funds will not be disbursed until FM Assessment for the Challenge
Fund is completed and an action plan would be agreed with the client. The implementation of the
action plan would be monitored before releasing the funds. Following are the contours of the
Challenge Fund broadly:
a. CF would be provided to entities based on the wining proposal as approved by the
Ministry as per the procedures to be agreed with the Bank
b. A sub-financing agreement would be entered between the beneficiary and the
Ministry
c. The grant would be allocated for specific goods or services or IOC based on the
proposal
d. The grant would be to a maximum amount of $500,000.00
49
e. The grant would be transferred by the Ministry to the beneficiary, only after the
fiduciary assessment for the entity has been completed by the Bank and the Bank has
agreed to for an action plan and reporting requirements with the beneficiary which
would be monitored during the period of the grant.
f. The beneficiary would maintain such funds in a separate bank account so that the trail
of the funds can be ascertained for any period.
Even though the Ministry can transfer the amount of grants to the beneficiary, the IDA would
disburse based on the actual expenditure incurred by the beneficiary which would be reported as
part of IUFR.
Internal Controls and Internal Auditing
20. Internal Controls: All controls associated with government system will be in force in the
project.
21. Internal Audit: Internal audit will be put in place throughout the project and it will cover
implementing entities on a risk based approach. The TOR of Internal Auditors has been agreed.
The auditor will be selected from CA firms empanelled with the C&AG. The internal auditors
for the Project will be appointed within 180 days after the Effective Date of the project. The
audit will be carried out by auditors acceptable to the Bank.
22. Internal Audit will be conducted on Quarterly basis. The Internal Audit report should be
submitted within 30 days from the end of Quarter to the respective Ministry. The report and the
compliance would be submitted to the Bank on a regular basis within 60 days from the quarter
end.
Disbursement arrangements
23. The project will submit withdrawal applications to CAAA in DEA for onward submission
to the Bank for reimbursement
24. Reimbursement of actual expenditures based on quarterly IUFRs. The IUFRs will be
accompanied by detailed Statements of Sources and Application of Funds, which will report
actual expenditures, and all other statements outlined in the IUFRs. The IUFRs will form the
claim statements for the purposes of the Bank.
25. These IUFRs will reflect actual expenditure for project components. Any advances given
by the project will be separately shown in the IUFRs and will not be eligible to be claimed. All
expenditures reported in the IUFRs will be subject to confirmation/certification in the annual
audit reports. Any difference between the expenditure reported in the IUFRs and those reported
in the annual audit reports will be analyzed and those expenditures which are confirmed by the
Bank as being not eligible for funding (refundable to IDA) would be adjusted in the subsequent
disbursements.
Financial Reporting
26. MOUD and MOHUPA will be required to submit quarterly expenditure information to the
Bank through IUFRs, within 45 days of close of each quarter. These IUFRs will have to be
50
prepared by the PMU on behalf of the two Ministries by consolidating information and based on
reconciliation with PAO records. The basis for reporting will be expenditure by the
implementing entity and not releases/advances.
Auditing
27. A single consolidated annual audit report for the project will be submitted to the Bank,
which will be audited by the CAG as per the TOR which will be agreed with the Bank. These
TORs will be included in the Financial Management Manual. The annual audit report consists
of: (i) annual financial statements (ii) audit opinion and (iii) management letter highlighting
weaknesses, if any, and identifying areas for improvement. The auditors would also provide
reconciliation of expenditures reported in the IUFRs with the audited project financial statements
and certify the claims. The annual audited project financial statements would be submitted to
the Bank within 6 months of the close of GOI‘s financial year.
28. The following annual audit reports will be received by the Bank and monitored in Audit
Reports Compliance System (ARCS):
Audit Report Implementing Agency Due Date
Annual Financial Statements MOUD/MOHUPA (based on consolidated
financial statements of MOUD and MOHUPA)
30 September
Disclosure of Financial Information
29. The project would be required to disclose the following:
IUFR for every quarter
Annual Project Financial Statements
Annual Project Audit report
Contract details (including contract amount , payments made package wise)
Supervision Plan
30. Even though the risk rating of the project is Moderate, the project will require intensive
supervision in the initial year (on quarterly basis till the systems are set up and stabilized) to
review the implementation of the agreed FM arrangements and progress of implementation of
the FM Reform component financed under the project. As the project progresses, more attention
would be provided to the FM Reform component while half yearly reviews can be done in case
of the fiduciary requirements.
Arrangements regarding FM that will be included in the Legal Agreement
(Apart from the general conditions for IUFR and statutory audit)
31. Financial Management Specialist, PMU: The Borrower shall appoint a FMS with
qualifications acceptable to the Bank in the PMU no later than ninety days after the Effective
Date and thereafter maintain throughout the period of Project implementation.
51
32. Internal Audit: The Borrower shall appoint internal auditors for the Project no later than
180 days after the Effective Date.
33. Challenge Fund: Challenge Fund would disburse money only after the Bank conducts the
Fiduciary Assessment of the entity to which the fund is being provided. An action plan would be
worked out with the entity and the implementation of the same would be monitored before
releasing the payments.
Action Points Table Pending Action By When By Whom Current
Status
1) Budget heads to be created in the
budget of MOUD and MOHUPA and Project
costs to be provided in Borrower‘s Budget
By Negotiations
MOUD and
MOHUPA
Action
Completed
2) Approval of FM Manual by MOUD
and Bank
3) Agreement on design of IUFRs
between MOUD and the Bank
By Negotiations
MOUD and
MOHUPA
Action
Completed
Action
Completed
4) PMU FMS (CA) to be appointed.
5) Appointment of Internal Auditors to
be completed
Within ninety days
after Effective Date
Within 180 days after
Effective Date
MOUD and
MOHUPA
Action
ongoing
52
Annex 8: Procurement Arrangements
INDIA: Capacity Building for Urban Development Project
A. General
1. Procurement for the proposed project will be carried out in accordance with the World
Bank‘s "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised
October 1, 2006 & May 1, 2010 (Procurement Guidelines); and "Guidelines: Selection and
Employment of Consultants by World Bank Borrowers" dated May 2004, revised October 1,
2006 & May 2010 (Consultant Guidelines) and the provisions stipulated in the Legal Agreement.
2. This section covers methods of procurement & procurement procedure to be followed by
the Borrower, and the Review procedure applicable to the Project. For each contract to be
financed by the Credit the different procurement methods or consultant selection methods,
estimated costs, prior review requirements, and time frame are agreed between the Borrower and
the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as
required to reflect the actual project implementation needs and improvements in institutional
capacity.
3. Procurement of Goods: Goods procured under this project would include office and IT
equipment (desktop and laptop computers, printers, software etc.). No works are planned to be
procured under the project. Bank‘s Standard Bid Documents for Goods will be used for
procurements under ICB.
4. Selection of Consultants: Services of consultant firms will be required for Project
Management Unit, MIS, Curriculum development and challenge fund management etc. For all
consultant procurement, the Bank‘s Standard Request for Proposal (SRFP) document and
pertinent Form of Contract shall be used.
5. Capacity Building Activities: In order for the ULBs to be able to utilize their resources
effectively, their procurement capacity needs to be built. Generally ULBs have no past exposure
to Bank funded projects and the best practices of public procurement as these have not engaged
themselves in any Bank funded projects earlier.
6. The capacity building component, under the Project funding, is expected to help States
and ULBs to improve their capabilities in procurement planning and implementation, contract/
supply management, developing strategies for project execution, project monitoring and to help
them effectively adopt e-Procurement, as and when these institutions get ready to adopt it.
7. During project implementation, the PMU will work-out a comprehensive need based
training plan for short and medium term training for concerned PMU/ULB/MOUD/MOHUPA
staff/officer to enhance their procurement capacity. No procurement by the ULBs is envisaged
under the project.
8. Challenge Fund for Urban Poverty Alleviation: Competing ULBs for Grants will
follow selection/administrative procedures which are not relevant for procurement.
53
9. Procurement Documents and Conditions:
a. ICB procedures will be as per Section II of the World Bank procurement
guidelines.
b. Shopping procedures shall be in accordance with the requirements of paragraph
3.5 of the World Bank procurement guidelines, and sample document for
shopping procedures, as applicable, will be followed.
c. Goods which meet the requirements of paragraph 3.6 of the World Bank
procurement guidelines may be procured following Direct Contracting
procedures.
d. The limits for procurement methods can be reassessed during the Project
implementation, and modification made if found justified by the Bank.
e. For procurement under National Competitive Bidding, procedures as per
paragraphs 3.3 and 3.4 of the Procurement Guidelines shall be followed. In
addition, following conditions must be met in order for the bidding process
under NCB to be acceptable to the Bank:
i. Only the model bidding documents for NCB agreed with the GOI Task
Force (and as amended from time to time) shall be used for bidding;
ii. Invitations to bid shall be advertised in at least one widely circulated
national daily newspaper, at least 30 days prior to the deadline for the
submission of bids;
iii. No special preference will be accorded to any bidder either for price or
for other terms and conditions when competing with foreign bidders,
state-owned enterprises, small-scale enterprises or enterprises from any
given State;
iv. Except with the prior concurrence of the Bank, there shall be no
negotiation of price with the bidders, even with the lowest evaluated
bidder;
v. Extension of bid validity shall not be allowed without the prior
concurrence of the Bank (a) for the first request for extension if it is
longer than four weeks; and (b) for all subsequent requests for extension
irrespective of the period;
vi. Re-bidding shall not be carried out without the prior concurrence of the
Bank. The system of rejecting bids outside a margin or ―bracket‖ of
prices shall not be used in the project;
vii. Rate contracts entered into by Directorate General of Supplies &
Disposals will not be acceptable as a substitute for NCB procedures.
Such contracts will however be acceptable for any procurement under
Shopping procedures; and
viii. Two or three envelope system will not be used.
54
B. Assessment of the agency’s capacity to implement procurement
10. The management and procurement responsibilities will be handled by the respective
Ministries with the assistance of a specialized project management consultant for the PMU with
appropriate capacity in Procurement, FM, M&E & several technical areas as relevant to the
project. The TORs and the RFP have included the requirements on the all mentioned key
functions and were cleared by the Bank. This contract will be financed under the project and
will cover the entire duration of project.
11. The selection of the PMU is under process. . Given this arrangement, the overall project
risk for procurement is for the present considered ‗Substantial‘. The Bank will monitor the
performance of the PMU consultant (including the procurement key staff) and reassess the risk
rating periodically.
12. The following table summarizes key procurement risks and their mitigation measures:
Table 7 Risk/ Risk Factors Rating Mitigation Measures Residual Risk
Absence of permanent
procurement arrangements in
MOUD and MOHUPA
High MOUD is in advance stage of hiring a
PMU at national level that will have
procurement key staff. The PMU will
be responsible for managing and
assisting the procurement activities
and will provide periodic reports to
MOUD and MOHUPA
Substantial
Inadequate capacity of MOUD
and MOHUPA in managing and
executing World Bank procedures
for procurement and delay in
hiring of the PMU at national
level
High Consultant assistance has been
provided to help MOUD/MOHUPA
hire the PMU. This hiring is subject to
prior review of the Bank.
The PMU will provide assistance,
once it is in place.
Process of hiring is being closely
monitored by MOUD/MOHUPA.
No procurement (other than the PMU)
will be done under the project till
PMU has been established and the
required procurement capacity has
been built in PMU.
Medium
Involvement of multiple ULBs for
procurement, whose capacity has
not been assessed
High The PMU will assist the Ministries to
provide support to the States and
ULBs in their procurement activities,
building their capacity and monitoring
compliance with agreed Bank
procedures.
The entire procurement under the
project will be carried-out at central
level with the assistance of the PMU.
A procurement manual is being
developed based on the procurement
guidelines of the Bank for all
procurement under the project and
Substantial
55
formats to guide procurement and
thresholds based methods for goods,
and services. The manual would also
describe the proposed systems along
with procurement management and
administrative mechanism as well as
Bidding Documents/RFPs, bidding
formats, protocols for planning &
scheduling along with an illustrative
list of packages. This procurement
manual will be reviewed and will be
subject to acceptance by the Bank.
Usage of the Procurement manual
needs to be systematically
disseminated up to the all the project
implementation agencies level by
procurement capacity building that
shall be undertaken by the PMU. The
Manual will be reviewed and ensured
that Bank‘s concerns for transparency,
fairness, economy and efficiency are
met. In case of any inconsistency
between the provisions under
procurement manual and the
provisions of the ―Bank‘s Guidelines,
SRFP and SBDs,‖ the latter shall
prevail.
Overall Risk: Substantial
13. Given the lack of permanent arrangements at present, overall residual risk is being
retained as Substantial. Procurement Risk and the progress on the various mitigation measures
listed in the table above will be re-assessed/ reviewed after the PMU has started functioning.
C. Implementation Arrangements for the project:
14. A Program Management Unit (PMU) will be established by a Consultant Firm after the
process of hiring has been completed and the Consultant is on board. The PMU will work under
the supervision of the respective Ministries and assist in the procurement activities under the
project at central level and it will also provide support to the ULBs for capacity building on
procurement to be undertaken by them (outside the project funds). The PMU will also assist the
States and ULBs in the reforms component under the project. It will prepare a Model
Procurement Manual for ULBs detailing various procurement processes under the project. It will
undertake training programs and conduct workshops to make the ULBs aware of these
procedures and help them to build capacity to carry out procurement in future. Specific details of
these activities have been included in the TOR of PMU being selected by the project authorities,
and as part of the procurement capacity assessment.
15. The respective Project Management Boards and respective Project Steering Committees
will be assisted by the PMU, which will be established for providing overall technical and
managerial support during project implementation (Please refer to Annex 6 on implementation
arrangements).
16. The respective Project Directors (PDs) will coordinate on procurement matters and also
putting in place a contract signing and monitoring mechanism in the respective ministries.
56
Project Management Component and Assignment of Procurement to PMU
17. The PMU will be responsible for assisting the Ministries in all procurement activities and
documentation, including training and support to the ULBs in procurement. The prior review
cases originating from the central Ministries or the States and ULBs will be forwarded to the
Bank. In this the PMU shall assist the Ministries with its review and recommendations to the
Bank.
18. The proposed PMU will be responsible to assist the respective Ministries, amongst other
responsibilities, to develop shortlist of consultants, developing RFP/bid documents, assisting in
selection process and proposal/bid evaluation reports following Bank procurement procedures,
for various ULBs.
19. Disclosure Requirements: The provisions of the Bank‘s Procurement Guidelines and
Consultant Guidelines on disclosure will be complied under the project. The Right to
Information Act (RTI) 2005 both for on-demand disclosure and proactive disclosure of
information is applicable to all the Government entities in India including MOUD and MHUPA.
The RTI intent is to enhance the transparency of the decision making processes in compliance
with the requirement under the said Act. This enhanced disclosure of information to the public is
also expected to facilitate civil society oversight, to achieve greater adherence to transparency
norms and quality of deliveries during project implementation
D. Procurement Plan
20. The Borrower, at appraisal, developed a procurement plan for project implementation
which provides the basis for the procurement methods. This plan has been agreed between the
Borrower and the Project Team [and is available at MOUD/MOHUPA. It will also be available
in the project‘s database and in the Bank‘s external website. The Procurement Plan will be
updated in agreement with the Borrowers‘ Project Team annually or as required to reflect the
actual project implementation needs and improvements in institutional capacity.
E. Frequency of Procurement Supervision
21. In addition to the prior review to be carried out from Bank offices, it is recommended to
carry out two supervision missions (one every six months) as part of the Bank supervision
missions. This arrangement will be reviewed at the end of one year of the PMU being in place.
57
F. Procurement Arrangement
22. A procurement manual is being developed by the MHUPA and MOUD based on the
procurement guidelines of the Bank for all procurement under the project and formats to guide
procurement and thresholds based methods for goods and services. The manual would also
describe the proposed systems along with procurement management and administrative
mechanism as well as SBDs, bidding formats, protocols for planning & scheduling along with an
illustrative list of packages. Usage of the Procurement manual needs to be systematically
disseminated up to the all the project implementation agencies level by procurement capacity
building that shall be undertaken by the PMU. The Manual will be reviewed by the Bank and
will be subject to acceptance by the Bank before the start of procurement process (except for the
selection of PMU) and it will be ensured that Bank‘s concerns for transparency, fairness,
economy and efficiency are met. In case of any inconsistency between the provisions under
procurement manual and the provisions of the ―Bank‘s Guidelines, SRFP15
and SBDs16
,‖ the
latter shall prevail.
Procurement of Goods, Works and non-consulting services
Methods of Procurement:
ICB contracts, above US $ 200,000 for goods
NCB contracts up to US $ 200,000 for goods
Limited Competitive Bidding/ Shopping, contracts up to US $ 10,000 for goods.
Rate contracts of Director General of Supplies and Disposal (DGS&D) are also
acceptable as one of the quotations for shopping procedures.
Proprietary items, such as spare parts, and software, up to US $ 5,000 equivalent per
contract meeting requirements stated in paragraph 3.6 of the Bank‘s Procurement
Guidelines and petty items costing up to US $ 500 per contract may be procured
through Direct Contracting.
Prior Review Threshold. The Table below lays down the threshold values above which
the procurement process will be subject to Prior Review by the Bank in accordance with
Appendix 1 to the Procurement Guidelines.
Table 8: Prior Review Threshold for Procurement of Goods Procurement Method Prior Review Threshold
ICB (Goods) All contracts irrespective of value
NCB (Goods) US $ 200,000 and first 2 contracts of
each agency, irrespective of estimated
cost. For all subsequent NCB
procurement, the IA will use the bidding
documents as cleared with the Bank
under first 2 prior review cases.
Shopping First 2 Contracts from all the
implementing agencies
Direct Contracting All contracts above US $ 100 each
15
Standard Request for Proposals 16
Standard Bidding Documents
58
Selection of Consultants
23. Methods of Procurement: The following methods of selection will be adopted depending
upon size and complexity of assignment, as defined in the Consultant Guidelines:
Procurement Method
A. Firms
(a) Quality and Cost based Selection
(b) Quality-Based Selection
(c) Selection Under a Fixed Budget
(d) Least Cost Selection
(e) Selection Based on Consultant‘s Qualifications
(f) Single Source Selection
B. Individuals
(g) Procedures set forth in paragraphs 5.2 and 5.3 of the Consultant Guidelines for the
Selection of Individual Consultants
(h) Selection of Individual Consultants on sole source basis as per the Procedures set forth in
paragraph 5.4 of Guidelines
24. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated
in Appendix 1 to the Consultancy Guidelines.
Table 9: Prior Review Threshold for Consultant Selection Selection Method Prior Review Threshold
Competitive Methods (Firms) US $ 200,000
Individual Consultants (Competitive Method) US $ 50,000
Single Source (Firms and Individuals) All
25. The Expression of Interest for consultancy services estimated to cost above US$200,000
equivalent per contract for firms shall be advertised in UNDB17
online and dgMarket and other
provisions of paragraph 2.5 of the Consultant Guidelines.
26. Short list of consultants for services, estimated to cost less than US$500,000 equivalent
per contract, may comprise entirely of national consultants in accordance with the provisions of
paragraph 2.7 of the Consultant Guidelines.
27. Post Review: the Bank will conduct post review of the contracts entered into by the
implementing agencies whether at the central, state, or districts levels. The concerned agencies
will be required to make all relevant documentation available to the Bank or its nominated
consultants, as and when required. The post review by the Bank will be conducted either by
Bank staff or by its nominees in accordance with Paragraph 5 of Appendix 1 to the Bank‘s
Procurement Guidelines.
17
United Nations Development Business
59
28. Any Other Special Selection Arrangements: The Bank‘s Guidelines and processes will
be followed for procurements and selections even during preparation phase for being eligible for
retroactive financing as per respective Guidelines. All no objections issued during this phase will
be subject to signing of financing agreement and without any commitment by the Bank.
29. Use of e-Procurement for IDA funded procurement, if requested by the Borrower on a
later date, shall be subject to satisfactory completion of assessment and acceptance by the World
Bank.
60
Appendix-A
Procurement Plan
I GENERAL
1. PROJECT INFORMATION
Country
India
Borrower Government of India
Project Name Capacity Building for Urban Development
Project
Credit No. TBA
Project Implementing
Agencies
i. Ministry of Urban Development
(MOUD)
ii. Ministry of Housing and Urban
Poverty Alleviation (MHUPA)
These agencies will be assisted by the
Project Management Unit
2. BANK’S APPROVAL DATE OF THE PROCUREMENT PLAN
Original : June 03, 2011
3. Date of General Procurement Notice: 30th September 2007 in UNDB issue no 711
4. Period covered by this procurement plan: Covers period of first 18 months.
Procurement plan will be reviewed annually or as required for necessary modifications
as the project progresses.
5. Guidelines: Procurement will be carried out in accordance with the World Bank‘s
"Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004,
revised October, 2006 and May 1, 2010 (Procurement Guidelines); and "Guidelines:
Selection and Employment of Consultants by World Bank Borrowers" dated May 2004,
revised October 2006 and May 01, 2010 (Consultant Guidelines).
This being a Technical Assistance project the procurement is limited to consulting services and
goods. No procurement of works is envisaged under the project.
II. Goods and non-consulting services.
1. Prior Review Threshold: Procurement Decisions subject to Prior Review by the Bank
as stated in Appendix 1 to the Guidelines for Procurement:
61
Procurement
Method
Prior Review
Threshold
Remarks
1. Goods US $ 200,000 All ICB Contracts
subject to prior
review irrespective
of value. The first 2
contracts of any
method (NCB/
Shopping) from each
of the agencies/ULB
irrespective of value.
2. Shopping First 2 Contracts from
each of the agencies
3. Direct Contracting First 2 contracts and all
contracts above US$
100
Shopping (Goods): Applicable for items costing less than US $ 10,000 per contract after
the proposal for procurements of goods and non-consultancy services under this method
will be reviewed and agreed with the Bank.
Direct Contracting: This method will be followed by the Project after the proposal for
procurements of goods and non-consultancy services under this method supported by
adequate justification by the implementing agencies/ULB has been reviewed and agreed
with the Bank.
2. Prequalification. NOT APPLICABLE
3. Reference to (if any) Project Operational/Procurement Manual: Financial Manual
as agreed with the Bank. The Procurement Manual for the Project is to be received
from Implementing Agencies, reviewed and agreed with the Bank.
4. Any Other Special Procurement Arrangements: [including advance procurement
and retroactive financing, if applicable]
For the Project Management Unit being hired by the implementing agencies the
procurement capacity building measures would be suggested during the
implementation support.
A procurement manual is being developed based on the procurement guidelines of the
Bank for all procurement under the project and formats to guide procurement and
thresholds based methods for goods and services. The manual would describe the
proposed systems along with procurement management and administrative mechanism
as well as SBDs, bidding formats, protocols for planning & scheduling along with an
illustrative list of packages. The procurement manual once furnished to be the Bank
and agreed in consultation with the Bank, its usage of needs to be systematically
62
disseminated up to the all the project implementation agencies level by procurement
capacity building that shall be undertaken by the PMU. The Procurement Manual will
be reviewed by the Bank and ensured that Bank‘s concerns for transparency, fairness,
economy and efficiency are met. In case of any inconsistency between the provisions
under procurement manual and the provisions of the ―Bank‘s Guidelines, SRFP and
SBDs,‖ the latter shall prevail.
The following Special Procurement arrangements will be applicable incase of National
Competitive Bidding (NCB) proposed by the project for any of the goods packages.
Procurement through NCB method shall be carried out in accordance with paragraph 3.3
and 3.4 of the Guidelines and the following provisions shall additionally apply:
i. Only the model bidding documents for NCB agreed with the GOI Task Force
(and as amended from time to time) shall be used for bidding;
ii. Invitations to bid shall be advertised in at least one widely circulated national
daily newspaper, at least 30 days prior to the deadline for the submission of
bids;
iii. No special preference will be accorded to any bidder either for price or for
other terms and conditions when competing with foreign bidders, state-owned
enterprises, small-scale enterprises or enterprises from any given State;
iv. Except with the prior concurrence of the Bank, there shall be no negotiation of
price with the bidders, even with the lowest evaluated bidder;
v. Extension of bid validity shall not be allowed without the prior concurrence of
the Bank (a) for the first request for extension if it is longer than four weeks;
and (b) for all subsequent requests for extension irrespective of the period;
vi. Re-bidding shall not be carried out without the prior concurrence of the Bank.
The system of rejecting bids outside a margin or ―bracket‖ of prices shall not
be used in the project;
vii. Rate contracts entered into by Directorate General of Supplies & Disposals will
not be acceptable as a substitute for NCB procedures. Such contracts will
however be acceptable for any procurement under shopping procedures; and
viii. Two or three envelope system will not be used.
5. Procurement Packages with Methods and Time Schedule: No procurement of works is
envisaged under the project.
III. Selection of Consultants
1. Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated
in Appendix 1 to the Guidelines Selection and Employment of Consultants:
63
Selection Method Prior Review Threshold
Consultancy Services (Firms) For QCBS : US $ 200,000
Consultancy Services
(Individuals)
US $ 50,000
Single Source Selection (SSS)
and Direct Contracting (DC)
All contracts irrespective of value
2. Short list comprising entirely of national consultants: Short list of consultants for
services, estimated to cost less than US $500,000 equivalent per contract, may comprise
entirely of national consultants in accordance with the provisions of paragraph 2.7 of the
Consultant Guidelines.
3. Any Other Special Selection Arrangements: The Expression of Interest for consultancy
services estimated to cost above US$200,000 equivalent per contract for firms shall be
advertised in UNDB online and dg Market and other provisions of paragraph 2.5 of the
Consultant Guidelines.
4. Consultancy Assignments with Selection Methods and Time Schedule
S #
Description of
Assignment
Estimated
Cost
(USD
Millions)
Selectio
n
Method
Review
by
Bank
(Prior /
Post)
Proposals
be
Received
by the
Project
Authoriti
es
(Date)
Comments
1 2 3 4 5 6 7
1 Project Management
Unit for technical and
managerial support
4.0 QCBS Prior
Review
09/06/10
2 Develop comprehensive
M&E system, Poverty
Alleviation Strategies
and Curriculum
2.0 QCBS Prior
Review
01/07/12
3 Challenge Fund
Management and
replication of innovative
practices in urban
poverty alleviation.
1.0 QCBS Post
Review
01/07/12
4 Technical assistance for
the reform of legislative
inclusion of the poor
3.1
QCBS
Prior
Review
01/07/12
5 Technical Assistance to
Resource centers 0.75
QCBS
Post
Review
01/07/12
64
Note: * For the packages proposed by the Project to be selected under QBS, CQS and SSS
methods, the respective implementing agency will provide adequate justification to the
Bank and obtain Bank‘s no-objection on method of selection proposed by them before
proceeding with the selection process.
IV. Implementing Agency Capacity Building Activities with Time Schedule
1. This section will be updated after the PMU is mobilized. The Section will provide
information on capacity building program finalized with the respective implementing
agencies, such as annual calendar for the procurement training/workshop of the
concerned implementing agency officials, ULBs as well as PMU.
No.
Expected outcome /
Activity Description
Estimated
Cost
Estimated
Duration
Start
Date
Comments
65
ANNEX 9: GOVERNANCE AND ACCOUNTABILITY PLAN
INDIA: Capacity Building for Urban Development Project
1. Project Approach. The project aims at improving the framework for urban management
and urban poverty reduction in ULBs. The project is designed as a sector level management
improvement project. The principal sector level risk is reputational, i.e. there may be some
reputational risk for the Bank in seeking to build capacity for a difficult and complex urban
reform agenda. To some degree the demand driven nature of the project addresses this
reputational risk: those ULBs that are most interested in reform will be most interested in
accessing funds under the project. Thus while there is a degree of un-mitigated reputational risk
associated with the project, it is not considered substantial.
2. Project level issues: The GAAP therefore focuses on project level measures to ensure
the effectiveness of capacity building in the targeted ULBs. Most project level risks and
mitigation are addressed in project design, especially in the role of the PMU. The PMU will
assist the Ministries in implementation of the project.
3. Three project design issues affect the achievement of the PDO:
Ensuring that the capacity building that is offered reflects the needs of ULBs and results in
sufficient capacity to effect policy and institutional change. On the supply side, the capacity
building components are aligned with the two sub-missions of JnNURM and the proposed RAY,
thus ensuring consistency with the reforms and institution building that have already been
thoroughly evaluated and agreed in the urban sector. On the demand side, a demand-driven
approach is the basis for participation by ULBs in the project. ULBs themselves have a strong
voice in the effectiveness of the capacity building assistance and tangible ways to measure it
(e.g. accounting system functioning, poverty MIS functioning). To assist in implementation,
JnNURM has assistance and oversight mechanisms (State Level Nodal Agencies). And DFID is
supporting city level resource centers, building on experience gained in India.
Ensuring an appropriate management and accountability structure for the project. The project
is implemented by two Ministries (MOUD and MOHUPA), and thus has some risk of diffused
accountability. To mitigate this, however, the project follows a structure similar to what is
already being implemented under JnNURM, in which the two sponsoring ministries co-chair two
central level committees.
Ensuring support for the Ministries for project implementation. Though accountability is clearly
situated with the respective Ministries. , their capacity for project implementation needs to be
augmented. To mitigate this risk, the Joint Secretaries will be assisted by a PMU, recruited under
Bank procurement procedures and funded from the loan. Risk mitigation depends on two factors:
(i) a high quality PMU that must be contracted; and (ii) effective reporting by the PMU and
control by the respective Joint Secretaries/PDs, embodied in the quarterly work programming
reviews. Both these issues are addressed in the RFP (i.e. required skills, tasks, reporting and
control) for the PMU. Additionally the PMU will be selected by the time of the project
negotiations, thus minimizing potential delays in effectiveness. Nevertheless while the
establishment of the PMU mitigates many important project risks, it also creates others. These
are discussed in the table below
66
4. Detailed risks are described below.
Risk Description Mitigation Steps Responsibility Timeline/Status
FM
Weak capacity of ULBs No FM done by ULBs.
Government selects
PMU in accordance
with Bank procurement
guidelines. RFP
identifies required FM
skills and capacity in
PMU. TOR of PMU
explicitly describe FM
role.
MOUD/MOHUPA
Prior to negotiations
67
Procurement
Weak procurement
capacity of ULBs,
leading to potential for
corruption or collusion
in bids, low
transparency in
procurement decision
making,
No procurement done
by ULBs.
Government selects
PMU in accordance
with Bank procurement
guidelines. RFP
identifies required
procurement skills and
capacity in PMU.
Assistance provided by
PMU for Ministries to
carry out procurement
in accordance with
World Bank guidelines.
PMU maintains a
project website
describing contract
opportunities and bid
documents, results of
EOI/RFP
Compliance with RTI.
Enhanced post reviews
by Bank supervision
missions.
MOUD/MOHUPA
Bank
Prior to negotiations
Quarterly work
programming reports to
Joint Secretaries.
Quarterly work
programming reports to
Joint Secretaries.
Bank supervision
missions
Limited number of
bidders.
Contracts will be
grouped to reach a size
that is more desirable to
potential bidders.
PMU assists respective
Ministries in
procurement process
and maintains a
contracts database and
project website.
MOUD/MOHUPA Quarterly work
programming reports to
Joint Secretaries
Poor contract
management leads to
payment for sub-
standard work
PMU assists respective
Ministries in
procurement process
and maintains a
contracts database and
website.
MOUD/MOHUPA Quarterly work
programming reports to
Joint Secretaries
68
Implementation
MOUD and MOHUPA
need implementation
support.
Day to day
implementation support
vested in PMU
Joint Secretaries Quarterly work
programming reports to
Joint Secretaries.
Challenge Fund is an
untested pilot in India.
There is substantial
international experience
that has been
incorporated in the
design.
Operating Manual will
be developed
MOHUPA Joint
Secretary (RAY)
Three awards are planned
during the five year
implementation of the
project
Ready by effectiveness
Improprieties in
selection of Challenge
Fund winners.
Administrator of the
Challenge Fund
operates according to
pre-determined
procedures described in
Operations Manual.
Winners are selected by
MOHUPA based on
ranking of a panel of
national and
international experts
that is convened by
MOHUPA.
MOHUPA Joint
Secretary (RAY)
Three awards are planned
during the five year
implementation of the
project.
Poor performance in
PMU hampers the
achievement of PDO
PMU submits quarterly
work program to
Mission Directors
Joint Secretaries Quarterly work
programming reports to
Joint Secretaries
Poor quality of capacity
building
Regular independent
review of capacity
building activities
MOUD/MOHUPA Mid-term review year
Periodic workshops
where beneficiaries can
share experiences
Training and capacity
building does not have
the intended impact – it
is not properly
―institutionalized‖
Training designed as a
process with follow-up
training and hand-
holding
User surveys
/beneficiary assessment
conducted to confirm
improvement in service
delivery
MOUD/MOHUPA
At least one survey per
year
Delays in project
implementation due to
complex institutional
and procedural
arrangements
Regular independent
review of project
implementation
experience and follow-
up workshop to adjust
existing processes
Definition of service
standards for approval
processes
MOUD/MOHUPA Annual review
Service standards are
defined before
effectiveness
Non transparent
decision making and
project implementation
Public disclosure on all
key project activities
(e.g. TOR, bids, audits,
reports) on a website
MOUD/MOHUPA
Website operational by
effectiveness
69
Establishment of a
complaints mechanism
in collaboration with
existing institutions of
accountability
Complaints mechanism
operational by
effectiveness
Lack of sufficient
participation users in the
design and
implementation of
capacity building
activities
Assistance to interested
ULBs in needs
assessments and priority
setting.
MOUD/MOHUPA Quarterly work program
reports to Joint
Secretaries
Disclosure policy. As a TA project, disclosure issues mainly revolve around (i) the award of
contracts; (ii) complaints associated with the award of contracts; and (ii) progress in building
capacity in the areas identified in the two main project components (see above). The PMU is
charged with maintaining a database and developing a website for this purpose. The Challenge
Fund represents a special case. Its success will depend on broad participation from ULBs, thus
implying that its rules, procedures, and benefits are widely disclosed. The awards process under
the Challenge Fund will similarly be tracked via a website and will be judged by a panel of
national and international experts.
70
Annex 10: Economic and Financial Analysis
INDIA: Capacity Building for Urban Development Project
No technical or financial analysis of the project has been undertaken.
71
Annex 11: Safeguard Policy Issues
INDIA: Capacity Building for Urban Development Project
Safeguard Policies Triggered Yes No TBD
Environmental Assessment (OP/BP 4.01) X
The activities envisaged in the project are not likely to cause any significant environmental impacts.
Natural Habitats (OP/BP 4.04) X
Forests (OP/BP 4.36) X
Pest Management (OP 4.09) X
Physical Cultural Resources (OP/BP 4.11) X
Indigenous Peoples (OP/BP 4.10) x
Involuntary Resettlement (OP/BP 4.12) X
Safety of Dams (OP/BP 4.37) X
Projects on International Waterways (OP/BP 7.50) X
Projects in Disputed Areas (OP/BP 7.60) X
Environmental Category: C
1. The project is categorized as a Category C project from the Environmental Assessment
point of view and it is unlikely that any of the Environmental or Social safeguards are triggered.
72
Annex 12: Project Preparation and Supervision
INDIA: Capacity Building for Urban Development Project
Planned Actual
PCN review 12/14/2006 12/14/2006
Initial PID to PIC 01/30/2007
Initial ISDS to PIC 02/08/2007
Appraisal 02/12/2009 02/19/2009
Negotiations 03/16/2011 05/31/2011
Board/RVP approval 07/21/2011
Planned date of effectiveness 10/01/2011
Planned date of mid-term review 03/15/2014
Planned closing date 06/30/2016
Key institutions responsible for preparation of the project:
DEA, (Banking and Financial Sector Division), MOF GOI
Ministry of Urban Development
Ministry of Housing and Urban Poverty Alleviation
Bank staff and consultants who worked on the project included:
Project Team
Songsu Choi TTL & Lead Urban Economist Barjor Mehta Sr. Urban Specialist
Richard Clifford Consultant & Ex-TTL Arun Srivastav Consultant
Raghu Kesavan Sr. Infra. Finance Specialist Anand K. Srivastava Procurement Specialist
Carolina Sanchez
Paramo
Senior Economist N.V.V. Raghava Sr. Municipal Engineer
Puja Vasudeva Dutta Social Protection Economist Aashish Mishra Research Analyst
Chris Heymans Senior Municipal Development
Specialist, WSP – SA
Asha Bhagat Consultant
Shruti Garga E. T. Consultant Sonia Chand Sandhu Senior Env. Specialist
Priya Goel Senior FM Specialist Mary Ellen Hammond Junior Professional
Associate
Shonali Sen E. T. Consultant Meera Chatterjee Sr. Social Dev. Specialist
Ashish Bhateja Senior Procurement Specialist Ellen Hamilton Sr. Urban Planner & Peer
Reviewer
S. Krishnamurthy FM Specialist Nabaroon
Bhattacharjee
Sr. WS Specialist & Peer
Reviewer
Satya Mishra Social Development Specialist Mamata Baruah Program Assistant
Abha Joshi Ghani Sector Manager FEUUR Michelle Lisa Chen Program Assistant
Vasudha Sarda
Thawakar
Research Analyst
Bank funds expended to date on project preparation:
1. Bank resources: US$ 949,754
2. Trust funds: US$ 621,226
3. Total: US$1,570,980
Estimated Approval and Supervision costs:
1. Remaining costs to approval: US$ 50,000
2. Estimated annual supervision cost: US$ 100,000
73
Annex 13: Documents in the Project File
INDIA: Capacity Building for Urban Development Project
1. FM Needs Assessment Reports: Pune, Latur, Vadodara, Jaipur, Guwahati, Chennai,
Ajmer, Agra, Nanded.
2. Concept and design of Challenge Fund
3. Study tours on slum upgrading: (i) Brazil; and (ii) Peru, Colombia; May 2009 and follow
up conference in Mumbai June 2009
4. International Workshop on ―Scaling-up Upgrading and Affordable Housing: from
National Policies to State Programs and City-wide Slum Free Interventions‖, January 2010,
Udaipur, Rajasthan
5. International Workshop on Capacity Building for Inclusive Urban Development:
Challenges and Way Forward, April 2011, New Delhi
74
Annex 14: Statements of Loans and Credits
INDIA: Capacity Building for Urban Development Project
Original Amount in US$ Millions
Difference between
expected and actual
disbursements
Project ID
FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev‘d
P102624 2011 IN:Kerala Local Govt. & Service Delivery
0.00 200.00 0.00 0.00 0.00 202.36 0.00 0.00
P102329 2011 IN: Rajasthan Rural Livelihoods Project
0.00 162.70 0.00 0.00 0.00 169.00 0.00 0.00
P107649 2011 IN:Karnataka State Highway Improv
Pro II
350.00 0.00 0.00 0.00 0.00 350.00 0.00 0.00
P114338 2011 IN: Eastern Dedicated Freight Corridor-I
975.00 0.00 0.00 0.00 0.00 975.00 0.00 0.00
P088520 2011 IN: Biodiver Cons & Rural Livelihood 0.00 15.36 0.00 0.00 0.00 15.58 0.00 0.00
P119085 2011 IN: National Ganga River Basin Project
801.00 199.00 0.00 0.00 0.00 997.93 0.00 0.00
P108258 2011 IN: E-Delivery of Public Services 150.00 0.00 0.00 0.00 0.00 150.00 0.00 0.00
P120836 2011 IN: Maharashtra Agric.
Competitiveness
0.00 100.00 0.00 0.00 0.00 99.16 -4.66 0.00
P121515 2011 IN: NHAI Technical Assistance Project
45.00 0.00 0.00 0.00 0.00 40.39 -4.50 0.00
P122096 2011 IN: Bihar Kosi Flood Recovery Project
0.00 220.00 0.00 0.00 0.00 216.15 1.33 0.00
P124639 2011 IN: PMGSY Rural Roads Project 500.00 1,000.00 0.00 0.00 0.00 1,360.61 -150.00 0.00
P110051 2010 IN: Haryana Power System Improv
Project
330.00 0.00 0.00 0.00 0.00 233.71 105.55 -95.47
P110371 2010 IN: Sustainable Urban Transport Project
105.23 0.00 0.00 0.00 0.00 97.44 34.56 0.00
P089985 2010 IN: Dam Rehabilitation & Improvement
175.00 175.00 0.00 0.00 0.00 345.97 8.00 0.00
P091031 2010 IN: CBldg for Indus Poll Mgt 25.21 38.94 0.00 0.00 0.00 60.63 -3.62 0.00
P092217 2010 IN:National Cyclone Risk Mitigation
Proj
0.00 255.00 0.00 0.00 0.00 262.20 -0.31 0.00
P105990 2010 IN: West Bengal PRI 0.00 200.00 0.00 0.00 0.00 187.52 -15.85 0.00
P101650 2010 IN: A. P. RWSS 0.00 150.00 0.00 0.00 0.00 132.09 10.00 0.00
P096021 2010 IN: AP Road Sector Project 320.00 0.00 0.00 0.00 0.00 296.00 36.13 0.00
P097985 2010 IN: Integrated Coastal Zone Mgmt Project
0.00 221.97 0.00 0.00 0.00 222.35 11.01 -6.58
P100954 2010 IN: AP Water Sector Improvement Proj
450.60 0.00 0.00 0.00 0.00 407.26 -25.54 0.00
P119043 2010 IN: Microf-Scaling Up Sustnble &
Resp
200.00 100.00 0.00 0.00 0.00 205.44 -40.29 0.00
P071250 2010 IN: Andhra Pradesh Municipal
Development
300.00 0.00 0.00 0.00 0.00 277.90 -2.02 0.00
P102771 2010 IN: IIFCL - India Infras Finance Co Ltd
1,195.00 0.00 0.00 0.00 0.00 1,175.44 419.47 0.00
P115566 2010 IN: POWERGRID V 1,000.00 0.00 0.00 0.00 0.00 934.13 79.47 0.00
P113028 2010 IN: Mumbai Urban Transport Project-2A
430.00 0.00 0.00 0.00 0.00 428.49 -0.43 0.00
P102549 2010 IN: Tech Engr Educ Qual Improvement II
0.00 300.00 0.00 0.00 0.00 280.04 2.20 0.00
P100101 2009 IN: Coal-Fired Generation
Rehabilitation
180.00 0.00 0.00 0.00 0.00 179.55 45.50 0.00
75
P096023 2009 IN: Orissa State Roads 250.00 0.00 0.00 0.00 0.00 229.93 56.39 0.00
P112033 2009 IN: UP Sodic III 0.00 197.00 0.00 0.00 0.00 180.67 -7.84 0.00
P102331 2009 IN: MPDPIP-II 0.00 100.00 0.00 0.00 0.00 86.29 27.07 0.00
P093478 2009 IN: Orissa Rural Livelihoods Project 0.00 82.40 0.00 0.00 0.00 75.16 17.39 0.00
P100735 2009 IN:Orissa Community Tank Management Proj
56.00 56.00 0.00 0.00 35.06 70.04 15.03 0.00
P094360 2009 IN: Ntnl VBD Control&Polio Eradication
0.00 521.00 0.00 0.00 0.00 407.24 197.68 0.00
P102547 2008 IN: Elementary Education (SSA II) 0.00 1,350.00 0.00 0.00 0.00 510.55 -243.64 152.14
P101653 2008 IN: Power System Development
Project IV
1,000.00 0.00 0.00 0.00 0.00 237.35 -196.57 125.60
P095114 2008 IN: Rampur Hydropower Project 400.00 0.00 0.00 0.00 0.00 223.79 87.29 0.00
P102768 2007 IN: Stren India's Rural Credit Coops 300.00 300.00 0.00 0.00 0.00 220.18 183.04 0.00
P100789 2007 IN: AP Community Tank Management Proj
94.50 94.50 0.00 0.00 0.00 144.95 88.99 0.00
P071160 2007 IN: Karnataka Health Systems 0.00 141.83 0.00 0.00 0.00 41.23 5.46 0.00
P075060 2007 IN: RCH II 0.00 360.00 0.00 0.00 0.00 180.54 158.02 0.00
P078538 2007 IN: Third National HIV/AIDS Control Proj
0.00 250.00 0.00 0.00 0.07 122.21 107.77 0.00
P078539 2007 IN: TB II 0.00 170.00 0.00 0.00 0.00 53.68 0.06 0.00
P083187 2007 IN: Uttaranchal RWSS 0.00 120.00 0.00 0.00 0.00 70.58 53.82 41.82
P090585 2007 IN: Punjab State Roads Project 250.00 0.00 0.00 0.00 0.00 115.62 63.80 0.00
P090592 2007 IN: Punjab Rural Water
Supply&Sanitation
0.00 154.00 0.00 0.00 0.23 117.47 98.53 -3.47
P090764 2007 IN: Bihar Rural Livelihoods Project 0.00 63.00 0.00 0.00 0.00 25.48 -31.51 4.51
P090768 2007 IN: TN IAM WARM 335.00 150.00 0.00 0.00 0.00 312.84 179.54 0.00
P096019 2007 IN: HP State Roads Project 220.00 0.00 0.00 0.00 0.00 145.57 75.12 0.00
P099047 2007 IN: Vocational Training 0.00 280.00 0.00 0.00 0.00 145.68 27.84 0.00
P078832 2006 IN: Karnataka Panchayats Strengthening
0.00 120.00 0.00 0.00 0.00 35.93 -43.07 0.00
P079675 2006 IN: Karn Municipal Reform 216.00 0.00 0.00 0.00 0.00 145.25 141.59 0.00
P079708 2006 IN: TN Empwr & Pov Reduction 0.00 274.00 0.00 0.00 0.00 163.96 -4.22 0.00
P083780 2006 IN: TN Urban III 300.00 0.00 0.00 0.00 0.64 110.60 111.24 33.98
P086414 2006 IN: Power System Development
Project III
400.00 0.00 0.00 0.00 0.00 1.40 1.40 0.00
P093720 2006 IN: Mid-Himalayan (HP) Watersheds 0.00 60.00 0.00 0.00 0.00 14.83 6.21 0.00
P092735 2006 IN: NAIP 0.00 200.00 0.00 0.00 0.00 97.56 40.58 7.54
P084632 2005 IN: Hydrology II 104.98 0.00 0.00 0.00 0.00 64.47 64.47 54.92
P084790 2005 IN: MAHAR WSIP 325.00 0.00 0.00 0.00 0.00 115.47 107.14 0.00
P084792 2005 IN: Assam Agric Competitiveness 0.00 154.00 0.00 0.00 0.00 38.51 29.63 16.35
P094513 2005 IN: Tsunami ERC 0.00 465.00 0.00 0.00 68.99 264.88 316.41 127.77
P086518 2005 IN: SME Financing & Development 520.00 0.00 0.00 0.00 0.00 128.39 -270.61 109.39
P073370 2005 IN: Madhya Pradesh Water Sector Restruct
394.02 0.00 0.00 0.00 6.62 221.32 227.94 0.00
P073651 2005 IN: Disease Surveillance 0.00 68.00 0.00 0.00 8.31 39.22 42.01 7.88
P077977 2005 IN: Rural Roads Project 99.50 300.00 0.00 0.00 0.00 9.17 0.62 0.00
P077856 2005 IN: Lucknow-Muzaffarpur National Highway
620.00 0.00 0.00 0.00 0.00 18.37 18.37 0.00
P075058 2005 IN: TN Health Systems 0.00 228.53 0.00 0.00 20.06 103.93 -3.04 -9.48
P050655 2004 IN: Rajasthan Health Systems Dev 0.00 89.00 0.00 0.00 0.00 21.01 15.63 5.81
P078550 2004 IN: Uttar Wtrshed 0.00 77.60 0.00 0.00 0.00 14.05 -3.71 0.00
P050649 2003 IN: TN ROADS 398.70 0.00 0.00 0.00 0.00 26.57 -24.00 0.00
P071272 2003 AP RURAL POV REDUCTION 0.00 315.03 0.00 0.00 0.00 48.78 -136.28 33.35
76
P071033 2002 IN: KARN Tank Mgmt 32.00 130.90 0.00 0.00 25.07 95.42 32.96 22.08
P040610 2002 IN: RAJ WSRP 0.00 159.00 0.00 0.00 25.84 49.37 16.37 -15.03
P050668 2002 IN: MUMBAI URBAN TRANSPORT PROJECT
463.00 79.00 0.00 0.00 9.88 107.06 103.69 116.69
P050653 2002 IN: KARNATAKA RWSS II 0.00 301.60 0.00 0.00 16.40 149.64 -18.90 1.00
P050647 2002 IN: UP WSRP 0.00 149.20 0.00 0.00 40.11 22.31 33.30 -11.96
Total: 14,310.74 10,898.56 0.00 0.00 257.28 16,126.86 2,275.01 718.84
INDIA
STATEMENT OF IFC‘s
Held and Disbursed Portfolio
In Millions of US Dollars
Committed Disbursed
IFC IFC
FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic.
2005 ADPCL 39.50 7.00 0.00 0.00 0.00 0.00 0.00 0.00
2006 AHEL 0.00 5.08 0.00 0.00 0.00 5.08 0.00 0.00
2005 AP Paper Mills 35.00 5.00 0.00 0.00 25.00 5.00 0.00 0.00
2005 APIDC Biotech 0.00 4.00 0.00 0.00 0.00 2.01 0.00 0.00
2002 ATL 13.81 0.00 0.00 9.36 13.81 0.00 0.00 9.36
2003 ATL 1.00 0.00 0.00 0.00 0.68 0.00 0.00 0.00
2005 ATL 9.39 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2006 Atul Ltd 16.77 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2003 BHF 10.30 0.00 10.30 0.00 10.30 0.00 10.30 0.00
2004 BILT 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00
2001 BTVL 0.43 3.98 0.00 0.00 0.43 3.98 0.00 0.00
2003 Balrampur 10.52 0.00 0.00 0.00 10.52 0.00 0.00 0.00
2001 Basix Ltd. 0.00 0.98 0.00 0.00 0.00 0.98 0.00 0.00
2005 Bharat Biotech 0.00 0.00 4.50 0.00 0.00 0.00 3.30 0.00
1984 Bihar Sponge 5.70 0.00 0.00 0.00 5.70 0.00 0.00 0.00
2003 CCIL 1.50 0.00 0.00 0.00 0.59 0.00 0.00 0.00
2006 CCIL 7.00 2.00 0.00 12.40 7.00 2.00 0.00 12.40
1990 CESC 4.61 0.00 0.00 0.00 4.61 0.00 0.00 0.00
1992 CESC 6.55 0.00 0.00 14.59 6.55 0.00 0.00 14.59
2004 CGL 14.38 0.00 0.00 0.00 7.38 0.00 0.00 0.00
2004 CMScomputers 0.00 10.00 2.50 0.00 0.00 0.00 0.00 0.00
2002 COSMO 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00
2005 COSMO 0.00 3.73 0.00 0.00 0.00 3.73 0.00 0.00
2006 Chennai Water 24.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2003 DQEL 0.00 1.50 1.50 0.00 0.00 1.50 1.50 0.00
2005 DSCL 30.00 0.00 0.00 0.00 30.00 0.00 0.00 0.00
2006 DSCL 15.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2005 Dabur 0.00 14.09 0.00 0.00 0.00 14.09 0.00 0.00
2003 Dewan 8.68 0.00 0.00 0.00 8.68 0.00 0.00 0.00
2006 Federal Bank 0.00 28.06 0.00 0.00 0.00 23.99 0.00 0.00
2001 GTF Fact 0.00 1.20 0.00 0.00 0.00 1.20 0.00 0.00
2006 GTF Fact 0.00 0.00 0.99 0.00 0.00 0.00 0.99 0.00
77
1994 GVK 0.00 4.83 0.00 0.00 0.00 4.83 0.00 0.00
2003 HDFC 100.00 0.00 0.00 100.00 100.00 0.00 0.00 100.00
1998 IAAF 0.00 0.47 0.00 0.00 0.00 0.30 0.00 0.00
2006 IAL 0.00 9.79 0.00 0.00 0.00 7.70 0.00 0.00
1998 IDFC 0.00 10.82 0.00 0.00 0.00 10.82 0.00 0.00
2005 IDFC 50.00 0.00 0.00 100.00 50.00 0.00 0.00 100.00
IHDC 6.94 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2006 IHDC 7.90 0.00 0.00 0.00 0.00 0.00 0.00 0.00
2006 Indecomm 0.00 2.57 0.00 0.00 0.00 2.57 0.00 0.00
1996 India Direct Fnd 0.00 1.10 0.00 0.00 0.00 0.66 0.00 0.00
2001 Indian Seamless 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00
2006 JK Paper 15.00 7.62 0.00 0.00 0.00 7.38 0.00 0.00
2005 K Mahindra INDIA 22.00 0.00 0.00 0.00 22.00 0.00 0.00 0.00
2005 KPIT 11.00 2.50 0.00 0.00 8.00 2.50 0.00 0.00
2003 L&T 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00
2006 LGB 14.21 4.82 0.00 0.00 0.00 4.82 0.00 0.00
2006 Lok Fund 0.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00
2002 MMFSL 7.89 0.00 7.51 0.00 7.89 0.00 7.51 0.00
2003 MSSL 0.00 2.29 0.00 0.00 0.00 2.20 0.00 0.00
2001 MahInfra 0.00 10.00 0.00 0.00 0.00 0.79 0.00 0.00
Montalvo 0.00 3.00 0.00 0.00 0.00 1.08 0.00 0.00
1996 Moser Baer 0.00 0.82 0.00 0.00 0.00 0.82 0.00 0.00
1999 Moser Baer 0.00 8.74 0.00 0.00 0.00 8.74 0.00 0.00
2000 Moser Baer 12.75 10.54 0.00 0.00 12.75 10.54 0.00 0.00
Nevis 0.00 4.00 0.00 0.00 0.00 4.00 0.00 0.00
2003 NewPath 0.00 9.31 0.00 0.00 0.00 8.31 0.00 0.00
2004 NewPath 0.00 2.79 0.00 0.00 0.00 2.49 0.00 0.00
2003 Niko Resources 24.44 0.00 0.00 0.00 24.44 0.00 0.00 0.00
2001 Orchid 0.00 0.73 0.00 0.00 0.00 0.73 0.00 0.00
1997 Owens Corning 5.92 0.00 0.00 0.00 5.92 0.00 0.00 0.00
2006 PSL Limited 15.00 4.74 0.00 0.00 0.00 4.54 0.00 0.00
2004 Powerlinks 72.98 0.00 0.00 0.00 64.16 0.00 0.00 0.00
2004 RAK India 20.00 0.00 0.00 0.00 20.00 0.00 0.00 0.00
1995 Rain Calcining 0.00 2.29 0.00 0.00 0.00 2.29 0.00 0.00
2004 Rain Calcining 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00
2005 Ramky 3.74 10.28 0.00 0.00 0.00 0.00 0.00 0.00
2005 Ruchi Soya 0.00 9.27 0.00 0.00 0.00 6.77 0.00 0.00
2001 SBI 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1997 SREI 3.21 0.00 0.00 0.00 3.21 0.00 0.00 0.00
2000 SREI 6.50 0.00 0.00 0.00 6.50 0.00 0.00 0.00
1995 Sara Fund 0.00 3.43 0.00 0.00 0.00 3.43 0.00 0.00
2004 SeaLion 4.40 0.00 0.00 0.00 4.40 0.00 0.00 0.00
2001 Spryance 0.00 1.86 0.00 0.00 0.00 1.86 0.00 0.00
2003 Spryance 0.00 0.93 0.00 0.00 0.00 0.93 0.00 0.00
2004 Sundaram Finance 42.93 0.00 0.00 0.00 42.93 0.00 0.00 0.00
2000 Sundaram Home 0.00 2.18 0.00 0.00 0.00 2.18 0.00 0.00
2002 Sundaram Home 6.71 0.00 0.00 0.00 6.71 0.00 0.00 0.00
1998 TCW/ICICI 0.00 0.80 0.00 0.00 0.00 0.80 0.00 0.00
2005 TISCO 100.00 0.00 0.00 300.00 0.00 0.00 0.00 0.00
2004 UPL 15.45 0.00 0.00 0.00 15.45 0.00 0.00 0.00
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1996 United Riceland 5.63 0.00 0.00 0.00 5.63 0.00 0.00 0.00
2005 United Riceland 8.50 0.00 0.00 0.00 5.00 0.00 0.00 0.00
2002 Usha Martin 0.00 0.72 0.00 0.00 0.00 0.72 0.00 0.00
2001 Vysya Bank 0.00 3.66 0.00 0.00 0.00 3.66 0.00 0.00
2005 Vysya Bank 0.00 3.51 0.00 0.00 0.00 3.51 0.00 0.00
1997 WIV 0.00 0.37 0.00 0.00 0.00 0.37 0.00 0.00
1997 Walden-Mgt India 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00
2006 iLabs Fund II 0.00 20.00 0.00 0.00 0.00 0.00 0.00 0.00
Total portfolio: 956.52 249.41 42.30 536.35 604.74 175.91 38.60 236.35
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic.
2004 CGL 0.01 0.00 0.00 0.00
2000 APCL 0.01 0.00 0.00 0.00
2006 Atul Ltd 0.00 0.01 0.00 0.00
2001 Vysya Bank 0.00 0.00 0.00 0.00
2006 Federal Bank 0.01 0.00 0.00 0.00
2001 GI Wind Farms 0.01 0.00 0.00 0.00
2004 Ocean Sparkle 0.00 0.00 0.00 0.00
2005 Allain Duhangan 0.00 0.00 0.00 0.00
Total pending commitment: 0.04 0.01 0.00 0.00
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Annex 15: Country at a Glance
INDIA: Capacity Building for Urban Development Project
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