Document of

The World Bank

Report No: 22169-IN

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$589 MILLION EQUIVALENT

TO THE

GOVERNMENT OF INDIA

FOR THE

GRAND TRUNK ROAD IMPROVEMENT PROJECT

May 30, 2001

Infrastructure Sector UnitSouth Asia Regional Office

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CURRENCY EQUIVALENTS

(Exchange Rate Effective January 18, 2001)

Currency Unit = Indian Rupees (INR)INR 1.00 = US$0.022

US$1 = INR 45.42

FISCAL YEARApril 1 -- March 31

ABBREVIATIONS AND ACRONYMS

AADT - Annual Average Daily Traffic MOST - Ministry of Surface TransportADB - Asian Development Bank NCB - National Competitive BiddingAIDS - Acquired Immune Deficiency Syndrome NGO - Non governmental organizationAPL - Adaptable Program Loan NHAI - National Highways Authority of IndiaBOT - Build-Operate-Transfer NHDP - National Highway DevelopmentC&AG - Controller & Auditor General of India ProgramCAS - Country Assistance Strategy NPV - Net Present ValueCBO - Community Based Organization O&M - Operation and MaintenanceCMU - Corridor Management Unit OD - Operational DirectiveEA - Environmental Assessment PFMS - Project Financial ManagementEMP - Environmental Management Plan SystemsERR - Economic Rate of Retum PIC - Project Information CenterESMU - Environment & Social Management Unit PMR - Project Management ReportGOI - Government of India PMU - Project Management UnitGTRIP - Grand Trunk Road Improvement Project PPP - Public-Private PartnershipHDM-III- Highway Design and Maintenance PSD - Private Sector Development

Standards Model - Version III PWD - Public Works DepartmentsHIV - Human Immunodeficiency Virus RAP - Resettlement Action PlanHO - Head Office R&R - Resettlement and RehabilitationJBIC - Japanese Bank for International ROW - Right-of-Way

Cooperation SC - Supervision ConsultantsICB - International Competitive Bidding SIL - Specific Investment LoanICR - Implementation Completion Report SOE - Statement of ExpenditureIL&FS - Infrastructure Leasing & Financial TN\HP - Third National Highway Project

Services TTZ - The Taj Trapezium ZoneMOEF - Ministry of Environment & Forestry UP - Uttar PradeshMORTH- Ministry of Road Transport & Highways WTCP - Western Transport Corridor Project

Vice President: Mieko NishimizuCountry Manager/Director: Edwin R. Lim

Sector Manager/Director: Vincent GouarneTask Team Leader/Task Manager: Zhi Liu

INDIAGRAND TRUNK ROAD IMPROVEMENT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 2

2. Key performance indicators 2

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 22. Main sector issues and Government strategy 23. Sector issues to be addressed by the project and strategic choices 5

C. Project Description Summary

1. Project components 62. Key policy and institutional reforms supported by the project 93. Benefits and target population 104. Institutional and implementation arrangements 10

D. Project Rationale

1. Project alternatives considered and reasons for rejection 112. Major related projects financed by the Bank and other development agencies 123. Lessons learned and reflected in proposed project design 144. Indications of borrower conmnitment and ownership 145. Value added of Bank support in this project 15

E. Summary Project Analysis

1. Economic 152. Financial 163. Technical 174. Institutional 175. Environmental I86. Social 227. Safeguard Policies 27

F. Sustainability and Risks

1. Sustainability 272. Critical risks 283. Possible controversial aspects 28

G. Main Loan Conditions

1. Effectiveness Condition 292. Other 29

H. Readiness for Implementation 29

I. Compliance with Bank Policies 30

Annexes

Annex 1: Project Design Summary 31Annex 2: Detailed Project Description 35Annex 3: Estimated Project Costs 38Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 39Annex 5: Financial Summary for Revenue-Eaming Project Entities, or 44

Financial SummaryAnnex 6: Procurement and Disbursement Arrangements 45Annex 7: Project Processing Schedule 59Annex 8: Documents in the Project File 60Annex 9: Statement of Loans and Credits 62Annex 10: Country at a Glance 66Annex 11: Environment & Social Assessment, EMP, and RAP 68

MAP(S)IBRD 31387

INDIA

Grand Trunk Road Improvement Project

Project Appraisal Document

South Asia Regional OfficeSASIN

Date: May 30, 2001 Team Leader: Zhi LiuCountry Manager/Director: Edwin Lim Sector Manager/Director: Vincent GouameProject ID: P071244 Sector(s): BI - Institutional Development, DV -

Privatization, TH - HighwaysLending Instrument: Specific Investment Loan (SIL) Theme(s): Public Sector; Private Sector; Transport

Poverty Targeted Intervention: N

Program Financing Data[X] Loan [ ] Credit [ Grant [1 Guarantee [] Other:

For Loans/Credits/Others:Amount (US$m): 589.00

Proposed Terms (IBRD): Variable Spread & Rate Single Currency Loan (VSCL)Grace period (years): 5 Years to maturity: 20Commitment fee: 0.75% Front end fee on Bank loan: 1.00%

Financing Plan (US$m): Source Local Foreign TotalBORROWER 161.20 5.80 167.00IBRD 377.60 211.40 589.00

Total: 538.80 217.20 756.00

Borrower: GOVERNMENT OF INDIAResponsible agency: NATIONAL HIGHWAYS AUTHORITY OF INDIANHAIAddress: National Highway Authority of India, 1, Eastem Avenue, Maharani Bagh, New Delhi, 110065Contact Person: Subhash Patel, Chief General Manager (World Bank Projects)Tel: 91-11-682-4974 Fax: 91-11-692-4383 Email: nhai@vcnl.com

Estimated disbursements ( Bank FY/US$m):FY 2002 2003 2004 2005 2006 2007 2008

Annual 88.00 147.00 177.00 118.00 59.00Cumulative 88.00 235.00 412.00 530.00 589.00

Project implementation period: Five yearsExpected effectiveness date: 09/30/2001 Expected closing date: 12/31/2006

00SPAD FaV S Ma . 25

A. Project Development Objective

1. Project development objective: (see Annex 1)

The Bank adopts a programmatic approach to support the Government of India's (GOI) NationalHighway Development Program (NHDP) through a series of loans. The Grand Trunk RoadImprovement Project (GTRIP) is the second project in the series, following the Third NationalHighway Project (TNHP) which was approved by the Board in June 2000 and is underimplementation. Thus the development objectives of the project are consistent with those ofTNHP: (a) to reduce transport constraints on national economic activity; and (b) to improveinstitutional capabilities to manage road programs, assets, and services on a more commercialbasis.

2. Key performance indicators: (see Annex 1)

(a) Vehicle travel time along the entire national highway corridor between Delhi and Calcuttareduced by 25-30% by end of project (EOP); (b) truck operating costs reduced by at least 10% byEOP; (c) incidence of road deaths reduced by 20% on project roads by EOP; and (d) about 1,200km of national highways maintained under contract with private sector and managed by theCorridor Management Units (CMU) by EOP.

B. Strategic Context1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)Document number: R2001-0037/1[IFC/R2001-0037/11 Date of latest CAS discussion: 4/5/2001

The CAS identifies highway infrastructure bottlenecks as one of the major constraints to povertyreduction and private sector-led growth. The GTRIP supports the CAS sector goal of reducinghighway infrastructure bottlenecks. The project is also designed to contribute to the twoimportant areas emphasized by the CAS: (a) improving government capability and effectiveness todeliver core public services that are vital for economic growth and poverty reduction; and (b)enabling the environment for private sector investments in infrastructure. The major projectworks will be implemented in the states of Bihar, Jharkhand, and Uttar Pradesh, which are amongthe less developed states in India. The project is expected to improve the ability of these states toparticipate in the economic development and trade which is taking place to a larger extentelsewhere in India.

2. Main sector issues and Government strategy:

The national highway network has a total length of 57,700 km, which accounts for about 1.7percent of the total road network of 3.3 million km but carries over 40% of the road traffic. Over95% of the national highway network are two-lane roads or narrower, and a significantproportion is in poor surface condition. This results from years of inadequate allocation ofresources to the core highway system and poor management of transport infrastructure by thepublic sector. During the market liberalization in the 1 990s, steady economic growth has drivenup the demand for improved road transport; and traffic on the national highways has been

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growing at about 8-10% per annum. As a result, the trunk national highways are increasinglycongested.

The level of service is further worsened by the mixed traffic of fast and slow vehicles, highlycongested and unsafe urban crossings, and state border inspections/check points (for the purposesof tax collection and commodity permits) that often hold up truck traffic for many hours. It takesfour to five days for a truck to go one way between Delhi and Calcutta (about 1,300 km).Moreover, the poor driving condition in mixed traffic on the two-lane national highways is amajor contributing factor to road traffic accidents. India is among the nations with the highestroad accident rate per vehicle, and 38% of the road accidents occur on national highways. Whereboth vehicle insurance system and health care are less developed, the economic and health impactsof traffic accidents on poor households are especially severe.

Improving the level of service on the national highway corridors requires both capacity investmentand traffic efficiency/safety enhancement. The financial requirements for increasing the trunkhighway capacity through 4-laning, 6-laning, and expressway construction are expected to bebeyond the level that the public sector alone will be able to meet in the near future. However,private sector participation in road financing is just starting, and is facing a number of institutionaland market constraints. For example, institutional capacity needs to be built up for thepreparation, implementation, and monitoring of highway concession projects. The domesticfinancial market is yet to develop appropriate long-term financial instruments needed for privateinvestment in road infrastructure. Few projects are financially viable for a stand-alone privateinvestment, and most projects would require Public-Private Partnership (PPP) to become viable.However, various modalities of PPP are still under development and need to be tested. All theseconstraints must be overcome before private investment can be mobilized to provide significantadditionality to public investment.

National highway development in India is also heavily constrained by the weak institutionalcapacity and lengthy procedures to address project-related environmental and social issues. Whilerelevant laws and government institutions are in place to deal with the issues, technical capabilitiesare inadequate, and coordination is weak among the central and state administrative jurisdictions.Moreover, there is a lack of adequate mechanism for the consultation with and participation of theproject affected people, stakeholders, and non-governmental organizations (NGOs) in theprocess. As many displaced households are of low income, their relocation and rehabilitationneed to be handled more carefully. There is a need for social and environmental capacity buildingto ensure the speedy implementation of the NHDP.

To summarize, the following main issues are recognized in the national highway sector: (a)serious road capacity constraint on the national highway network; (b) worsening road safety amidgrowing motorization; (c) poor management of road infrastructure services by the public sector;(d) weak enabling environment for private sector participation in road financing; and (e) weakinstitutional capacity to address highway project related social and environmental issues.

Government strategy. The GOI recognizes that the poor performance of the national highwaysystem has been a major drag on the growth of national economy and is determined to upgrade

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the system through its NHDP. The program was based on the govemment strategy outlined inthe 1996 India Infrastructure Report. Covering a network of 13,000km, the program includesthe four-laning of a 6,000 km "Golden Quadrilateral" (linking Delhi, Calcutta, Chennai andMumbai), the North-South and East-West corridors, and the trunk roads to key ports. It alsoincludes the planning and construction of expressways where feasible. Total cost for the programis estimated to be US$12 billion over eight years, and funding sources include govemrnment grants,fuel levies, tolls, bonds, private investments, and loans from international development banks,including the on-going TNHP funded by the World Bank. A cess of Rs. 1 per liter on petrol anddiesel was introduced by GOI in 1999, and a substantial portion (about Rs. 2000 crores orequivalent of US$430 million a year) of the cess revenues is earmarked for national highwaydevelopment, maintenance, and operation. Moreover, GOI has made notable efforts to improvethe enabling environment for private sector participation in national highway financing. Theefforts include the development of policy guidelines and a legal framework for private investmentsin national highway projects. The National Highway Act was amended to permit tolls on nationalhighways and to provide financial incentives such as public-private partnership to encourageprivate investments on toll roads. According to the policy guideline, the government may providefinancial support up to 40% of the project cost to enhance the viability of the private investmentprojects, and the amount of support would be determined through competitive bidding. A numberof projects have been identified for private investments through BOT schemes, and concessionshave been signed for nearly 20 bridges and short bypass projects, although these projects aremostly small scale (less than 20 km each).

Institutional reform to improve the effectiveness of public road agencies is also an integral part ofthe government strategy. The Ministry of Road Transport & Highways (MORTH, formerly theMinistry of Surface Transport) had long been responsible for the development and management ofthe national highways. With close oversight, MORTH delegated considerable responsibilities tothe national highway branches in the state Public Works Departments (PWDs). Under theNational Highways Authority of India Act of 1988, GOI established the National HighwaysAuthority of India (NHAI) to take charge of major works programs on the national highwaynetwork. The Act requires NHAI to act on business principles as far as possible in the dischargeof its functions. The agency has maintained a lean organization by outsourcing most of itsactivities to the private sector. It has now assumed full responsibility for the implementation ofNHDP, including the extemally-aided projects financed by the Asian Development Bank (ADB),the Japanese Bank for International Cooperation (JBIC) and the World Bank. As part of thisprogram, NHAI has taken significant steps to develop and strengthen its institutional capacity forthe development, maintenance, and operation of the national highway system in response to theneeds of road users and other stakeholders. The institutional development being undertaken byNHAI is fostering a cultural change in the Indian road sector of viewing roads as a service insteadof merely a physical infrastructure. However, NHAI is still in the early stages of reforms inaccounting policies and strengthening of its financial management systems, in its move towardsbeing an effective agency managing its resources on business principles. In this regard, actionsare being planned to address several policy and process related issues during implementation ofthe GTRIP and the TNHP. NHAI is also a designated implementing agency for the preparatorywork and monitoring the implementation of private investment projects on the national highwaynetwork. Recently the agency has taken responsibility for the maintenance and operation of 6,000

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km Golden Quadrilateral, and is exploring suitable maintenance contracts with the private sector,partly through the implementation of the CMU concept under the TNHP.

3. Sector issues to be addressed by the project and strategic choices:

The GTRIP will help address all five main sector issues discussed above by: (a) adding muchneeded capacity to the heavily congested part of the national highway network; (b) reducing therisks of road accidents and improving traffic efficiency; (c) promoting private sector participationin road financing; and (d) enhancing institutional capacity for the effective delivery andmanagement of national highway assets and services. This broad scope of the project is desireddue to the expected great impact, and also realistic as the project will complement and consolidatethe similar effort being made under the on-going TNHP. TNHP comprises three majorcomponents: (a) upgrading of 475 km national highway; (b) corridor management and road safetyworks; and (c) institutional strengthening and training. It mainly aims to improve NHAI'scapacity in the areas of project implementation, accountability, strategic planning, and assetmanagement. The GTRIP will take a significant step further along the same institutionalstrengthening direction set forth by the TNHP, especially with regard to private sectorparticipation and road safety.

Due to the programmatic approach, the GTRIP broadly follows the strategic choices made underthe TNHP. In addition, a strategic choice is made to support private sector participation in roadfinancing.

Institution choice. The GTRIP fully supports the GOI's strategy of shifting responsibility for theNHDP from MORTH to NHAI. Both the TNHP and GTRIP, as well as ADB's proposedWestern Transport Corridor Project (WTCP), support NHAI's institutional development towardsa non-bureaucratic agency that manages national highways like a business. In addition to theeffort to maintain a lean organization through outsourcing most of its activities to the privatesector, NHAI is exploring various financial sources outside the central government budget, and istaking initial step to include a national highway user group representative as a member of itsBoard. Moreover, NHAI has demonstrated strong commitment through satisfactory progress inthe implementation of the TNHP and the preparation of the GTRIP. The institutionalstrengthening actions to be supported under the GTRIP are defined in close coordination with theTNHP and WTCP under the institutional development strategic framework agreed by NHAI,ADB, and the Bank.

Public or private finance. Private investments in the road sector have so far been very limited, andthere are still many institutional and market constraints to overcome before private sector is ableto play a greater role in road financing. GOI is actively pursuing various options for attractingprivate sector funding. The Bank has been providing assistance in this aspect through anon-going Infrastructure Leasing & Financial Services (IL&FS) Project. NHAI is activelyexploring and experimenting various options to encourage private investments on nationalhighways. Nevertheless, in the short to medium term, before the enabling environment is maturedfor substantial private sector financing, a large part of India's road infrastructure will need to beprovided and managed by the public sector. This project focuses on the urgently needed public

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investments, while supporting NHAI's efforts to promote private sector participation broadly inroad financing, operation and maintenance, construction and engineering services. A privatesector participation component is defined to help NHAI test a modality of PPP through arelatively large pilot BOT project. This pilot project is timely as the private investment in roadinfrastructure needs to be stimulated by successful examples and demonstration of governmentcommitment.

Corridor choice. There is coordination among the World Bank, ADB, and JBIC in terms ofassistance to the improvements of priority corridors in the NHDP. The major works of thisproject and the on-going TNHP are on National Highway 2 (NH-2, also popularly known asGrand Trunk Road) between Delhi and Calcutta. Interventions focusing on one particularnational highway corridor have an advantage for effectively addressing: (a) project relatedenvironmental and social issues; and (b) corridor transport efficiency issues through a combinationof capacity investment, corridor management, and reduction of traffic delays caused by bordercheck posts. Moreover, the project will finance civil works associated with road safety, CorridorManagement Units, and public-private partnership on other selected national highways. Thesecivil works are proposed as part of the support to NHAI's institutional capacity building.

C. Project Description Summary

1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed costbreakdown):

Highway upgrading: The national highway sections proposed for upgrading under the GTRIP,totaling 420 kin, are all located along the 1,000 km of NH-2 from Agra in Uttar Pradesh (UP) toBarwa Adda in Jharkhand. The entire stretch is divided into 16 construction sections. Eightsections were chosen for financing under the TNHP on the basis of implementation readiness.The sections proposed by NHAI for financing under the GTRIP are all remaining sections exceptone (Allahabad section) which will be considered for financing under the Bank's next nationalhighway project. The upgrading works mainly involve the widening of existing two lanes to a4-lane divided carriageways with service roads, bypasses, and other traffic separation measureswhere required. In one section between Agra and Bhognipur, widening to 6 lanes is proposed foraccommodating the heavy traffic. The project also makes a provision for low-cost interim trafficmanagement measures, as necessary, to deal with the short-term congestion in the existingnational highway stretch passing through the city of Allahabad.

Road safety and corridor management works: This component includes the civil worksassociated with the support to NHAI's institutional capacity building in the areas of road safetyand corridor management. It finances the improvement of hazardous locations on selectednational highways, and the implementation of civil works associated with the new CorridorManagement Units to be established under the project.

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Public-private partnership in road concession: In collaboration with similar and related effortsby ADB, this component will assist NHAI to undertake detailed preparation and implementationof a pilot project to upgrade, under an innovative public-private partnership scheme, a selectednational highway section (over 60 kin) outside the NH-2 corridor. One candidate section wouldbe the stretch between Tindivanam and Tiruchirapalli on the NH-45 within Tamil Nadu. Theentire stretch is 200 km long, and is proposed to be upgraded from 2 lanes to 4 lanes. The projectis expected to require NHAI financial support (estimated to be around US$25 million) to enhanceits financial viability for private sector participation. It is proposed that a BOT scheme beawarded based on competitive bidding on the required NHAI share of public-private investment,under the fixed toll rate and fixed concession period. The feasibility study, detailed engineeringdesign, and draft Environmental Assessment (EA) and Resettlement Action Plan (RAP) for thestretch have been completed with funding from the Bank's Second National Highway Project.The component will fund consultant service for the preparation of concession (including legaladvisory, preparation of bid documents, and evaluation of bids) and a portion of the biddengovernment (NHAI) financial support for the project or another more suitable candidate section.

Institutional strengthening: The component builds on the similar component under the TNHP,and is designed in a close coordination with ADB's WTCP (which has a similar implementationtimetable to the current project) under the institutional development strategic framework agreedamong NHAI, ADB, and the Bank. A joint assistance strategy for the India's road sector betweenthe Bank and ADB has recently been developed in consultation with MORTH and NHAI to helpcoordinate the assistance program of the Bank and ADB and policy dialogue in the nationalhighways and state highways subsectors. The TNHP focuses mainly on technical assistance toNHAI to develop and implement the institutional strengthening program, setting up of a roadinformation system, establishment of two pilot CMUs, and implementation of a program of minorroad improvements to increase operational efficiency and reduce accidents. The GTRIP willenhance the capacity of MORTH and NHAI to improve road safety and traffic efficiency, expandits program of corridor management, strengthen the newly created social and environmental unit,strengthen the public-private partnership for road financing, and develop a computerized nationalhighway asset inventory. Specifically, the component will include the following sub-components:(a) NHAI's social and environmental capacity building, including (i) a poverty and highwaydevelopment study that would help understand the poverty dimension of the social issues involvedin highway development, and (ii) consultant services for training and streamlining monitoringprocedures; (b) training of trainers and dissemination of road safety manual; (c) public road safetyeducation and campaign through mass media; (d) implementation of road safety action plan to beformulated under the TNHP; (e) computerizing the Golden Quadrilateral national highway assetinventory; (f) CMUs related consultant services; (g) a cross-state border road efficiency study;and (h) provision for subsequent project preparation and sector studies, including expresswayproject preparation (the stretch from Vadodara to Mumbai is proposed as one of the candidatesfor detailed project study).

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Indicative Bank- % ofComponent Sector Costs % of financing Bank-

_ _M_ L Total - $M ficing1. Highway upgrading of 420 km of Highways 685.30 90.6 527.40 89.5NH-2 to four or six lanes includingconstruction, supervision, landacquisition and resettlement, andenvironmental management.2. Road safety and corridor Highways 20.20 2.7 16.20 2.8

management works.3. Public-private partnership in road PSI 25.60 3.4 20.60 3.5concession, including technicalassistance, funding NHAI's share ofpublic-private financing of pilot BOTproject on NH-45.4. Institutional strengthening, including Institutional 19.00 2.5 18.90 3.2(a) NHAI's social and environmental Developmentcapacity building; (b) training oftrainers and dissemination of roadsafety manual; (c) public road safetyeducation and campaign through massmedia; (d) implementation of roadsafety action plan; (e) computerizingthe Golden Quadrilateral nationalhighway asset inventory; (f) CMUsconsultant service; (g) a cross-stateborder road efficiency study; and (h)project preparation and sector studies.

Total Project Costs 750.10 99.2 583.10 99.0

Front-end fee 5.90 0.8 5.90 1.0

Total Financing Required 756.00 100.0 589.00 100.0

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2. Key policy and institutional reforms supported by the project:

The GTRIP seeks to support NHAI's long term transition from an agency focusing on the deliveryof national highway infrastructure to the one that will effectively manage the provision,maintenance and operation of national highway assets on business principles. The recentlycompleted institutional development study proposed an Institutional Development Strategy and arange of actions to improve NHAI efficiency and effectiveness. The TNHP will finance theimplementation of immediate and short-term actions, which mainly focus on NHAI's capacity inproject implementation, highway operation and maintenance, and on MORTH's capacity in overallplanning, policy and regulations. The GTRIP focuses on institutional strengthening actions thatwould expand or complement the similar actions supported by TNHP. The main policies andinstitutional reforms supported under the TNHP and GTRIP as well as ADB's WTCP include: (a)keeping the NHAI lean by outsourcing to the private sector most of NHAI's functions related todesign, construction, maintenance, operation, and collection of road network infornation andcondition data; (b) making NHAI more responsive and accountable to users and stakeholders; (c)making NHAI more autonomous and financially independent; and (d) leveraging NHAI's limitedresources with private financing to promote public-private partnerships in financing roads alongviable corridors.

Moreover, the GTRIP will support two policy oriented studies: (i) a study on the poverty impactof highway development that will lay the ground work for measuring the impact of highwaydevelopment on poverty reduction and on other social dimensions, so as to enhance NHAI'scapacity to address highway project related poverty issues; and (ii) a national highway transportefficiency study that aims at consensus building for removing the freight traffic delays caused bycross-state border inspection and taxation. As part of the agreed institutional strengthening actionplan between the Bank and ADB, ADB will support four key studies under the WTCP, namely (i)study of bond issues by NHAI and lessons learned; (ii) securitization study and development of anaction plan for NHAI; (iii) a study to enhance NHAI's treasury functions; and (iv) a study of tollsystems.

Road safety is another key policy area for intervention. Although both the Bank-financed SecondNational Highway Project and TNHP have a road safety component, road safety is still very mucha "green" area for urgent public action, largely due to the rapidly growing magnitude of theproblem. The GTRIP will support the implementation of a comprehensive road safety actionplan, training, public education and campaign, as well as safety audit and hazardous locationimprovement works.

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3. Benefits and target population:

The major benefits include: (a) a reduction in transport costs, which will directly lower theeconomic costs of goods and services, widen markets, and promote regional trade and privatebusiness growth; (b) a reduction in road accidents and improved ability to alleviate the impact oftraffic accidents, which will have significant implication to public health improvement and povertyreduction; (c) improved efficiencies in the utilization of public resources in the form of higherlevel of output per unit agency cost; and (d) greater participation of private sector in the provisionof highway infrastructure and services.

The project will directly benefit the users of the national highways, roadside communities andbusinesses, and the cities, towns and rural areas directly served by the project roads. Thesebenefits are mostly in the forn of (a) increased accessibility to markets, resources, jobs,education, and health services, (b) improved security against economic shocks through access toalternative jobs and to emergency services, and (c) more job opportunities from the civil worksduring the project implementation and maintenance. These benefits will be measured through aproject component--a study of the poverty impact of highway development--which will collectbaseline and follow-up data for monitoring socioeconomic impacts, especially poverty impacts.

4. Institutional and implementation arrangements:

The project is prepared and will be implemented by NHAI with extensive outsourcing to theprivate sector and close coordination with the states of UP, Bihar, and Jharkhand. Within NHAI,implementation of the major works components is under the direct responsibility of a ChiefGeneral Manager, supported by 5 Project Directors on site, each in charge of one of the 5construction packages. High-level State Project Coordinating Committees have been establishedin each of the three states to facilitate land acquisition, resettlement, utility shifting, forestry andother issues which may require coordination between NHAI and the states. Responsibility forland acquisition and resettlement and financing of all project-related costs will remain with NHAI.NHAI has taken on state PWD engineers on deputation as well as specialists in environment, landacquisition, social and financial management to assist with project implementation.

The road safety component will involve NHAI, MORTH and the states where the project roadsare located. While MORTH will be responsible for coordinating the implementation of thecomponent, NHAI will be responsible for the procurement activities of the component. Thecross-state border road efficiency study will be conducted under the general guidance ofMORTH, and NHAI will be responsible for the procurement of consultant services.

Accounting and Internal Control Arrangements: NHAI has decentralized accountingarrangements. Its on site project management teams prepare monthly trial balances which are sentto the headquarters. All projects are supervised by independent professional constructionsupervision consultants. The contractor's bills are checked by the consultants in addition toensuring quality control. Bills are also checked by NHAI technical and accounts staff beforemaking payments to contractors. The process of development of the computerized integratedfinancial management system initiated for TNHP, being implemented by NHAI, is now in

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advanced stages and the system and its scope has now been widened to cover all NHAI activitiesand will not be limited to project related accounting. NHAI has a strong team of financeprofessionals who will coordinate the consolidation and subrnission of reimbursement claims forthe project. The internal audit function will be re-established and will assist management inimproving financial management functions. They will also assist NHAI to update the manual onoperational accounting policies and procedures.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

Some of the project alternatives considered were discussed in Section B-3.

Specific Investment Loan (SIL) vs. Adaptable Program Loan (APL). SIL is consideredappropriate for this project, as the major physical investment of the project and its implementationtimetable are clearly defined by the client. APL was considered as an alternative to support GOI'sNHDP, but it was rejected on the ground that SIL is a better, more focused alternative foraddressing highway development related resettlement and relocation issues in India at this stage.Moreover, the Bank's assistance to GOI's NHDP adopts a programmatic approach through aseries of SILs. The long term commitment of this approach can provide the leverage and timeframe needed to build step-by-step a program with stronger policy content in the sector. Theproject is designed to further enhance the institutional policy objectives of the TNHP andstrengthen NHAI's planning, implementation and management capacity which at present wouldnot be considered adequate for undertaking APLs. Similarly, subsequent national highwayprojects could be built upon the achievement of the objecti-ves of this project.

4-Laning vs. expressway. GOI recognizes that the development of an expressway network isnecessary in the medium term for supporting trade and economic growth. However, landacquisition for expressway construction is extremely difficult and is expected to be verytime-consuming. Four-laning mainly within the existing right-of-way is thus considered to be areasonable compromise for meeting the urgent need for highway capacity, and is found to beeconomically attractive. Moreover, four-laning is considered to be necessary for reducing thefriction between fast and slow vehicles. Expressway development requires careful planning andstrong institutional capacity to address environmental and social issues. Enhancing NHAI'scapabilities in these areas is supported by the institutional strengthening component of thisproject.

National highways vs. state highways. Additional capacity is required for both nationalhighway and state highway networks. This project focuses on the national highways in parallelwith the Bank's state highway program in India. This project is also considered to be a timelyvehicle to help the central government implement urgent actions for road safety. Given themagnitude of the road safety issues in India, public actions are required at both national and statelevels, but the central govermment road agency should act as a national champion for road safetyinitiatives.

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Upgrading vs. maintenance. The national highway services can be improved through capacityupgrading, better maintenance, or a combination of both. This project focuses on upgradingworks because improving road surface condition through clearance of maintenance backlog on thecore national highways would not be sufficient for achieving the level of service required by thecurrent and future levels of traffic. However, the project addresses the highway maintenanceissue through support to the Corridor Management Units which will test the alternativemaintenance contracts with the private sector. Moreover, the institutional developmentframework agreed among NHAI, ADB, and the Bank sets forth a market-oriented approach forimproving the maintenance practice, mainly through performance-based O&M contracts with theprivate sector.

2. Major related projects financed by the Bank and/or other development agencies (completed,ongoing and planned).

Latest SupervisionSector Issue j Project (PSR) Ratings

__ __ __ __ _ __ __ __ _ ____ _ _ _ _ _ _ _ _ _ _ _ _ _ Ba k f n n ed p o e tImplementation Development

Bank-financed Progress (IP) Objective (DO)

COMPLETED or ONGOING- Construction/rehabilitation of rural Bihar Rural Roads Project U Uroads (Cr. 1072-IN)- Construction/rehabilitation of rural Gujarat Rural Roads Project S Sroads (Cr. 1757-IN)- Capacity expansion of national First National Highways U Uhighway. Four laning and strengthening Project (Ln.2534-IN)in four states- Capacity expansion of state roads and States' Road Project U Uinstitutional development of state road (Ln.2994-IN, Cr.1959-IN)agencies- Capacity expansion of national Second National Highways S Shighways and institutional Project (Ln.3470, Cr.2365-IN),strengthening of MORTH and NHAI and Third National Highways

Project (Ln.4559-IN)-Enhancement of institutional capacity State Roads Infrastructure S HSto prepare projects at the state-level Development Technical

Assistance (Ln.4114-lN)-Capacity expansion, maintenance and Andhra Pradesh State Highway S HSinstitutional development of state road Project (Ln.4192-lN)agency

Gujarat State Highway Project S S(Ln 4577-IN)

Karnataka State HighwaysImprovement Project (Ln4606-rN)

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- Widening and strengthening of two Infrastructure Leasing & S Sstate roads in Gujarat in a commercial Financial Services (Lnformat: Vadodara - Halol SH and 3992-IN; Cr. 2838-IN)Ahmedabad - Mahesana SH

PLANNED Proposed Kerala, Uttar- Capacity expansion and maintenance Pradesh, Mizoram, Tamilof state roads and institutional Nadu, Orissa and Rajasthandevelopment of state road agencies State Highways projects

(FY2001-03)

- Capacity expansion of national Fifth National Highway Projecthighways and institutional strengthening (FY2003)of NHAI/MORTHOther development agenciesONGOINGADB - Capacity expansion of national First Highway Project, Secondhighways and institutional strengthening Highway Project, Nationalof NHAI/MORTH Highway Project, and

Surat-Manor Tollway Project.- Japanese Bank for International Yamuna Bridge Project,Cooperation (formerly OECF) - National Highway Project.Capacity expansion of nationalhighways and institutional strengtheningof NHAI/MORTH- ADB - TA for preparation of national Western National Highwayhighway project Corridor Study 1998/99- ADB - TA for preparation of West Bengal, North-Southinvestment plan and strategy for the Corridor Development, 1998/99north-south corridor development inWest Bengal

PLANNEDADB - Capacity expansion of national Proposed Western Transporthighways and institutional strengthening Corridor Project, 2001,of NHAI/MORTH National Highway Corridor I &

lI, 2002 and 2003ADB - Capacity expansion of state Proposed Madhya Pradeshhighways and institutional strengthening State Highway Project, 2002of state road agency

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)

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3. Lessons learned and reflected in the project design:

To varying degrees all projects initiated before the mid-i 990s have suffered from (a) poor qualityat entry and, in one case, long delay for start-up; (b) weak institutional capacities for projectmanagement, and contract and consultant services administration; (c) inexperience in Bank'sprocurement methods; (d) inadequate inter-agency coordination; (e) inordinate delays in handingover project sites; (f) weak contractor capabilities and inadequate consultant capacity; (g)excessive delays due to weak dispute resolution and decision mechanisms and also due to belatedpayments to contractors; and (h) lack of awareness and low degree of acceptance towardsintegration of environment and social issues in technical design.

A great deal of the above issues have been addressed during the preparation and implementationof the TNHP. For the current project, key aspects of the preparation process have included:

* Substantial attention to the implementation progress for TNHP.

* Much stronger engineering preparation using international consultants, larger constructionpackages and more thorough contractor prequalification. Very high degree of readinessfor implementation would be achieved prior to loan approval, with all engineering designscompleted and bids invited.

* Much stronger processes for environmental assessment, stakeholder consultation, landacquisition and resettlement, and government clearances. Full site readiness of substantialreaches of each package (sections to be handed over to the contractor on mobilization)will be a condition of contract award.

* Support and facilitate NHAI's effort to attract international road construction contractorsto work in India in order to promote competition and technological improvement ofIndia's construction industry.

4. Indications of borrower commitment and ownership:

The GTRIP and TNHP support GOI's NHDP, which was proposed by the Prime Minister'sTaskforce in 1998, and is GOI's top priority infrastructure investment program. The PrimeMinister took a comprehensive review of the program on May 26, 2000. NHAI has demonstratedstrong borrower commitment and ownership through: (a) the successful preparation of the TNHPand GTRIP; (b) the satisfactory progress made so far in the implementation of TNHP; and (c) theagency's performance in the improvement of institutional capabilities during the last few years.The TNHP became effective in October 2000. Since then, the agency has made significantprogress in the procurement of civil works and consultant services, and in the institutionalarrangement for implementing the project-related safeguard policies. Civil works contracts forover 70% of the total scope of the project have been awarded and mobilized. All theseexperiences will be directly beneficial to the implementation of the GTRIP. NHAI has also madesignificant effort in the preparation of the GTRIP, especially the social and environmentalsafeguard measures.

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5. Value added of Bank support in this project:

The most important contribution of the Bank in this sector is the knowledge of effectiveinstitutions, policies, financing and implementation mechanisms in other parts of the world, andexperience with analysis of economic, social, environmental and poverty impacts of project. Thisproject focuses on the strengths and weaknesses of current practices in the sector, and willmobilize technical expertise in examining and experimenting new approaches. Many of theprocedures which have been put in place during the preparation of TNHP and the current projectare now being adopted by NHAI for all of its project preparation activities, includingprocurement, engineering, environment, land acquisition, resettlement, construction supervisionand dispute resolution practices.

The Bank has been supporting NHAI's institutional development, and more broadly, facilitatingthe exchange of information between central government, states and the private sector.Continued involvement of the Bank will facilitate institutional reforms in sound businessmanagement, accountability and responsiveness to external stakeholders (including prompt andaccurate financial reporting consistent with national accounting standards), improved managementof road assets and traffic flow efficiency and safety, and better planning, policy and regulatorycapacity. The Bank is a key partner of the Global Road Safety Partnership, and has comparativeadvantage in providing technical assistance for road safety.

The Bank's financial participation is also important to the implementation of India's NHDP, beforea more sustainable financial mechanism is developed for national highway development andmaintenance. The project will not only provide needed funding, but also help mobilize otherfinancial sources through support to the public-private partnership.

E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)

1. Economic (see Annex 4):* Cost benefit NPVUS$908 million; ERR = 25.9 % (see Annex 4)O Cost effectivenessO Other (specify)

The highway upgrading component including contingencies represents 90% of the total projectcost. Benefits were determined from savings in road user costs due to improved pavementcondition, reduced traffic congestion, and increased separation of fast and slow moving traffic,and from savings in future maintenance costs arising from timely rehabilitation. The economicanalysis was based on the well-established Highway Design and Maintenance Standards Model(HDM-III) developed by the Bank. Traffic volumes on the 7 selected packages ranged from6,000 to 21,000 vehicles per day, including 65% to 90% trucks and buses. Various investmentalternatives were examined in terms of number of lanes, pavement type and strength, service roadsand bypasses. For the selected alternatives, the analysis showed Economic Rates of Return(ERR) of 16.7% to 45.3% with an overall rate of return of 25.9% and Net Present Value of US$908 million. If benefits are reduced by 20% and costs increased by 20%, the overall rate of return

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is 19.3%. A switching values analysis indicates that the cost of highway upgrading works wouldhave to increase by 175% or the benefits to drop by 64% before the NPV would fall to zero.

2. Financial (see Annex 4 and Annex 5):NPV=JUS$ million; FRR = % (see Annex 4)

NHDP is the major expenditure program for the national highways for the next few years till2008. It includes the upgrading of 13,000 km. core national highways and its total costs areestimated to be US$12 billion. NHAI is entrusted to deliver the program. NHAI was establishedunder the 1988 National Highways Authority of India Act, and became operational in 1995. TheAct requires NHAI to act on business principles in the discharge of its functions. The sources ofNHAI funding include normal government budget, fuel levies (cess), bonds, tolls, and loans.Levies of Rs. 1 per liter on petrol and diesel are collected under the Central Road Fund which wascreated through the Parliament legislation. A fixed share of the cess revenues is allocated toNHAI. It amounts to Rs 2,000 crores (or equivalent of US$ 435 million) in 2000/01, and isexpected to increase with total cess revenues. For externally financed projects, NHAI will get80% of the external assistance as grant from GOI, and 20% as loan that NHAI will be required topay back to GOI, presumably through incomes generated from tolls, agency fee, etc. Moreover,all counterpart fund will come from NHAI's fund (mainly the cess).

NHAI currently has few independent assets and little independent revenues. There will be afinancial gap between NHAI's current fund and the NHDP financial requirement. The gap isexpected to be closed by borrowing, tolls, and private investment. The key is to develop asustainable national highway financial mechanism. GOI is taking initial steps in this direction. Forexample, a cess of Rs. 1 per liter on petrol and diesel was introduced by GOI in 1999. Therevenues are earmarked as dedicated fund for the development and maintenance of national, state,and rural road infrastructure. A substantial portion of the revenues is allocated to NHAI fornational highway development. With the assistance from ADB, NHAI is exploring variousfinancial instruments (including bond issues, securitization, and toll systems) that would enable theagency to be more financially independent. A Rs 500 crores (or equivalent of US$ 110 million)National Highway Bond was recently issued. NHAI is also examining a market-orientedapproach for funding road maintenance, possibly through performance-based O&M contractswith the private sector.

The substantial investment to be supported under the project is unlikely to crowd-out private fundfor road investment, as private road financing is still at the experimental stage, and would not bemobilized fast enough to fund the urgently needed highway capacity. The project supports apublic-private partnership for a BOT project, which is designed to attract additional resourcesfrom the private sector. It is a pilot project expected to provide demonstration effect that wouldstimulate greater private sector financing.

Fiscal Impact:

The fiscal impact of the project is expected to be minimal, as GOI has made budget commitmentto the NHDP and necessary policy provision to NHAI to tap other financial sources. Moreover,the budget commitment to the maintenance and development of the national highways is made in

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a fixed portion of the total cess revenues which are expected to grow with increasingmotorization. The current cess revenues allocated to the entire national highway system (underMORTH and NHAI) amount to US$750 million a year.

3. Technical:

Capacity and safety of the project roads will be substantially improved through widening fromtwo lanes to divided carriageways with at least four lanes and paved shoulders. Bypasses, serviceroads, grade separated intersections, raised embankments and provision for pedestrians and localtraffic are provided as required to meet local conditions. Preparation studies consideredpavement alternatives of asphalt or cement concrete, and proposed a combination of the two, withadditional provisions for strengthening quality oversight for newly introduced constructionmethods. Safety audit will be performed on the engineering design of all project roads and thedesign will be modified according to the safety audit recommendations. The management ofmixed traffic to achieve traffic efficiency and safety after the 4-laning will be carried out throughthe corridor management program to be supported by the project and facilitated in township areasby provision of parallel service lanes.

4. Institutional:

4.1 Executing agencies:

NHAI's capability to implement the current project, including environment and social safeguardpolicies, has been greatly strengthened through the implementation of the TNHP.

4.2 Project management:

The capacity of NHAI for project management will be further strengthened through projectpreparation and especially the implementation of TNHP. NHAI has mobilized a strong team inheadquarters and on site to work closely with consultants and local authorities during projectpreparation, and this will continue during the implementation phase. Additional skills in landacquisition, environment, resettlement and rehabilitation (R&R), and financial management arebeing built up.

4.3 Procurement issues:

No significant procurement issues are expected at this stage. If any issues emerge, they will beaddressed based on the actual experience from the TNHP.

4.4 Financial management issues:

NHAI is also implementing the TNHP. The assessment and review of the financial managementarrangements for the implementation of this project have focused primarily on the follow-up onactions agreed during the earlier appraisal.

The key issues that have been identified are as follows:

* There has been little opportunity to establish the adequacy of the financial managementarrangements as no reimbursement claims or project management reports have been receivedby the Bank for the TNHP.

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* NHAI will seek the assistance of the internal auditors to be appointed to update accountingmanual and merge it with financial management manual (first draft to be prepared byDecember 31, 2001).

* The computerized Project Financial Management System (PFMS) is in advanced stage ofpreparation. The PFMS will ensure that the project-specific financial reporting system is theproduct of mainstream accounting systems, and not limited to meeting just the Bank'srequirement.

* The current business and accounting practices do not allow NHAI to work out project wiseunder or over absorption of their indirect costs. These costs are not directly allocated orattributed to projects but charged off to Profit & Loss Account to offset against agencycommission income. It also implies that this percentage of works, capitalized as assets (asNHAI is the owner of the works) is treated as revenue income in the Profit & Loss Account.This is contrary to standard accepted accounting practices. It is recommended that NHAIreview this policy at the earliest.

* NHAI has not had internal audit done (except the internal reviews carried out by their ownstaff) since 1998-99. NHAI is currently in the process of preparing a short list of firms ofchartered accountants to undertake the internal audit for the year 2001-2002.

NHAI is audited by the Controller & Auditor General of India (C&AG). NHAI needs to initiatediscussions with the C&AG on ways to streamline the entire audit process in order to meet thetime frame. NHAI will carry out a time-bound action plan detailed in Annex 6 for thestrengthening of the agency's financial management system. NHAI will work with a firm ofchartered accountants to assist in the consolidation and finalization of the accounting statementsby August 15, 2001, to meet the Bank's timeline for submission of audited statements and report.Moreover, NHAI intends to convert its current disbursement system to the Project ManagementReport (PMR) based disbursement by January 1, 2003.

5. Environmental: Environmental Category: A (Full Assessment)5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (includingconsultation and disclosure) and the significant issues and their treatment emerging from this analysis.

Base EAs of the GTRIP and TNHP, together, from Agra to Barwa Adda section of the NlI-2,were carried out during 1998-2000. The approach adopted was a reiterative one in whichenvironmental issues were identified in successive levels of detail and specificity at each step in theprocess, and feedback from the stakeholders and public consultation process was incorporated.Analysis of alternatives, community consultation and stakeholder involvement were key steps inthe EA process. Since the beginning with TNHP, the EA process of the GTRIP has evolved, andaddressed the potential impacts and mitigation measures in greater details. The Consolidated E1Afor the GTRIP and the 7 contract (package) specific Environmental Management Plans (EMPs)address impacts and propose adequate mitigation and environmental enhancement measures. Anindependent review summarizes that the EA and the EMPs adequately address the Bank'senvironment and social safeguard policies.

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Key Environment Issues: Besides construction related impacts, the project may also lead topotential impacts from induced development especially along the bypasses, in the Gautam BuddhaWild life Sanctuary, and the Taj Trapezium Zone (TTZ). To address any unforeseen impacts onthe Gautam Buddha Wildlife Sanctuary and the TTZ, a contingent fund of US$1.5 million is madeavailable in case of need for further impact study and implementation of further mitigationmeasures.

The TTZ covers an area of about 10,400 km and has been identified as the zone of influence forthe protection of the Taj Mahal from pollution sources, especially air. Package I-A of the GTRIPtraverses the TTZ (and the west end of Package I-B touches the TTZ), although at its nearest, itis more than 10 km. away from the Taj Mahal or any other World Heritage sites, within the zone.The GTRIP is in confornity with the TTZ Development Plan, which envisages highway wideningto ease traffic congestion and reduce pollution (the initial 22 km. of Package I-A will be 6-laned,and the remaining 4-laned). Additional mitigation measures in the EMP include 10 m thick bandof roadside plantation on either side of the highway. A detailed landscape plan has been prepared.

Due to intense agricultural activities in the region, natural forests along the project road have longbeen removed except in some parts such as Agra Reserved forest area (Package I-A, for a 2 km.stretch), and the Kaimur Hills forest area (Package IV-C). The project acquires 0.5 ha. of theAgra Reserved forest area (Package I-A), and 2.35 ha. of the Kaimur Hills forest area (PackageIV-C). The Agra reserved forest is a degraded area, the green cover is thin, and is used as agarbage dumping site. The Kaimur Hills Forest has been already reduced from dry deciduous toscrub land. The EMP for Packages I-A and IV-C propose, in addition to compensatoryafforestation, physical barriers to prevent any further dumping of wastes; closing access fortrucks; regular policing and patrolling to prevent unwarranted intrusion in forest areas.

Package VB passes through 36.4 km. of protected forest area, 18 km. of which is through theGautam Buddha Wildlife Sanctuary (no forest land is proposed to be acquired for the project).The sanctuary exists in two parts on either side of the road, with the road passing through thebuffer zone (400 m on either side of the highway had been designated as buffer when thesanctuary was established. The road existed since the medieval age, and the area was declared asa sanctuary in the 1 970s). During the EA process, consultations included inputs from thecommunity as well as forestry and wildlife specialists. The EMP incorporates the SanctuaryManagement Plan, developed by the Department of Forest and Wildlife. The EMP measuresinclude check dams, water holes, screen plantation, animal underpasses, check posts, noisecontrol, signage, closure of unregulated access for trucks, prohibition on extracting constructionmaterials from within the sanctuary area. Adequate resources have been allocated forimplementation of these measures, including an additional sum of INR 5 million to be transferredto the sanctuary authorities linked to the progress of the implementation of the SanctuaryManagement Plan. At the Project Management Unit (PMU) an additional Manager(Environment) will be specially deputed for coordinating implementation of the EMP for PackageV-B. A coordination committee is being constituted to oversee implementation of the EMP forPackage V which includes mitigation measures specifically related to the project area. In

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concurrence with other relevant agencies, NHAI will issue the order creating the committee byJuly 31, 2001. Release of funds to the contractors will be linked to implementation progress inperformance indicators agreed in the Bills of Quantities for all works undertaken. The NHAIEnvironmental Manager will be responsible for monitoring and oversight. The coordinationcommittee will recommend whether further mitigation measures/additional funds will benecessary, and in consultation with the Bank, NHAI will decide on fund allocation from theaforementioned contingent fund of US$1.5 million.

The EA has studied the potential of induced development in detail, and identified the highwaystretches which would be subjected to successive levels of urban-industrial development pressurein future. The EA desegregated these highway stretches into 8 different policy zones forcontrolled/guided development, and sets of policies for each zone have been prepared. Effectivecontrol of ribbon development is an interdepartmental issue and is beyond just NHAI's purview.However, budget allocation has been made in the EMPs to enable a policy dialogue at GOI leveland NHAI. The Corridor Management Units, proposed as part of the project will coordinatethese development controls.

Construction related issues and impacts: Improvement of the proposed highway is restricted tothe existing right-of-way, except in the case of the 15 bypasses. The project requires a largevolume of material excavation, procurement and transport; use of potable water (for concretepavement); setting up of stone-crushers, hot-mix plants and concrete batch plants, transport andround-the-clock laying of concrete, etc. Additional impacts will result from spills of oil, fuel,lubricants and bitumen, and operation of borrow areas, quarries and construction camps. Theseimpacts will be managed by implementation of the EMPs, which contain good environmentalmanagement and mitigation measures, conservation and prevention measures, redevelopmentplans and a substantial tree plantation program.

5.2 What are the main features of the EMP and are they adequate?

Detailed EMPs include implementation schedule, monitoring program, budget, institutionalarrangements, and integration of the proposed mitigation measures into the contract. The EMPmeasures include road landscape and plantation; preventive measures for minimizingair/noise/water pollution; protection and restoration of surface water bodies (cascades,silt-fencing, sedimentation chambers, oil interceptors), groundwater recharging pits; gabionstructures, turfing, reinforced earth walls and brick/stone pitching to prevent erosion;conservation and redevelopment borrow areas; use of fly ash; noise enforcement measures andnoise barriers (especially in front of schools and hospitals); provision of underpasses forlivestock/animals; and pedestrian and other local facilities, etc. NHAI's Roadside Tree PlantationStrategy covers all plantation regimes (compensatory, roadside, median, and possibility oftransplantation), coordination of NHAI with the Forest department including management offunds.

Each EMP contains enhancement plans for several sites (altogether about 100), which areimportant from environmental, ecological or community point of view. All enhancement plans arecomplete with implementation designs and bill of quantities.

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As part of the evolving EA process since TNHP, the consolidated EA for GTRIP also addressesissues such as gender in construction management (including involving women as managersduring construction) and health issues such as the spread of HIV/AIDS. The EMPs provide suchrecommendations that are in the purview of the project and can be facilitated or coordinated byNHAI, such as a health management plan at the construction site, and safety plan duringconstruction.

The EMPs also provide for further and contingency actions. A pilot study on HIV is proposed.The project also includes a road safety component and involves a road safety audit of theengineering designs. With respect to Forests and Protected areas, major efforts are being made byNHAI through EMPs to revitalize these areas within the Corridor of impact. In particular, NHAIhas provided US$1.5 million under the GTRIP for additional safeguard measures. This fund willbe made available in case of need for further study and mitigation measures relating to the TTZand the Gautam Buddha Sanctuary.

5.3 For Category A and B projects, timeline and status of EA:Date of receipt of final draft: February 2001 (Consolidated EA and

EMPs for selected contract packages)

5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EAreport on the environmental impacts and proposed environment management plan? Describe mechanismsof consultation that were used and which groups were consulted?

Since the project has been developed through a participatory process, stakeholder consultationswere carried out as part of the Environment and Social Assessment process at different stagesduring project preparation and will continue through the rest of the project cycle. This has beendocumented in the EA report in the Chapter on Community Consultations. In the same token,NHAI will be conducting workshops in March 2001 to build further consensus to involve thepeople in implementation of the EMPs that have been developed.

Community consultation was carried out at the Screening, Feasibility and during theSocial/Environment Assessment of the project. The different consultation means includeddoor-to-door personal interviews, village meetings, focus group discussions, and consultationwith experts and NGOs working in the area. Additionally, various stakeholders were consulted (in13 separate consultation sessions) and as per the GOI, MOEF guidelines, 9 district level publichearings were conducted.

The key stakeholders consulted were the urban, semi-urban and rural people, some of them whomay lose land or properties; communities, which may be impacted by increased traffic and safetyconcerns; and hospitals, schools, and libraries, which may be impacted; road users including roaduser associations; government officials from the line departments; local government agenciesincluding village level 'panchayats'; NGOs and community based organizations (CBOs) workingin the region; experts including forestry, wildlife and environmental professionals.

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The Base EAs were disclosed by NHAI in March 2000 to the Public in the affected districts. TheConsolidated EA and the EMPs for the GTRIP have been disclosed at project affected sites andthe Bank's Project Information Center (PIC) both in Washington and New Delhi in January 2001.

Further details on consultations are described ahead in Section 6.2 and 6.3.

5.5 What mechanisms have been established to monitor and evaluate the impact of the project on theenvironnment? Do the indicators reflect the objectives and results of the EMP?

Institutional measures: Independent consultants, procured through International CompetitiveBidding (ICB) will act as the Supervision Consultants (SC) or Engineers, and will be responsiblefor implementing and monitoring all aspects of the project. Four such consultants will beengaged, each with an Environmental Specialist. The PMUs of NHAI will be staffed, amongothers, with Managers (Environment). The Environment and Social Management Unit at theNHAI Corporate Office will coordinate the implementation of environmental components of theproject. Training of the NHAI staff, the SC and the Contractors' personnel will be undertaken asper the training plan prepared as part of the EMPs. The training plan considers immediate andconstruction related, medium-term and long-term environmental issues in highway developmentprogram.

Monitoring: Day-to-day monitoring of the project is the responsibility of the SC. Furthermonitoring by the PMU and the NHAI Corporate is proposed. Detailed monitoring and reportingformats have been prepared, covering all aspects of the EMPs. During construction period, thecontractor will report to the SC once a month on implementation of the EMPs, and compliance.Similarly, the SC will report to the PMU every month, and the PMU will submit quarterly reportsto the NHAI Corporate. Quarterly reports will be submitted by the NHAI to the Bank.

Environment performance indicators have been developed to reflect the objectives and results ofthe EA in the EMP. To ensure effective monitoring of the EMPs, monitoring formats includemonitoring of performance indicators, as part of the supervision strategy for the project.

6. Social:6.1 Summarize key social issues relevant to the project objectives, and specify the project's socialdevelopment outcomes.

The project is expected to result in social benefits through improved access and linkages ofbackward areas. It involves Resettlement & Relocation (R&R) of affected and displacedtitleholders, squatters and encroachers. A social irnpact assessment has been carried out duringthe project preparation, consisting of the following: (i) early screening as part of project feasibilitystudies; (ii) public consultation; (iii) preparation of a project specific R&R entitlement frameworkconsistent with GOI's and the Bank's Operational Directives (OD) 4.30 and 4.20; (iv) census andbaseline socioeconomic survey of the potentially affected population; and (v) preparation of atime-bound RAP.

A full census was undertaken to document the status of the potentially affected population withinthe project impact area, with respect to their assets and sources of livelihood. This provided thebasis for establishing a cut-off date for determining who may be entitled to relocation assistanceor other benefits from the project. A detailed socioeconomic survey of a sample of the potentially

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affected population was also carried out to develop the monitoring and evaluation parameters andto develop the database. This survey also provided a baseline against which mitigation measuresand support will be measured and includes a comprehensive examination of people's assets,incomes, important cultural or religious networks or sites, and other sources of income such asdependence on common property resources. An analysis of survey results included a genderanalysis and examined the needs and resources of different groups and individuals, includingintra-household issues.

Acquisition of agricultural land and residential and commercial structures will be required for theupgrading and widening of the road, to the extent that either resettlement or relocation isnecessary for the affected people. In some cases small portions of roadside dwellings andbusinesses will be affected due to widening the legal right of way (ROW). In all cases, however,compensation and assistance will be provided depending on the status and extent of the propertytaken. A total of 622 hectares (see table below) of land is required for widening the existingalignment and for 13 bypasses. The additional land required by the project falls under twoclassifications: (a) public land owned by the Departments of State Government and village levelinstitutions; and (b) private land. A concerted effort by NHAI will be required to carry out theland acquisition according to the plan for the project, where the ROW to accommodate theproposed highway improvements in some alignments is not present, not sufficient, or notavailable. The process of land acquisition has been initiated by the NHAI under the NationalHighway Act and Land Acquisition Act.

Project-affected families and land required for each contract package

Contract Families Families Families Land to be Land to beaffected Displaced Displaced Acquired Transferred*

Titleholder Non-titleholder (ha) (ha)

I - A 1,125 307 336 71.08

I - B 1,713 397 40 103.33

I - C 1,764 690 143 216.41

II - B 1,347 21 1007 13.82 8.20

IV - A 1,089 568 274 24.75 6.72

IV -C 3,851 2,696 76 124.15 15.45

V-B 176 23 36 47.82 12.88

TOTAL 11,155 4,702 1912 622.36 43.80

* Includes government vested land and forest land.

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Resettlement is required where residential and/or commercial buildings must either be fullydemolished or made uninhabitable. Relocation is required for displaced residents or affectedbusinesses of these buildings and other public and religious buildings and structures.Rehabilitation will be required where resettlement relocation or other project impacts result in lostlivelihood or income. Emphasis has been given to identify alternate land since majority of thepeople displaced will lose their agricultural land and for restoration of livelihood (annexl 1). In allcases, it will be necessary to restore the economic status of affected persons to at least pre-projectlevels or better. The displaced vulnerable people will receive the alternate land for agriculture,house and shop free of cost and the non-vulnerable will purchase it with the compensation and theassistance received to meet the replacement cost for the assets acquired.

NHAI prepared the R&R policy that includes an entitlement framework consistent with the Bank'sO.D. 4.30 and O.D. 4.20 to deal with land acquisition and other potential adverse social impactsof the project. This was cleared by NHAI and endorsed by the Bank. The R&R policy addressesthe nature of entitlements to be given to titleholders, all squatters and vulnerable encroachers.Moreover additional support will be extended under the R&R policy to achieve reduction andequity. Following consultations, a framework has been developed which distinguishes betweencompensation in cases of land acquisition or other losses of private property, and rehabilitationand assistance given to all the affected people. Additional support has been provided tovulnerable poor that also includes women headed households. To ensure property rights towomen altemate plots provided for rehabilitation will be registered on joint names along withtheir spouses. The same policy will be applied for section III B and Etawah by-pass ofapproximately 13 km, that are excluded from the proposed GTRIP. A consolidated ResettlementAction Plan was prepared on the basis of individual RAPs that provides detailed mechanism forimplementing the provisions of the R&R policy and was approved by NHAI. The Bank willendorse the document.

The prime considerations during project preparation were to avoid or minimize negative impacton the people/communities due to land acquisition within the limitations of technical requirementsand cost effectiveness. Impacts have been avoided by lateral shifting of the proposed alignmentdepending upon the availability of land. The participatory planning with people has helped inminimizing losses, saving residential/commercial structures, cultural properties and communityinfrastructure. As far as possible concentric widening has been adopted in the built-up stretches,raised carriageways were incorporated wherever possible on bypasses and along the corridor tominimize impact on properties or to avoid land acquisition.

The social impact assessment for 422.78 km. project roads identified 11,155 project affectedfamilies that includes 8441 titleholders and 2,714 non-titleholders. Out of the total number ofaffected families 6,614 will be displaced that includes 4,702 titleholders and 1912 non-titleholders(see the above table). The figures in correlation with the quantity of land to be acquired indicatethat majority of the affected and displaced are due to acquisition of agricultural land. Furtherdetails are given in the Executive Summary. Since the proposed project is to upgrade the existingtwo lane to four lane within the existing right of way to the extent feasible, the project will nothave an impact on tribal community or groups. However, there are 66 tribal families who will beaffected and are thinly spread over the entire length. The social impact assessment documented

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the resource base of these families and their losses that is included in the RAP. The budgetaryprovisions for tribals are included in the overall budget prepared for the implementation of RAP.Others belonging to the vulnerable groups in particular those on the threshold of poverty line andbelow it are given targeted support in the RAP in accordance with the policy. The data collectedis disaggregated for each recognized category vulnerable and non-vulnerable and containsinformation about their socioeconomic status in the RAP.

No large-scale movements of groups of people are envisaged. However, resettlement sites will bedeveloped if more than 25 families are willing to settle in a cluster. The project will seek tofacilitate people's self-relocation by giving adequate resources and support, rather than developingclustered resettlement sites.

Studies on HIV/AIDS highlight that the truckers are carriers of virus. With increase in trafficwith the proposed project, the risks related to sexually transmitted infection may spread. Thisimpact will be minimized through effective preventive plans for awareness building and facilitateconvergence of National and State Health programs and is included in the RAP. A pilot study hasbeen undertaken to identify sensitive locations through focus group discussions with truckers andother high risk groups. Detailed plans to implement the preventive measures with the help ofNGOs have been prepared.

Another potentially negative social impact is the risk of road accidents associated with increasedtraffic speeds. In number of places widening has been proposed to minimize the propensity ofaccidents by proposing service roads. Underpasses have been provided to facilitate the peopleliving on either side of the road to have access to facilities and to avoid disruption of socialrelations and network. This impact will be further minimized through a safety audit on theengineering design of the project and recommendations will be implemented.

6.2 Participatory Approach: How are key stakeholders participating in the project?

As per the framework developed in the R&R policy, NHAI carried out public and communityconsultations as an integral part of the environmental and social assessment process with differentsocial groups and stakeholders at the village, district and state level throughout projectpreparation. At the local level, group discussions, participatory mapping of the resources andinfrastructure, and other methods have been used. Through comprehensive screening and localconsultation, the project preparation has minimized cases where land acquisition may be required,or where there may be other loses of assets or resources. These consultations helped to finalizevarious issues like location of bus stops and religious structures, realignments and suggestingmeasures for economic rehabilitation and new rehabilitation sites. The process ensures that theaffected population and other stakeholders are informed, consulted and allowed to participateactively in the development process. Moreover, follow-up consultations were organized atsensitive locations to disseminate the information about the final design and the details of the RAPand the NHAI prepared a separate document on the subsequent consultations.

A number of workshops and consultation meetings have been held in the three states (UttarPradesh, Bihar and Jharkand) with government representatives, consultants, project affected

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people and environmental protection agencies to build consensus on project objectives, design andimplementation arrangements and discuss impacts and rehabilitation or mitigation measures. Theproject proposes to further ensure community participation during implementation of theprovisions included in the RAP and the detailed mechanism is given in annex 11.To further strengthen the participatory processes for institutionalizing transparency all paymentsregarding compensation and assistance will be paid through checks in public meetings.

The R&R policy and the RAP have been made public through District offices and District PublicLibraries and Bank's Public Information Center. The R&R policy has been translated in locallanguage and will be distributed to the affected people during implementation.

6.3 How does the project involve consultations or collaboration with NGOs or other civil societyorganizations?

The R&R policy recognizes the importance of NGO involvement to facilitate the implementationof RAP through a participatory process. The process of appointing the NGOs has been initiatedfor the four packages. Their representatives will be members of District and Grievance RedressCommittees that have been set-up for implementation.

6.4 What institutional arrangements have been provided to ensure the project achieves its socialdevelopment outcomes'?

For implementation of RAP, state level committees set up for the entire project, will provideguidance on land acquisition and R&R issues. The NHAI has created a Social and EnvironmentCell at the corporate office, led by a General Manager and one R&R manager to coordinate theresettlement activities of all packages. Five PMUs have been established on site for the fivepackages. Each PMU has a project director and several line managers, including one in charge ofEA and R&R. They, along with the NGOs for each package will be responsible to implement theRAP. District level committees have been set up to facilitate the acquisition proceedings andR&R related issues. Grievance redress comnmittees have also been established in each district.The organizational framework for the RAP agreed during appraisal has been adequately staffed.

To promote local capacity building, efforts have been made, during project preparation, to carryout the work in collaboration with the consultants and the project authorities. An Orientationtraining program has been organized and further five training modules have been developed thatincludes exposure to similar projects and sharing of experiences that will be carried out duringproject implementation.

6.5 How will the project monitor performance in terms of social development outcomes'?

Monitoring arrangements and formats have been provided in the RAP. The NHAI will preparemonthly and quarterly progress reports during the first year of the implementation and for theremaining two years quarterly reports will be prepared to monitor the physical and financialprogress. Annual and mid-term evaluation will be undertaken to evaluate the processes adoptedduring implementation of the proposed activities included in the RAP. An end term evaluation willbe carried out to evaluate the impact the project has had on the project-affected people in

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achieving the objectives of the R&R policy. The NHAI will hire consultancy services to monitorand evaluate the R&R component of the project.

7. Safeguard Policies:7.1 Do any of the following safeguard policies apply to the project?

Polic ApplicabiritEnvironmental Assessment (OP 4.01, BP 4.01, GP 4.01) * Yes 0 NoNatural habitats (OP 4.04, BP 4.04, GP 4.04) * Yes 0 NoForestry (OP 4.36, GP 4.36) 0 Yes * NoPest Management (OP 4.09) 0 Yes * NoCultural Property (OPN 11.03) * Yes 0 NoIndigenous Peoples (OD 4.20) * Yes 0 NoInvoluntary Resettlement (OD 4.30) * Yes 0 NoSafety of Dams (OP 4.37, BP 4.37) 0 Yes * NoProjects in International Waters (OP 7.50, BP 7.50, GP 7.50) 0 Yes * NoProjects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) 0 Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.

The NHAI has prepared the R&R policy that includes an entitlement framework consistent withthe Bank's O.D. 4.30 and O.D. 4.20 to deal with land acquisition and other potential adversesocial impacts of the investment program (see section 6.1).

F. Sustainability and Risks

1. Sustainability:

Benefits of the project are likely to be sustained over time as the traffic volumes increase.Nevertheless, a key factor will be NHAI's capacity to maintain and efficiently operate the newlycreated road assets. The project will enhance this capacity through institutional strengthening,promotion of private sector involvement, and assured funding mechanisms. Key issues are (a)clarifying roles of NHAI, MORTH and the states; (b) establishing an overall strategy for nationalhighway spending; and (c) adequate funding for maintenance. The implementation of therecommendations of the Institutional Strengthening study and Corridor Management study will becritical for project benefits to sustain over a period of time. Recent increases in NHAI revenuesfrom levies on petrol and diesel fuel are also an important step.

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2. Critical Risks (reflecting the failure of critical assumptions found in the fourth colunmu of Annex 1):

Risk Risk Rating Risk Mitigation MeasureFrom Outputs to ObjectiveNewly increased traffic capacity is not M Secured maintenance funding and strengthenedefficiently managed and maintained. maintenance practice.

NHAI and MORTH commitment on road M The progress will be closely monitored throughsafety actions is weak. quarterly and supervision mission reports, and

the outcomes of road safety actions will besustained through NHAI organizationalrestructuring that aims to effectively respond tothe needs of road users.

Private sector participation is not actively M While the risk is small, it could arise due to thepursued through public-private slow response from the private sector. The riskpartnership. could be mitigated through knowledge sharing

and option study to be funded by the project.

NHAI and MORTH's commitment to M The progress will be closely monitored throughpolicy and institutional reforms becomes quarterly and supervision mission reports, andweak. remedial actions taken as appropriate.

From Components to OutputsDelays in procurement and award of N NHAI's function in procurement and contractingcontracts. is being strengthened under TNHP.

Delays in site readiness, and M Adequate staffing, high-level committees, earlyunsatisfactory implementation of RAP appointment of NGOs and monthly monitoringand EMP. of action plans.

Unsatisfactory consultant/contractor M Strict prequalification criteria, supervision byperformance, construction delays, quality intemationally experienced consultants, largeproblems and cost overrun. construction packages.

Current accounting policies undermine M Recognizing that this may be a hindrance, NHAINHAI objective of managing its resources has initiated discussions with GOI in order toon business principles define accounting policies more clearly.

Overall Risk Rating M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

3. Possible Controversial Aspects:

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G. Main Loan Conditions

1. Effectiveness Condition

Standard conditions only

2. Other [classify according to covenant types used in the Legal Agreements.]

1. The NHAI will maintain state high-level Project Coordinating Committees in the States of Uttar Pradesh,Bihar and Jharkhand to coordinate issues related to land acquisition, R&R, environment, and shifting ofutilities, supported by district level committees and grievance cells for land acquisition and R&R.

2. The NHAI will maintain the External Stakeholders Advisory Group, which will meet at least twice eachyear to review the overall program and strategy being implemented under the project.

3. The NHAI will implement Resettlement Action Plans, Environmental Management Plans, and TreePlantation Strategy, to the satisfaction of the Bank.

4. Any other road works which might be proposed for implementation under the project (e.g. because ofunforeseen land acquisition or environmental constraints or to utilize cost savings) would be considered forfinancing only after completion of Environmental Management Plan and Resettlement Action Plansatisfactory to the Bank.

5. The Bank's social and environmental safeguard policies would be applied to any BOT projects supportedunder the project, and the EA and RAP be completed prior to financial closure that will be endorsed by theNHAI and cleared by the Bank.

6. The NHAI will initiate the cross-state border road transport efficiency study by December 31, 2001.

7. The NHAI will produce annual reports on the condition of NHAI road network and projected future usercosts and projected asset condition with forecast levels of maintenance.

8. The NHAI will produce annual report on travel speeds and accidents on road stretches for the hazardouslocation imnprovement work.

9. The NHAI will produce a quarterly report on implementation progress with agreed formnat presented inthe Borrower's Project Implementation Plan, and mid-terrn review report after 24 months.

10. For the two road sections along the NH-2 corridor from Agra to Dhanbad (Allahabad sectionand Etawah bypass) which are not included in the scope of the project, the NHAI will follow thesame approach to the preparation and implementation of safeguard policies on these stretches asin the TNHP and GTRIP, and the EA, EMP and RAP for the Etawah bypass are subject to Bankreview and supervision.

H. Readiness for Implementation

Z 1. a) The engineering design documents for the first year's activities are complete and ready for the startof project imnplementation.

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E 1. b) Not applicable.

X 2. The procurement documents for the first year's activities are complete and ready for the start ofproject implementation.

X 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactoryquality.

1 4. The following items are lacking and are discussed under loan conditions (Section G):

1. Compliance with Bank Policies

Z 1. This project complies with all applicable Bank policies.n 2. The following exceptions to Bank policies are recommended for approval. The project complies with

all other applicable Bank policies.

Zhi Liu Vincent G uarne LimTeam Leader Sector Manager/Director Country Manager/Director

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Annex 1: Project Design Summary

INDIA: Grand Trunk Road Improvement ProjectKey Performance

Hierarchy of Objectives Indicators Monitoring & Evaluation Critical AssumptionsSector-related CAS Goal: Sector Indicators: Sectorl country reports: (from Goal to Bank Mission)Reduce highway Increased traffic capacity and Central government annual Government remainsinfrastructure bottlenecks to improved traffic safety on reports. committed to sector reforms.support poverty reduction and high-demand nationalprivate sector-led economic highway corridors.growth

Expanded public-private MORTH and NHAI reports. Continued funding for thepartnership in encouraging National Highwayprivate investments on large Development Program.BOT projects.

More effective institution for The Bank CAS Progress Increased delegation,managing national highways. Reports. independence and public

accountability of NHAI.

Project Development Outcome I Impact Project reports: (from Objective to Goal)Objective: Indicators:Reduce transport constraints Average vehicle travel time Project evaluation reports. Civil works are completed onon national economic activity. along the national highway time and meet design

corridor between Delhi and standards, and maintenanceCalcutta reduced by 25-30% funding is secured.from the current 4 to 5 days,by end of project (EOP).

Improved institutional Truck operating cost along Mid-tern review (MTR) Majority of the cost savingscapacity to manage road the national highway corridor mission reports. are captured by road users,programs, assets, and between Delhi and Calcutta consumers, and farmers.services. reduced by 10% in real terms

from the current Rs. 1 1 perkin, by EOP.

Incidence of road deaths Implementation Completion Relevant state governmentsreduced by 20% on project Reports (ICR). are engaged in seekingroads by end of project, by solutions to remove theEOP. cross-state border barriers.

About 1,200 km of national Annual road condition Central government assumeshighways maintained under surveys. a role as road safety championcontract with the private and step up road safetysector and managed by the actions.Corridor Management Unitsby EOP.

Annual surveys on delays and Central government continuesaccidents. to pursue PSD initiatives.

Strong NHAI and MORTHcommitment on policy andinstitutional reformscontinues.

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| Key Performance Hierarchy of Objectives Indicators Monitoring & Evaluation Critical Assumptions

Output from each Output Indicators: Project reports: (from Outputs to Objective)Component:1. Cost effective delivery of 1.1. Ex post ERRs of the 420 Quarterly progress reports; Newly increased capacity isincreased traffic capacity and km project roads are on efficiently managed andimproved quality of national average above 26%. Supervision mission reports; maintained.highways.

1.2. All civil work contracts Disbursement reports;delivered to time, budget, costand safety constraints. User surveys conducted for

baseline, MTR, and EOP;1.3. 100% delivery ofentitlements to PAFs and Annual road condition survey;restoration of commonproperty resources as and Annual surveys on delays andwhen planned in RAP. accidents on NH-2.

1.4. All EMPs carried out inaccordance with contractclauses.

1.5. Level of users'satisfaction with roadinfrastructure on project roadsincreased.

2. Improved road safety, 2.1. Safety audit and Both NHAI and MORTHmaintenance and management hazardous location strongly commit to roadof national highways. improvement works safety.

conducted on selected sectionsof NIHDP network.

2.2. A comprehensive roadsafety action planimplemented on a pilot basis.

2.3. Two new CMUsestablished by MTR.

3. Expanded public-private Public-private partnership NHAI and MORTH continuepartnership in promoting successfully executed to to pursue various options forprivate investment on large support large scale (over 50 encouraging greater privateBOT projects. km) BOT projects. sector participation in road

sector.

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4. Improved institutional 4.1. All technical assistance Strong NHAI and MORTHcapacity in social and in effect; comrnitment on policy andenvironmental aspects, road institutional reformssafety, corridor management, 4.2. NHAI HQ and field office continues.public-private partnership, staff trained;and managing trafficefficiency. 4.3. Options to eliminate

cross-state border freightdelays analyzed and policydialogue with relevant statesinitiated;

4.4. Over 120,000 treesplanted by MTR and over200,000 trees planted by EOP;

4.5. Over 70% tree survivalrate achieved by EOP.

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000 7 0007-- I 7 Key'efiac Performance..........v ,Hierarchy of Objectives * Indicators Monitoring & Evaluation Critical Assumptions

Project Components I Inputs: (budget for each Project reports: (from Components toSub-components: component) Outputs)1. Highway upgrading of 420 1. US$ 685.29 million Quarterly progress reports; Timely procurement andkm to 4-lanes or 6-lanes Supervision mission reports. contract implementation;including works, supervision,land acquisition and Timely site readinessresettlement, and including land acquisition anidenvironmental management. utility relocation;

Full implementation ofResettlement Action Plan andEnvironment ManagementPlan;

Satisfactory contractorperformance.

2. Road safety and corridor 2. US$ 20.25 million Quarterly progress reports; MORTH support;management works, including Supervision mission reports;safety audit and hazardous Consultant studies on selected NHAI acts as the nationallocation improvement works topics. champion of road safety;on existing nationalhighways, and CMU civil Active participation of NGOsworks. and civil society.

3. Public sector participation, 3. US$ 25.55 million Quarterly progress reports; Government remainsincluding preparation and Supervision mission reports; committed to implementingimplementation of a pilot Consultant studies on selected institutional reforms andBOT project based on topics. retains strong ownership ofcompetitive bid on action plans;government financial supportrequirements.

4. Institutional strengthening, 4. US$19.02 million Central Government assumesincluding NHAI capacity a role as the facilitator forbuilding in social and cross-state policy dialogue.environmental aspects, roadsafety, and highway assetinventory; an InterstateHighway Transport EfficiencyStudy; and project preparationand studies.

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Annex 2: Detailed Project Description

INDIA: Grand Trunk Road Improvement Project

By Component:

Project Component t - US$685.29 million1. Highway Upgrading - $ 685.29 million, including contingencies. This includes:

(a) civil works for widening and strengthening of about 420 km of national highway from twolanes to four-six lane divided carriageway with service roads where required in seven contractpackages ($590.41 million).

(b) supervision consultant services for civil works in four packages ($34.96 million).

(c) Land acquisition, utility relocation, resettlement and rehabilitation, environmentalmitigation/management ($52.49 million) as described below -

(i) Land acquisition and utility relocation ($26.31 million). This item will be financedentirely by NHAI.(ii) R & R assistance ($17.15 million) will be paid to beneficiaries for each package througha consultative process. Payments will be made from the project director's office, and theBank share ($12.40 million) will be reimbursed on the basis of Statements of Expenditure(SOE).(iii) Resettlement implementation support, training and monitoring ($0.89 million) will beprovided through: four supervision level NGO consultancy packages ($450,000 total); twoto three monitoring consultancies ($200,000 total); training of NHAI and NGO staff plusother R&R implementation expenses by SOE ($240,000).(iv) Environment management and mitigation works ($5.29 million) and consultancyservices for training, monitoring, evaluation and policy planning ($1.37 million)(v) Provision for additional safeguard measures (US$1.49 million). This fund will be madeavailable in case of need for fiurther study and mitigation measures relating to the TajTrapezium Zone and Gautam Buddha Sanctuary. A small fraction of the fund will be usedto support the sanctuary stakeholder committee's review and monitoring activities of theimplementation of the EMP for the stretch passing through the sanctuary.

(d) NHAI project management costs (not Bank financed, $7.43 million).

Project Component 2 - US$20.25 millionRoad Safety and Corridor Management Works - US$ 20.25 million, includingcontingencies

(a) consultant services for safety audit to be done on the road sections belonging to this projectand the TNHP ($0.22 millions). The minor mitigation measures and recommendations identifiedthrough this study will be implemented during the execution of this project. The consultantservices will be retroactively financed under this loan.

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(b) a program of road improvements specifically targeted at supporting improved methods forreducing accidents and improving the safety on the national highway network under NHAI($11.13 million). Expenditures under this component will be limited to $1,000,000 peritem/contract and subject to their selection and design by the consultancy services identified underthe institutional strengthening component (item 4 (e)). It should be ensured by NHAI throughappropriate monitoring that (i) candidate improvements directly address locations with accidentproblems and safety issues; (ii) selection should be made in consultation with police and localauthorities.

(c) a program of maintenance works to introduce alternative contracting methods and strengthenmaintenance management practices under two or three more Corridor Management Units ($8.90million) which will be taken up after the pilot experience on two CMUs of the TNHP. Priorities,design and implementation support will be provided by the consultancy services listed under theinstitutional strengthening component (item 4 (e)).

Project Component 3 - US$ 25.55 millionPublic-Private Partnership in Road Concession - $25.55 million, including contingencies(a) Consultant services including legal advisory, preparation of bid documents, and evaluation ofbid (0.55 millions).

(b) NHAI financial support (estimated to be $25 million) for civil works, with 80% of Bankfinancing.

Project Component 4 - US$19.02 millionInstitutional Strengthening - US$ 19.02 million, including contingencies. This componentincludes:

(a) Social and environmental capacity building, including (i) a poverty and highway developmentstudy (US$0.77 million), which will be financed retro-actively; and (ii) Consultant services fortraining and streamlining monitoring procedures ($0.33 million).

(b) Road safety capacity strengthening (US$7.44 million), including training of trainers anddissemination of road safety manual for 2 to 3 years, public education and campaign through massmedia, and implementation of the comprehensive road safety action plan.

(c ) National Highway Asset Inventory (US$4.00 million). This will involve digitizing all availabledata on the Golden Quadrilateral and computerizing the national highway asset inventory andcharacteristics to enable effective management, control and planning of road assets. If necessary,an aerial survey of NH-2 corridor will be undertaken after the completion of the upgrading works,to prepare ortho-photographic and strip maps of adequate scale (1:5000 or 1:2000) to show allfeatures in the ROW including settlements and encroachments. The baseline information will beintegrated with other road and traffic related databases using the GIS.

(d) A study on the cross-border road transport efficiency (US$0.33 million). The study willexamine the current system of cross- border inspections, state taxes imposed on inter-state freight,

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freight tariffs, axle load control, etc. and recommend alternatives that will reduce or eliminate thelong delays occurring to traffic on the national highways. The study will be conducted incollaboration with MORTH and will adopt a stakeholder participatory approach.

(e) Corridor Management Units related consultant services (US$2.20 million).

(f) Project preparation and sector studies (US$ 3.96 million). This component will providetechnical assistance for conducting sector and project preparation studies, including expresswayproject preparation (the stretch from Vadodara to Mumbai is proposed as one of the candidatesfor detailed project study).

Project Component 5 - US$5.89 millionFront End Fee ( $ 5.89 million)

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Annex 3: Estimated Project CostsINDIA: Grand Trunk Road Improvement Project

Local Foreign TotalProject Cost By Conponent _ US $million US $mitlion US $million

Highway Upgrading 442.78 175.30 618.08Private Sector Development 17.75 7.75 25.50Corridor Management and Road Safety 16.30 1.90 18.20Institutional Strengthening 11.40 6.25 17.65

Total Baseline Cost 488.23 191.20 679.43Physical Contingencies 21.36 8.49 29.85Price Contingencies 29.21 11.62 40.83

Total Project Costs 538.80 211.31 750.11Front-end fee 5.89 5.89

Total Financing Required 538.80 217.20 756.00

Local Foreign "TotalProject Cost By Category US $rnillion US $million US $million

Civil Works 454.98 186.85 641.83Goods 2.28 2.28 4.56Services 30.66 22.18 52.84Miscellaneous 50.88 0.00 50.88

Total Project Costs 538.80 211.31 750.11Front-end fee 5.89 5.89

Total Financing Required 538.80 217.20 756.00

Identifiable taxes and duties are O (US$m) and the total project cost, net oftaxes. is 756 (USS5n). Therefore, the project cost sharing ratio is 77.91% oftotal project cost net of taxes.

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Annex 4: Cost Benefit Analysis Summary

INDIA: Grand Trunk Road Improvement Project

Economic analysis was conducted for each of the nine highway upgrading packages. The totalcost of the component including contingencies represents 90% of the total project cost.Economic analysis was not performed for the corridor management units works for which bothinternational and domestic experiences suggest that these works will be highly economicallyviable.

Economic analysis for the individual upgrading packages was prepared by the consultantsappointed for the feasibility studies. Details of the analysis are described in the relevant feasibilitystudy reports, which are included in the project file. All analyses followed the conventionalhighway cost-benefit analysis methodology, and were based on well established highway projectevaluation models, including the Highway Design and Maintenance Standards Model (HDM-III)developed by the World Bank. To ensure consistency, NHAI re-evaluated all packages usingHDM-II1, with the same input data from the consultant reports. A summary of the results is givenon the table below:

[For projects with benefits that are measured in monetary terms]

Present Value of Flows Fiscal ImpactEconomic Financial AnalysisAnalysis Taxes Subsidies

Benefits: $1,461 m $1,623 mSavings in roaduser costs and roadmaintenance

Costs: $ 553 m $ 614 mRoad construction,

land & resettlement,future maintenanceNet Benefits: $ 908 m $ 1009 m

IRR: 25.9% 25.9%

A standard conversion factor of 0.90 has been used throughout to convert financial costs to economnic costs.

Summary of Benefits and Costs:The unit construction costs were based on the Bill of Quantities developed by the consultants for the 420km of roads for which the preliminary engineering design was completed. Total costs include physical andprice contingencies, supervision costs, and costs of land acquisition, R&R and utility relocation. Theaverage cost of US$ 1.6 million per kilometer includes widening to 4 and 6 lanes and shoulderreconstruction. Maintenance costs were based on the costs developed during the Road Maintenance Study.The table below presents the main characteristics of each package (Note that two packages, I-A and II-B,are further divided into two sub-packages, respectively, for the purpose of economic analysis):

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1998 Total Total

Length Traffic Road Cost Cost ERR NPV

Package Section (km) (AADT) Widenin (M$) (M$/km (%) (M$)._ _ g )

I-Al Agra- Tundla 22.0 17509 6 Lanes 54 2.45 45% 158

I-A2 Tundla - Thane Mathsena 28.8 11008 4 Lanes 40 1.38 36% 109

I-B Thane Mathsena - Etawah Byp. 59.0 6416 4 Lanes 72 1.22 23% 71Start

I-C Etawah Bypass End- Sikandara 72.8 8938 4 Lanes 101 1.38 31% 195

II-BI Bhaunti - Fatehpur Part I 30.5 8361 4 Lanes 72 2.35 17% 28

Il-B2 Bhaunti - Fatehpur Part 2 20.8 8361 4 Lanes 45 2.14 19% 26

IV-A Varanasi - Mohania 76.0 7056 4 Lanes 114 1.50 26% 169

IV-C Sasaram - Dehri 30.0 6919 4 Lanes 65 2.16 21% 62

V-B Barachatti - Gorhar 80.0 4117 4 Lanes 115 1.44 20% 91

Total 420.0 678 1.61 26% 908

The HDM-1II model estimates the net reduction in total transportation costs over the life of theproject, taking account of savings in road user costs, primarily vehicle operating costs and timesavings, along with changes in construction and maintenance costs. User cost savings dependmainly on changes in road roughness, traffic congestion and operating speeds. Existing trafficvolumes range from 13,000 to 38,000 passenger car equivalents per day.

Safety impacts are uncertain due to offsetting effects of improved road standards and expectedhigher traffic speeds, and were not considered in the analysis due to lack of refined data on bothaccident occurrence and costs. It was observed that on the existing road the accident rates arearound 37 fatalities per 100 million vehicle-km and 47 injuries per 100 million vehicle-kin, whichare very high. The benefits of widening and paving the shoulders were included in the analysisthrough speed-flow equations based on lane and shoulder width. Speeds predicted by theHDM-III model were consistent with observations of speeds on the roads. The effects of narrowroads, non-motorized traffic, pedestrians and roadside activities were reflected in a "friction"factor affecting traffic speed that was estimated to be on average 0.70. Altemative road widthswere considered in the analysis, before adopting the final pavement and shoulder widths.

Main Assumptions:

The base case without the project assumes that roads are maintained (routine maintenance, potholepatching and reconstruction at 11 IRI) but not improved over the 20-year evaluation period. In thewith-project case, further pavement strengthening is provided through an overlay scheduled when theroughness reaches 6.0 IRI. Roads are designed on the basis of current levels of truck overloading,recognizing the substantial lack of success in introducing improved load enforcement or truck fleetmodernization in India.

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For the purpose of economic analysis, a project life of 20 years is assumed. A 20% scrap value is assumedfor the end year of project life. A discount rate of 12% is used for the calculation of NPV. Whereapplicable, a 0.9 standard conversion factor is used for converting financial costs into economic costs.

The base year traffic levels were updated from the latest traffic counts (all in recent years), and verifiedthrough field inspection. The traffic growth rates for each package were estimated based on the predictedrates of population growth and per capita income in the project areas, and the assumed income (total GDP)elasticities of traffic demand. The assumed elasticities were based on various international empiricalstudies of traffic growth at similar stage of economic development. Specifically, elasticities for passengervehicle traffic range from 1.8 to 2.0, and for freight vehicle traffic, 1.0 to 1.25. On average, the annualtraffic growth rate was estimated to be around 9% for passenger vehicles and between 7% and 8% forfreight vehicles during the first 10 years of the evaluation period, afterwards, a conservative growth rate of6% was adopted for all vehicles.

Generated traffic was also considered for the first year after project completion. A conservative priceelasticity of 0.25 was assumed to estimate the generated traffic, which yields, on average, a generatedtraffic equivalent to 5% of the normal traffic. The road user benefits accrued to the generated traffic werecalculated as 50% of the road user benefits accrued to normal traffic. Passenger value of tirne by type ofvehicle was based on the per capita income level of the average passengers using that type of vehicle. Theimpact of road congestion was considered through the HDM-III model. The table below presents typicalvehicle characteristics and road user costs:

Typical Vehicle Characteristics and Road UserCosts

Light | Medium Heavy

Cars Buses Trucks Trucks Trucks

Vehicle Characteristics

Gross vehicle weight (tons) 1.2 13.2 7.0 16.2 25.0

Number of passengers (#) 4.8 43 0 0 0

Service life (years) 10 10 10 10 10

Kilometers driven per year (kmn) 18000 100000 65000 85000 85000

Hours driven per year (hours) 600 3000 2200 2900 2900

Economic Costs

New vehicle price (Rs) 213500 489000 460000 572800 776500

New tire price (Rs) 1000 6700 3000 6500 6500

Maintenance labor (Rs/hour) 10 10 10 10 10

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Driver wages (Rs/hour) 0 70 25 37 37

Time costs (Rs/hour) 22 15 0 0 0

Fuel price (Rs/liter) 10 9 9 9 9

Lubricants price (Rs/liter) 26 26 26 26 26

Typical Road User Costs (Rs pervehicle-kilometer)

Four/Six Lane Road (3 IRI) 5.1 15.6 4.8 6.8 9.9

Congested Two Lane Road (4 IRI) 6.0 21.2 5.7 7.4 11.2

Congested Two Lane Road (7 IRI) 6.5 22.5 6.8 8.9 12.9

Congested Two Lane Road (10 IRI) 7.6 25.5 8.4 10.9 15.0

Typical Traffic Composition (%) 28% 6% 11% 49% 6%

Sensitivity analysis / Switching values of critical items:

The major risks affecting economic analysis for the highway upgrading component are costoverruns, delays in implementation and lower-than-expected traffic growth. Cost overruns wereconsidered by a 20% increase in costs. The delays in implementation were reflected by assumingone or two year delay in the opening of all works, with a commensurate delay in the benefitstream. To account of lower traffic growth, that can be caused by macroeconomic problems, a6% and 4% growth rate for all vehicles was assumed over the evaluation period. All thesesensitivity scenarios yield a project ERR greater than 18%. If benefits are reduced by 20% andcosts increased by 20%, the project ERR is 19.3%. A sensitivity scenario considering the value ofpassenger and cargo time to be zero, yields a project ERR of 19.6%, which indicates that a highquality of the project benefits are coming from the expected improved surface condition of theproject roads.

Sensitivity Scenarios ERR NPV ($ million)

Base case 25.9% 908

One year delay in opening 23.0% 783

Two year delay in opening 20.0% 653

Traffic growth equal to 6% for all vehicles 22.3% 558

Traffic growth equal to 4% for all vehicles 18.7% 293

Value of passenger and cargo time equal to zero 19.6% 434

Benefits decreased by 20 % 22.0% 622

Cost increased by 20% 22.7% 804

Benefits down 20% and costs up 20% 19.3% 519

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Switching values of critical items: The cost of highway upgrading works would have to increase by 175percent or the benefits to drop by 64 percent before the overall project NPV would fall to zero. For atypical section with an estimated cost for widening to four lanes of US$ 1.5 million per kilometer, thetraffic would have to be around 5,000 AADT to justify the investmnent with a 12% rate of return. For atypical section with a current traffic of 8,000 AADT, the cost for widening to four lanes would have to bearound US$ 3.0 million per kilometer to justify the investrnent with a 12% rate of return.

Distribution of benefits: All income groups use the national highways, as travelers and as suppliers andconsurners of goods and services. Without the project, high transport costs would continue to affect pricesand availability of services to the communities served by the project, and would constrain economicdevelopment at all levels. With the project, transport costs will decrease, travel times will reduce, andservices such as electricity, health, education, and agricultural extension are more likely to becomeavailable in rural areas. The trucking industry in India is competitive, and is likely to pass on the benefitsof vehicle operating cost savings through lower freight rates, higher quality of services, and extendedservice coverage. Bus services that use the project roads are both publicly and privately operated. Theproject benefits to the privately operated bus services are likely to reach the bus users through lower faresand higher quality. Fares of the publicly operated bus services are not likely to be reduced, but the extentand schedules of bus services are likely to respond to changes in road capacity and quality. The tablebelow shows the distribution of project benefits among vehicle classes and sources of benefits, whichindicates that 66% of the benefits will be allocated to trucks, 17% to buses and 17% to passenger cars.Vehicle operating costs savings of the normal and generated traffic will account for 69% of the projectbenefits, while travel time savings will account for 31% of the project benefits.

Project Net Benefits (M$)Net Benefits 908Costs -553Benefits 1461

Distribution of Benefits by Vehicle Class (M$)Cars 248 17%Buses 248 17%Light Trucks 161 11%Medium Trucks 731 50%Heavy Trucks 73 5%Total 1461 100%

Distribution of Benefits by Source of Benefits (M$)Nornal Traffic 978 67%VOC SavingsGenerated Traffic 30 2%VOC SavingsNormal Traffic 438 30%Time SavingsGenerated Traffic 15 1%Time SavingsTotal 1461 100%

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Annex 5: Financial Summary

INDIA: Grand Trunk Road Improvement Project

Years Ending

Year1e arr I Year3 4 Year5| Year6 Year7Total Financing Required

Project CostsInvestment Costs 112.5 187.5 225.0 150.0 75.0 0.0 0.0Recurrent Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Project Costs 112.5 187.5 225.0 150.0 75.0 0.0 0.0Front-end fee 5.9 0.0 0.0 0.0 0.0 0.0 0.0

,Total Financing 118.4 187.5 225.0 150.0 75.0 0.0 0.0

FinancingIBRD/IDA 88.0 147.0 177.0 118.0 59.0 0.0 0.0Government 30.4 40.5 48.0 32.0 16.0 0.0 0.0

Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0User Fees/Beneficiaries 0.0 0.0 0.0 0.0 0.0 0.0 0.0Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Total Project Financing 118.4 187.5 225.0 150.0 75.0 0.0 0.0

Main assumptions:

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Annex 6: Procurement and Disbursement ArrangementsINDIA: Grand Trunk Road Improvement Project

Procurement

A. Institutional Capacity

NHAI carries out procurement of works, goods and services in-house by a division headedby Member/Chief General Manager. NHAI has prior experience of execution of large externallyaided projects under assistance from ADB and JBIC. Both Bank and ADB are supportingNHAI's National Highway Development Program and agency's institutional development.

An assessment was carried out earlier in February 2000 to determine the institutionalcapacity of the NHAI to undertake project procurement for Third National Highway Project [LN.4559-IN] and it was determined that NHAI has the institutional capacity to carry out projectprocurement.

NHAI has also confirmed that its Board has been fully delegated authority for award of allcontracts without any limitation of value. NHAI has an exclusive web-site 'www.nhai.org' thatgives procurement information on names of successful bidder, current bids, etc.

NHAI has carried out procurement for major consultancy and large work for ThirdNational Highway Project and has therefore gained further experience/expertise on Bank- fundedprocurement. The officers recruited have good educational background. There is fairly effectiveaudit system combined with review by internal and external vigilance organization. NHAI hasgood procurement cycle management support and control system, sound record keeping systemand a fairly established mechanism for settlement of dispute.

The overall risk assessment [with overall rating of - Average] and prior review thresholdsin Paragraph D below are arrived at after assessing NHAI's capacity for carrying out projectprocurement as per Bank's Procurement Guidelines.

B. Procurement Methods

All project activities financed under the Loan shall be procured in accordance with BankGuidelines for Procurement, January 1995, Revised January and August 1996, September 1997and January 1999, in respect of Goods and Works. Consulting services to be funded through theBank's Loan would be procured in conformity with the Bank's Guidelines for Selection andEmployment of Consultants by the World Bank Borrowers, January 1997, revised September1997, and January 1999. All civil works, goods and services will be procured using India-specificBank's Model Standard Pre-qualification and Bidding Document. Specific procurementarrangements are summarized in Tables A and Al, and are briefly described as under:

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B]. Works [US $641.84 Million]

International Competitive Bidding [ICB]: US$615.41 Million Equivalent : The workrelating to widening and strengthening of 420 km. of national highways from existing twolanes to four-six lane divided highway with service roads and other traffic separationmeasures where required will be implemented in seven contract packages of value, in therange of US$48 to US$96 million equivalent, for an aggregate value of about US $530million [excluding price escalation and contingencies] equivalent. The pre-qualificationapplications have been received by NHAI and the selection process of firms is underway.As an advance action, bidding documents are under preparation by NHAI and bids are to beinvited soon. There shall also be a component of work as a pilot project for private sectorparticipation based on Intemational Competitive Bidding for an estimated value of US$25.00 million.

National Competitive Bidding [NCB] : US $10.01 Million Equivalent: The work relating tocorridor maintenance and safety hazardous location improvement work shall beimplemented in contract package sizes of US $1.00 to 2.00 million equivalent each,approximately [excluding price escalation and contingencies], for a cumulative value ofUS$8.90 million equivalent and US$11.13 million equivalent.

Direct Contracting/Shopping/Force Account: US $16.40 Million Equivalent: The workrelating to minor improvement program/environment management program /provision foradditional safeguard measure/small work for road safety and corridor management shall beon the basis of [i] lump sum fixed price contract soliciting quotation from at least threequalified suppliers/contractors [ii] direct contracting with a qualified supplier/contractor or[iii] as a last resort through force account, with the value of each contract being less than theequivalent of US $25,000 in all the three cases.

B2. Goods [US $4.56 Million Equivalent]

Direct Contracting/Shopping : US $4.56 Million Equivalent : It is envisaged that forimplementation of road safety action plan there shall be need for Direct Contracting orShopping for items like computers, data collection, training aids such as audio/videoequipment, estimated to cost less than the equivalent of US $10,000 per contract, subject tocumulative value of US $560,000 equivalent.

The work of aerial survey estimated to cost US$ 4 million is envisaged to be done for theNational Highway Network under NHAI through National Remote Sensing Agency,Hyderabad on a direct contracting basis.

B3. Consultancy Services [US $52.81 Million Equivalent]

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Arrangement in respect of procurement of consultancy services is as under:

S. No. Description of Services Estimated Cost Method of[US $ Million] Selection

[i] Supervision of Civil Works 34.96 QCBS[Four Packages]

[ii] Consultants Services (Legal, 0.55 QCBSPreparation of Bid Documents,Evaluation of Bids)

[iii] Safety Audit on Engineering Design 0.22 Single SourceSelection

[iv] Social and Environment Capacity 0.77 Single SourceBuilding: Selection

- Poverty and Highway DevelopmentStudy

[v] Social and Environment Capacity 0.33 LCSBuilding:

- Consultant Services (Training,Streamlining, Monitoring Procedure)

[vi] Training of Trainers and dissemination 1.60 QCBS/Singleof Road Safety manual Source Selection

[vii] Public Education and campaign 2.64 QCBSthrough mass media

[viii] Implementation of Road Safety Action 2.64 SFBPlan

[ix] Cross State Border Road Efficiency 0.33 SFBStudy

[x] Corridor Management Units - 2.20 QCBSConsultants Services

[xi] Project Preparation and Sector Studies 3.96 QCBS

[xii] R&R support 0.85 QCBS/LCS

[xiii] Environmental Management Plan 1.37 QCBS

[xiv] Provision of Additional Safeguard 0.39 SFBMeasure

For item [i] above Proposals have been invited by NHAI and consultants shall be selected one month inadvance of start of construction work.

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C. Procurement Planning

NHAI has prepared a procurement plan for the identified packages under the project, in theformat specified by the Bank. This has been reviewed and approved by the Bank and is being fedin SAP Operations Procurement also. Procurement of all packages would be undertaken inaccordance with this procurement plan.

D. Review of Procurement Decisions by the Bank [Refer Table BI

Prior Review

- All ICB irrespective of value.

- All NCB civil works contracts [for corridor maintenance] valued US $5 Millionequivalent and above and first two contracts, irrespective of value.

- Consultants' contracts with an estimated value of US $100,000 equivalent and abovefor firms, and US $50,000 equivalent and above for individuals.

E. NCB Provisions

With reference to the procedures for undertaking procurement on the basis ofNCB, all NCB contracts shall be awarded in accordance with the provisions of Paragraphs 3.3and 3.4 of the Guidelines for Procurement Under IBRD Loans and IDA Credits published by theBank in January 1995 and revised in January and August 1996, September 1997 and January 1999[the Guidelines]. In this regard, all NCB contracts to be financed from the proceeds of the Loanshall follow the following procedures:

[i] Only the model bidding documents for NCB agreed with the Government of IndiaTask 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 dailynewspaper, 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 other termsand 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 pricewith the bidders, even with the lowest evaluated bidder;

[v] Extension of bid validity shall not be allowed without the prior concurrence of theBank [i] for the first request for extension if it is longer than eight weeks; and [ii] for

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all subsequent requests for extension irrespective of the period. [Such concurrencewill be considered by Bank only in cases of force majeure and circumstances beyondcontrol of NHAI];

[vi] Re-bidding shall not be carried out without the prior concurrence of the Bank. Thesystem of rejecting bids outside a pre-determined margin or " bracket " of prices shallnot be used; and

[vii] Rate contracts entered into by Directorate General of Supplies and Disposal will notbe acceptable as a substitute for NCB procedures. Such contracts will be acceptablefor any procurement under National Shopping procedures.

F. Procurement Information

Procurement information will be collected and recorded as follows:

[a] Prompt reporting of contract award information by the Project Management Units [PMU]for the respective components.

[b] Comprehensive quarterly reports by PMU indicating:

[i] revised cost estimates for individual contracts and total cost;

[ii] revised timings of procurement actions including advertising, bidding, contractaward and completion time for individual contracts; and

[iii] compliance report by the borrower within three months of the Loan signingdate.

G. Proposed Procurement Arrangements

The project elements, their estimated costs and proposed methods of procurementare summarized in Table A. Figures in parenthesis are the respective amounts to be financed bythe IDA/Bank.

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Procurement methods (Table A)

Table A: Project Costs by Procurement Arrangements(US$ million equivalent)

Procurement MethodExpenditure Category 1CB NCB Other N.B.F. Total Cost

1. Works 615.40 10.01 16.40 0.00 641.81

(492.00) (8.00) (13.00) (0.00) (513.00)2. Goods 0.00 0.00 4.60 0.00 4.60

(0.00) (0.00) (4.54) (0.00) (4.54)3. Services 0.00 0.00 52.90 0.00 52.90

(0.00) (0.00) (52.85) (0.00) (52.85)4. Miscellaneous 0.00 0.00 0.00 33.60 33.60

(0.00) (0.00) (0.00) (0.00) (0.00)5. Front-end fee 0.00 0.00 5.89 0.00 5.89

(0.00) (0.00) (5.89) (0.00) (5.89)6. Resettlement and 0.00 0.00 17.20 0.00 17.20Rehabilitation Support (0.00) (0.00) (12.72) (0.00) (12.72)

| Total r 615.40 10.01 96.99 33.60 756.00___________________________ | (492.00) (8.00) (89.00) (0.00) (589.00)

i Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.

Includes civil works and goods to be procured through direct contracting, national shopping, or forceaccount, consulting services, services of contracted staff of the project management office, training, andtechnical assistance services.

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Table Al: Consultant Selection Arrangements (optional)(US$ million equivalent)

Selection MethodConsultant Servces

Expenditure CaWgory QCBS QBS SFB LCS CQ Other N.B.F. Total CostA. Firms 44.90 0.00 5.34 0.78 0.00 0.99 0.00 52.01

(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)B. Individuals 0.00 0.00 0.00 0.00 0.00 0.80 0.00 0.80

(0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00)Total 44.90 0.00 5.34 0.78 0.00 1.79 0.00 52.81

(0.00) (0.00) (0.00) (000) (0.00) (0.00) (0.00) (0.00)1\ Including contingencies

Note: QCBS = Quality- and Cost-Based SelectionQBS = Quality-based SelectionSFB = Selection under a Fixed BudgetLCS = Least-Cost SelectionCO = Selection Based on Consultants' QualificationsOther = Selection of individual consultants (per Section V of Consultants Guidelines),Commercial Practices, Single Source Selection, etc.

N.B.F. = Not Bank-financedFigures in parenthesis are the amounts to be financed by the Bank Loan.

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Prior review thresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review1

Contract Value Contracts Subject toThreshold Procurement Prior Review

Expenditure Category (US$ thousands) Method (US$ millions)1. Works All ICB irrespective of ICB 8 contracts (US$555 nn.- Civil Works for value approximately)Widening and/orStrengthening US$5 million or first two NCB First two irrespective of

contracts irrespective of value (US$3 mn.)value

2. Goods Contracts for Aerial Direct Contracting 1 No. (US$4 mn.)Survey

3. Services- Consulting Services For firms USS100,000 and Bank Guidelines and as at 18 numbers (US$50 million

above Paragraph B3 above approximately)

For Individual Consultants,US$50,000 and above

4. Miscellaneous5. Miscellaneous6. Miscellaneous

Total value of contracts subject to prior review: 612 million

Overall Procurement Risk Assessment

Average

Frequency of procurement supervision missions proposed: One every 12 months (includes specialprocurement supervision for post-review/audits)

Thresholds generally differ by country and project. Consult OD 11.04 "Review of ProcurementDocumentation" and contact the Regional Procurement Adviser for guidance.

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Disbursement

Allocation of loan proceeds (Table C)

Table C: Allocation of Loan Proceeds

Expenditure Category n Amount in US$million T Financing Percentage

1. Civil Works 510.72 80%2. Goods 4.54 100% of foreign or ex-factory costs and

80% of other items procureddomestically

3. Consultants 52.85 100% of total expenditure net of taxes4. Unallocated 15.00

Total Project Costs 583.11 _

Front-end fee 5.89

Total 589.00

Financial Management Issues:

The project will be implemented by NHAI established under the NHAI Act, 1988. NHAI isalso implementing the TNHP. NHAI has already in place plans to build institutional financial andinternal control capacity.

Current Accounting System:

NHAI follows commercial (accrual) double entry accounting systems based on accountingstandards issued by the Institute of Chartered Accountants of India and significant accountingpolicies adopted by the Board of NHAI from time to time. However, it has been noted that thereis one significant deviation from accounting standards in relation to notional income and this hasbeen specifically described in the "Project Risks" section of this Annex. The Finance Division atthe Head Office (HO) at New Delhi coordinates the finance function. The Division works in closecoordination with the Project Management Units (PMUs) in implementation of the projects.NHAI follows decentralized payment and financial accounting procedure. At the HO, anoff-the-shelf accounting package is used for accounting.

NHAI has several bank accounts in commercial banks for operation of its funds. PMUs alsooperate and maintain bank accounts. Payments for various projects are handled and the books ofaccounts maintained at the PMUs. Each PMU is treated as a separate payment/accounting center.PMUs prepare monthly trial balances which are sent to the HO. The accounting system at thePMUs is manual.

At the end of the year, the consolidation of accounts takes place at HO based on the trialbalances submitted by the PMUs. The financial statements are prepared in the formats prescribed

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under the NHAI Rules, 1997. The Rules also provide for additional reports, as may be requiredby the Central Government, in consultation with the Comptroller and Auditor General (C&AG).

The budget of NHAI is compiled based on the information received from the PMUs andvarious departments at HO. Though the budget is monitored regularly by HO on the basis ofmonthly trial balances received from PMUs, NHAI does not prepare periodic statementscomparing the actual expenditure/income against the budget.

All payments are supervised by independent professional construction supervisionconsultants. The contractor's bills are checked by the consultants in addition to ensuring qualitycontrol. Bills are also checked by PMU technical and accounts staff before making payments tothe contractors. Cheques are signed jointly by the Project Manager and the Accounts Officer.Monthly trial balances prepared by the PMUs are reviewed by the HO.

Flow of Funds:

NHAI will receive funds required for the implementation of the project through Ministryof Road Transport & Highways (MORTH), Government of India (GOI) as capital grant throughthe budgetary allocations of GOI. Necessary funds to meet the project expenses are released fromHO to PMUs on a quarterly basis.

Proposed Arrangements:

Accounts Manual:

The accounting guidelines, policies followed by NHAI are documented in an AccountsManual prepared about five years back. New developments have required fresh guidelines to beissued from time to time. The Accounts Manual needs to be updated to incorporate thesechanges. NHAI will seek the assistance of the internal auditors to update the accounting manualalso incorporating the financial management manual developed by consultants appointed fordevelopment of a project financial management system.

Project Financial Management System

The computerized Project Financial Management System (PFMS) is in advanced stage ofpreparation. NHAI has contracted AF Fergusons for the purpose. The project financialmanagement system has been documented in a 'Financial Management Manual' which will now bemerged with the updated accounts manual. The Manual would also serve as a reference documentfor all project staff. Substantial work has been done under the consultancy and the PFMS shouldbe fully implemented by October 1, 2001. Key issues relating to the PFMS are as follows:

The development of a computerized integrated financial management system was initiatedunder TNHP and is expected to replace the "off the shelf' package currently being used by NHAIfor its accounting. NHAI have renegotiated with the financial management consultancy firm, AFFergusons to widen the scope of the PFMS from the project-specific financial reporting system

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for the proposed project to permit the project accounting system to be applied generally withinNHAI to upgrade its project accounting and integrate it with the mainstream accounting system.

* The PFMS will provide all information required for PMR reporting - cover all aspects ofproject accounting, procurement and contract administration and provide financialinformation with adequate linkages to physical performance indicators.

* A time bound action has been prepared for phased implementation and training of allaccounting staff in the PFMS. As per the current plans, the PFMS will be installed initiallyin the 5 PMUs implementing the Bank Projects and in the HQ. 3 months implementationassistance has been built into the consultancy contract. In addition, a dedicated IT personwill get associated with the PFMS project and take over the management of the systemsfrom the consultants.

Until the PFMS is installed and becomes operational, the Bank would recommend that theNHAI ensure that the following accounting benchmarks are adopted as part of the accountingprocedures:

* Quarterly consolidated financial statements are prepared. This would need the PMU'saccounts to be incorporated on a quarterly basis into the HQ accounts.

o The quarterly financial statements provide a comparison of the actual expenditures againstthe budgeted provisions.

Staffing and Training

The Finance Division at the HO is headed by a General Manager (GM, Finance) whoreports to the Member, Finance. The Member Finance is a member of the Board of NHAI and ison deputation from the Indian Administrative Service (IAS). He is supported by 3 Deputy GeneralManagers (Accounts), 3 Managers, 3 Accounts Officers, 6 Accountants and a Cashier. The PMUsare staffed with an Accounts Officer and an accountant.

Training will be the most important requirement for the operation and implementation of thefinancial management system. Accounting staff at the PMU and HO will be provided with trainingon the Bank's disbursement and reporting requirements before the implementation processcommences.

Disbursement Arrangements

Disbursements from the IBRD Loan would be initially be made according to the Bank'scurrent transaction-based disbursement procedures (reimbursements with full documentation oragainst Statements of Expenditure, and direct payments). It is expected that the quarterly ProjectManagement Reports (PMRs) would be prepared from the beginning of the project and used forproject management purposes. It is however, expected that assured preparation of regular, timelyand adequate PMRs could take up to eighteen months from the start of the project. Disbursement

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would be converted to PMR-based system after satisfactory, regular and timely quality PMRs hasbeen demonstrated.

Financial Reporting

Project management reports (PMRs) would be generated from the manual/ computenrzedaccounting system for each implementing agency and for the whole project. These reports wouldbe management-oriented and would be used for project management. The reports would include:(i) a comparison of budgeted and actual expenditure and analysis of major variances, includingsources and application of funds (by components and expenditure categories) and key physicalparameters and unit rates for selected key items; (ii) expenditures by disbursement categories; and(iii) forecasts for the next 2 quarters. The formats of these reports would conform to the Bank'srequirements and will be incorporated in the Financial Management Manual.

Auditing Arrangements

External Audit

NHAI is audited by the Controller & Auditor General of India (C&AG). The followingaudited annual project financial statements would be submitted to the Bank within 6 months of theclose of GOIs fiscal year.

Statement of Sources and Uses of funds classified by expenditure categories, componentsand sources of funds.Special Account reconciliationStatement of withdrawals from the Credit/Loan based on SOEs or PMRs.

The following audit reports will be maintained under ARCS:

Agency Audit Report Audited by

NHAI Proj ect/SOE C&AG

NHAI Entity C& AG

GOI, Department of Economic Affairs Special Account C&AG

In accordance with the Bank policies for submission of a separate financial statement for theentity as a whole for all revenue earning entities, NHAI would be required to submit entitystatement of accounts and an audit report on the same within six months of the close of thefinancial year in addition to the project audited reports.

Internal Audit

NHAI has not had internal audit done (except the internal reviews carried out by their ownstaff) since 1998-99. NHAI is currently in the process of preparing a short list of firms ofchartered accountants to under take the internal audit for the year 2001-2002. A time-bound

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action plan for the process has been prepared, including obtaining the approval of Termns ofreference from the Bank. The process will be completed by July 31, 2001.

Project Risks

The issues that pose inherent risks are as follows:

* The current business and accounting practices do not allow NHAI to work out project wiseunder or over absorption of their indirect costs. These costs are not directly allocated orattributed to projects but charged off to Profit & Loss Account to offset against agencycommission income. Agency commission is charged at 3% (of the civil works & supervisioncosts) for externally aided projects and 9% (of the civil works & supervision costs) for otherprojects. This is the standard policy followed by PWD in the states. It also implies that thispercentage of works, capitalized as assets (as NHAI is the owner of the works) is treated asrevenue income in the Profit & Loss Account. This is contrary to standard acceptedaccounting practices. In order to assist NHAI to move towards becoming an agency managingits assets on business principles: (a) the current accounting policy of creating notional revenueincomes as agency income at the cost of capitalization, which is a deviation from acceptedaccounting standards, needs to be examined by NHAI and GOI; and (b) NHAI needs to buildon the processes of using accounting information to determine the actual project wise underand over absorption of their indirect costs as a factor critical in arriving at informedmanagement decisions relating to sustainability. This can be addressed by building anappropriate costing module as part of the development of the computerized PFMS.

* Additionally, the PFMS being developed does not specifically provide for cost allocations toarrive at project wise profitability status. In the long run, this will be critical in arriving atinformed management decisions relating to sustainability. It is recommended that NHAIaddresses this issue in the future.

e NHAI has not had internal audit done (except the internal reviews carried out by their ownstaff) since 1998-99. The Bank has agreed on a time-bound action plan for the process,including obtaining the approval of Terms of reference from the Bank.

* Delays in the audit process. The annual accounts for the year ended 31 March 1999 and theaudit report thereon were issued in April 2000. The audit for the year 1999-2000 has beencompleted but the audit report has yet to be finalized.

The Bank requires NHAI to provide the audited financial statements and audit reportwithin six months of the close of the financial year. With the introduction of the PFMS, NHAIplans to complete the process of consolidation and finalization of accounts by the end of June toenable it to comply with the Bank's audit requirements.

For the year 2000-2001, NHAI will work with a firm of chartered accountants tocomplete the consolidation and finalization of the accounting statements to meet the Bank's timeline for submission of audited statements and report.

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Readiness for Implementation and Next Steps

While current capacity within NHAI to account for project funds is adequate, NHAI isupgrading this capacity with thz development of the computerized Project Financial ManagementSystem. A project financial m2nagement manual has been developed in conjunction with thesystem. The system will be tested and debugged, and staff trained, over a 12 week periodbeginning in June 2001, so that the system will be fully implemented from October 2001.

Agreed Actions By when

Quarterly financial statements provide a comparison of the For GTRIP: October 2001actual expenditures against the budgeted provisions andexplanations of significant variations. For entire NHAI: January 2002

Quarterly consolidated financial statements are prepared. August 2001This would need the PMU's accounts to be incorporated on aquarterly basis into the HQ accounts.

Initiate 12-week system testing and debugging process June 2001

Full implementation of PFMS for TNHP and GTRIP October 2001

Appointment of chartered accountant firm for internal audit July 2001purposes

Training of staff in Bank's accountirng, reporting July 2001requirements and claim procedure

Prepare detailed plan for roll out of PFMS for all projectaccounting needs of NHAI outside of GTRIP and TNHP December 2001

Begin PFMS roll out in NHAI to integrate with mainstream January 2002accounts

Update and merging of Accounts and Financial Management December 2001Manuals

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Annex 7: Project Processing Schedule

INDIA: Grand Trunk Road Improvement Project

Project Schedule Planned ActualTime taken to prepare the project (months) 15 10First Bank mission (identification) 09/04/2000 09/04/2000Appraisal mission departure 02/05/2001 02/12/2001Negotiations 05/15/2001 05/23/2001Planned Date of Effectiveness 09/30/2001

Prepared by:

National Highways Authority of India

Preparation assistance:

Consultants and India Country Office

Bank staff who worked on the project included:

Name SpecialityZhi Liu Task Leader, Transport Economist

A. K. Swaminathan Highway Engineer

Anil Bhandari Highways Adviser, Institutional Strengthening

Sonia Kapoor Environmental Specialist

Mridula Singh Social and Resettlement Specialist

Anil Somani Environmental Specialist

Guang Zhe Chen Transport Economist, India Transport Team Leader

Stein Lundebye Transport Specialist, Road Safety

Piers Vickers Transport Specialist

Rodrigo Archondo-Callao Technical Specialist, Economic Analysis

Reidar Kvam Social and Resettlement Specialist

N. Rarnan Procurement SpecialistD. C. Mishra Procurement Specialist

Rajat Narula Financial Management Specialist

Manvinder Mamak Financial Management Specialist

Irene Christy Program Assistant

Douglas Gray Program Assistant

N. S. Srinivas Team Assistant

Sangeeta Anand Team Assistant

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Annex 8: Documents in the Project File*INDIA: Grand Trunk Road Improvement Project

A. Project Implementation Plan

1. Grand Trunk Road Project, Borrower's Project Implementation Plan, Main Report, version 1.0, May2001

2. Grand Trunk Road Project, Borrower's Project Implementation Plan, Appendices, version 2.0, May2001

B. Bank Staff Assessments

C. Other

1. National Highways Authority of India (NHAI) - Grand Trunk Road Improvement Project:Consolidated environmental Impact Assessment Report - Volume I, February 2001

2. NHAI - Grand Trunk Road Project : Consolidated Environmental Impact Assessment Report -Executive Summary Draft: January 2001

3. NHAI - Grand Trunk Road Project: Noise Quality Assessment - Final Report, January 20014. NHAI - Tree Plantation Strategy - Grand Trunk Road Improvement Project, March 20015. NHAI - Grand Trunk Road Improvement Project: Consolidated Resettlement Action Plan - Final

Report, February 20016. NHAI - Grand Trunk Road Improvement Project: Construction Period Road Safety Plan - Volume VI,

Final Report, February 20017. NHAI - Grand Trunk Road Improvement Project: Independent Review Report - Volume II, Final

Report, February 20018. NHAI - Grand Trunk Road Improvement Project: Air Quality Assessment - Volume III, Final Report,

February 20019. NHAI - Grand Trunk Road Improvement Project: Executive Summary - Final Report, February 2001

10. NHAI - Grand Trunk Road Improvement Project: Road Landscape and Tree Transportation Plan -Volume V, Final Report, FebruLary 2001

11. NHAI - Grand Trunk Road Improvement Project: Environmental Management Plan - Package IA,Final Report, February 2001

12. NHAI - Grand Trunk Road Improvement Project: Environmental Management Plan - Package IB,Final Report, February 2001

13. NHAI - Grand Trunk Road Improvement Project: Environmental Management Plan - Package IIB,Final Report, February 2001

14. NHAI - Grand Trunk Road Improvement Project: Environmental Management Plan - Package IC,Final Report, February 2001

15. NHAI - Grand Trunk Road Improvement Project: Environmental Management Plan - Package IVA,Final Report, February 2001

16. NHAI - Grand Trunk Road Improvement Project: Environmental Management Plan - Package IVC,Final Report, February 2001

17. NHAI - Grand Trunk Road Improvement Project: Environmental Management Plan - Package VB,Final Report, February 2001

18. NHAI - Grand Trunk Road Improvement Project: Appendices to EIA Report - Volume IA, Final

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Report, February 200119. NHAI -Grand Trunk Road Improvement Project: Noise Quality Assessment - Volume IV, Final

Report, February 200120. NHAI - Economic Analysis, February 200021. Institutional Strengthening of National Highway Authority of India (NHAI), December 199922. NHAI, Corporate Plan 96-97, September 199623. NHAI, Options Report, Medium Term Construction Priorities for Expressways in India, December

199424. NHAI, Corporate Plan, Reference Documents, April 199625. NHAI, Organization and Development Proposals, May 199526. NHAI, Organization and Development Phase 2 Report, May 199627. Development of Long Term Plan for Expressways, Executive Summary, October 199128. Development of Long Term Plan for Expressways in India, Final Report, October 199129. Medium Term Construction Priorities for Expressways in India, 199630. NHAI, Resettlement Action Plan, October 2000 - Consultancy Services for Package - I, Four Laning

and Strengthening of the Existing Two-lane from km 199.66 (Agra) to 393 (Rajpur) of NH-231. NHAI, Resettlement Action Plan NH-2 (Package II), Construction Package 'B' - Four Laning and

Strengthening of Highway from km 393 (Sikandara) to km 115 (Khaga) Section of NH-2 (11/28/2000)32. NHAI, NH2 Varansasi - Aurangabad 4-laning and Strengthening Project, Resettlement and

Rehabilitation Action Plan, Construction Package A & Package C, September 200033. NHAI, Resettlement Action Plan, Consultancy Services for Four-laning and Strengthening of the

Existing two-lane Section of NH2, km 180.00 to km 398.75 (Madanpur to Barwa Adda) (packageV(B))

34. NHAI, Follow-up Public Consultation Programme, April 2001.

*Including electronic files

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Annex 9: Statement of Loans and Credits

INDIA: Cirand Trunk Road Improvement ProjectMay-2001

Differenc-e between expectedand actual

Orginal Amount in US$ Millions disbursements

Project iD FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'dP055454 2001 KERALA RWSS 0.00 65.50 0.00 0.00 61.17 -0.11 0.00

P035173 2001 POWERGRID II 450.00 0.00 0.00 0.00 450.00 0.00 0.00

P050658 2001 TECHN EDUC III 0.00 64.90 0.00 0.00 59.15 -0.51 0.00

P059242 2001 MP DPIP 0.00 110.10 0.00 0.00 103.53 -3.50 0.00

P010566 2001 GUJARATHWYS 381.00 0.00 0.00 0.00 340.11 1.45 0.00

P038334 2001 RAJ POWER I 180.00 0.00 0.00 0.00 161.46 -16.99 0.00

P067543 2001 LEPROSY II 0.00 30.00 0.00 0.00 29.57 0.00 0.00

P049770 2000 REN EGY II 80.00 50.00 0.00 0.00 125.24 3.67 0.00

P045049 2000 AP DPIP 0.00 111.00 0.00 0.00 100.77 -1.09 0.00

P035172 2000 UP POWER SECTOR RESTRUCTUFtING PROJECT 150.00 0.00 0.00 0.00 134.69 15.02 0.00

P010505 2000 RAJASTHAN DPIP 0.00 100.48 0.00 0.00 91.80 3.24 0.00

P067330 2000 IMMUNIZATION STRENGTHENING PROJECT 0.00 142.60 0.00 0.00 108.37 -14.04 0.00

P059501 2000 TAforEcon Reform Project 0.00 45.00 0.00 0.00 42.07 1.00 0.00

P055456 2000 Telecommunicabons Sector Reform lA 62.00 0.00 0.00 0.00 58.24 4.54 0.00

P050667 2000 UP DPEP III 0.00 182.40 0.00 0.00 143.17 28.28 0.00

P050657 2000 UP Health Systems Development Prcject 0.00 110.00 0.00 0.00 101.64 3.01 0.00

P009972 2000 NATIONAL HIGHWAYS III PROJECT 516.00 0.00 0.00 0.00 485.B4 7.31 0.00

P049537 1999 AP POWER APL I 210.00 0.00 0.00 0.00 113.71 67.38 0.00

P050651 1999 MAHARASH HEALTH SYS 0.00 134.00 0.00 0.00 119.30 129.20 0.00

P050646 1999 UP SODIC LANDS II 0.00 194.10 0.00 0.00 153.08 39.66 0.00

P050637 1999 TN URBAN DEVIl 105.00 0.00 0.00 0.00 38.99 -13.24 0.00

P045050 1999 RAJASTHAN DPEP 0.00 85.70 0.00 0.00 73.19 31.49 0.00

P045051 1999 2ND NATL HIVIAIDS CO 0.00 191.00 0.00 0.00 136.50 1.45 0.00

P041264 1999 WTRSHD MGMT HILLS II 65.00 50.00 0.00 0.00 106.79 10.08 0.00

P010561 1998 NATLAGR TECHNOLOGY 96.80 100.00 0.00 0.00 150.05 63.35 0.00

P035169 1998 UP FORESTRY 0.00 52.94 0.00 0.00 29.73 15.46 0.00

P035824 1998 UP DIV AGRC SUPPORT 79.90 50.00 0.00 0.00 105.95 57.11 0.00

P035827 1998 WOMEN & CHILD DEVLPM 0.00 300.00 0.00 0.00 249.36 36.34 0.00

P010496 1998 ORISSA HEALTH SYS 0.00 76.40 0.00 0.00 65.86 24.81 0.00

P049477 1998 KERALAFORESTRY 0.00 39.00 0.00 0.00 22.92 2.11 0.00

P038021 1998 DPEP III (BIHAR) 0.00 152.00 0.00 0.00 114.83 76.97 0.00

P049385 1998 AP ECON RESTRUCTURIN 301.30 241.90 0.00 0.00 330.20 122.29 0.00

P009584 1997 ECODEVELOPMENT 0.00 0.00 0.00 0.00 8.73 8.62 0.00

P036062 1997 ECODEVELOPMENT 0.00 28.00 20.00 0.00 15.28 12.10 0.00

P043728 1997 ENVCAPACITYBLDGTA 0.00 50.00 0.00 0.00 32.29 26.21 0.00

P044449 1997 RURAL WOMEN'S DEVELOPMENT 0.00 19.50 0.00 0.00 15.48 14.67 -0.80

P009995 1997 STATE HIGHWAYS l(AP) 350.00 0.00 0.00 0.00 226.72 90.06 0.00

P045600 1997 TA Srs RD INFRA DEV 51.50 0.00 0.00 0.00 12.35 12.94 12.94

P049301 1997 A.P. EMERG. CYCLONE 50.00 100.00 0.00 0.00 67.87 72.40 0.00

P010473 1997 TUBERCULOSIS CONTROL 0.00 142.40 0.00 0.00 100.93 86.28 0.00

P010511 1997 MALARIACONTROL 0.00 164.80 0.00 0.00 118.24 81.34 0.00

P010531 1997 REPRODUCTIVE HEALTH1 0.00 248.30 0.00 0.00 147.32 107.50 67.31

P035158 1997 APIRRIGATION III 175.00 150.00 0.00 0.00 208.30 111.46 0.00

P035825 1996 STATE HEALTH SYSII 0.00 350.00 0.00 0.00 139.82 152.72 0.00

P010529 1996 ORISSAWRCP 0.00 290.90 0.00 0.00 93.68 50.20 0.00

P043310 1996 COALENV&SOCIALMITIGATION 0.00 63.00 0.00 0.00 30.57 28.85 0.00

P010480 1996 BOMBAY SEW DISPOSAL 167.00 25.00 0.00 10.00 74.99 81.57 6.49

P039935 1996 ILFS-INFRAS FINANCE 200.00 5.00 0.00 168.87 9.61 179.09 0.00

P035821 1996 DPEP II 0.00 425.20 0.00 0.00 141.03 29.23 0.00

P035170 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 0.00 222.18 162.45 0.00

P010484 1996 UP RURAL WATER 59.60 0.00 0.00 7.20 28.42 24.56 6.92

P010485 1996 HYDROLOGY PROJECT 0.00 142.00 0.00 19.64 40.65 77.96 13.06

P010503 1995 AGRIC HUMAN RES DEVT 0.00 59.50 0.00 0.00 6.53 11.83 0.90

P010489 1995 AP 1ST REF. HEALTHS 0.00 133.00 0.00 0.00 30.11 28.91 0.00

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Difference betweenexpected

Original Amount in US$ Millions and actualdisbursements

Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'dP010476 1995 TAMIL NADU WRCP 0.00 282.90 0.00 0.00 113.16 118.67 24.73P010461 1995 MADRAS WAT SUP II 275.80 0.00 0.00 189.30 19.83 205.54 2.07

P010463 1995 INDUS POLLUTION PREV 143.00 25.00 0.00 65.81 69.14 136.86 10.66

P010464 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 0.00 75.13 69.29 0.00

P010563 1995 FINANCIAL SECTOR DEV PROJ. (FSDP) 700.00 0.00 0.00 316.30 6.23 -377.47 0.00

P010522 1995 ASSAM RURAL INFRA 0.00 126.00 0.00 0.00 58.58 42.60 30.96

P009870 1994 CONTAINER TRANSPORT 94.00 0.00 0.00 15.00 39.35 51.71 51.70

P009964 1994 WATER RES CONSOLID H 0.00 258.00 0.00 0.00 66.79 68.21 0.00

P010457 1994 POPULATION IX 0.00 88.60 0.00 0.00 29.89 29.92 0.00

P010455 1994 BLINDNESS CONTROL 0.00 117.80 0.00 10.00 46.38 52.32 0.00

P010448 1994 FORESTRY RESEARCH ED 0.00 47.00 0.00 0.00 6.57 25.65 -2.05

P010410 1993 RENEWABLE RESOURCES 75.00 115.00 26.00 0.00 36.83 69.60 0.00

P009977 1993 ICDS II (BIHAR & MP) 0.00 194.00 0.00 0.00 46.84 53.04 53.05

P009946 1992 NAT. HIGHWAYS II 153.00 153.00 0.00 0.00 45.36 34.59 27.12

P009963 1992 POPULATION Vlil 0.00 79.00 0.00 0.00 30.89 33.90 0.00

P009869 1989 NATHPAJHAKRI HYDRO 485.00 0.00 0.00 0.00 71.47 71.47 30.92

Total: 6025.90 6822.22 46.00 802.11 6942.83 2832.59 336.01

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INDIASTATEMENT OF IFC's

Held and Disbursed PortfolioMay-2001

In Millions US Dollars

Committed DisbursedIFC IFC

FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic1990 TDICI-VECAUS II 0.00 0.74 0.00 0.00 0.00 0.74 0.00 0.001981/86/89/92/94 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.002000 Tanflora Park 0.00 0.51 0.00 0.00 0.00 0.00 0.00 0.001989/90/94 Tata Electric 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Taurus Starshare 0.00 2.53 0.00 0.00 0.00 2.53 0.00 0.001987/88/90/93 Titan Industries 0.00 0.52 0.00 0.00 0.00 0.52 0.00 0.001989 UCAL 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.001996 United Riceland 10.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001991/96 VARUN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001997 WIV 0.00 5.00 0.00 0.00 0.00 2.40 0.00 0.001997 Walden-Mgt India 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.001997 20TH Century 7.00 0.00 0.00 0.00 7.00 0.00 0.00 0.001993 20th Century 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001989 AEC 5.93 0.00 0.00 0.00 5.93 0.00 0.00 0.001994 Ambuja Cement 2.67 4.94 0.00 0.00 2.67 4.94 0.00 0.001992/93 Arvind Mills 0.00 9.67 0.00 0.00 0.00 9.67 0.00 0.001997 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.002001 Basix Ltd. 0.00 1.00 0.00 0.00 0.00 0.00 0.00 0.001984/91 Bihar Sponge 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.001997 CEAT 19.80 0.00 0.00 0.00 19.80 0.00 0.00 0.001990/92 CESC 19.50 0.00 0.00 43.55 19.50 0.00 0.00 43.551995 Centurion Bank 0.00 4.67 0.00 0.00 0.00 4.67 0.00 0.002000 Chinai 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 Chowgule 11.71 4.58 0.00 17.97 11.71 4.58 0.00 17.971997 Duncan Hospital 7.00 0.00 0.00 0.00 7.00 0.00 0.00 0.001997 EEPL 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.001986 EXB-City Mills 0.48 0.00 0.00 0.00 0.48 0.00 0.00 0.001986 EXB-STG 0.31 0.00 0.00 0.00 0.31 0.00 0.00 0.001995 EXIMBANK 11.37 0.00 0.00 0.00 11.37 0.00 0.00 0.001995 GE Capital 6.25 4.39 0.00 0.00 6.25 4.39 0.00 0.001986/92/93/94 GESCO 0.00 1.85 0.00 0.00 0.00 1.85 0.00 0.001988/94 GKN Driveshafts 0.00 0.33 0.00 0.00 0.00 0.33 0.00 0.001994/97 GVK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994/98/00 Global Trust 0.00 5.00 0.00 0.00 0.00 2.78 0.00 0.00

Gujarat Ambuja 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001994 HDFC 0.00 0.49 0.00 0.00 0.00 0.49 0.00 0.001978/87/91/93 HOEL 0.00 0.28 0.00 0.00 0.00 0.28 0.00 0.001990 IAAF 0.00 2.30 0.00 0.00 0.00 1.37 0.00 0.001998 ICICI-IFGL 0.00 0.14 0.00 0.00 0.00 0.14 0.00 0.001990/94 ICICI-SPIC Fine 0.00 2.79 0.00 0.00 0.00 2.79 0.00 0.001990/95/00 IDFC 0.00 15.46 0.00 0.00 0.00 15.46 0.00 0.001998 IL & FS 0.00 3.12 0.00 0.00 0.00 3.12 0.00 0.001990/93/94/98 IL&FS Venture 0.00 0.60 0.00 0.00 0.00 0.60 0.00 0.001992/95 ITW Signode 0.00 0.34 0.00 0.00 0.00 0.34 0.00 0.001981/86/91/93/96

Total Poitfolio: 187.09 147.87 5.00 70.52 150.81 136.34 5.00 70.52

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Approvals Pending Conmmitment

FY Approval Company Loan Equity Quasi Partic2000 SREI II 10.00 0.00 0.00 0.001999 Sarshatali Coal 30.00 0.00 5.00 0.002000 APCL 7.10 0.00 1.90 0.001999 Carraro 10.00 0.00 0.00 0.002001 GTF Fact 10.00 0.00 2.41 0.002000 IndAsia 0.00 0.00 15.00 0.002001 Internet Express 0.00 0.00 5.00 0.002001 Jetair 0.00 15.00 0.00 0.00

Total Pending Commitment: 67.10 15.00 29.31 0.00

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Annex 10: Country at a Glance

INDIA: Grand Trunk Road Improvement Project

POVERTY and SOCIAL South Low.Indbi Asia Income Development diamond'

1999Pnn-lAtion mid-valr Imnllionsl 997 5 1 t7t 2.417 Life expectancyGBtP Dor csaoia fAtlas method. USSI 440 440 410GNP fArlas method, USS bi,lionsl 441 A .'i1 9Rg:

Averace annual orowth. 1993-99

Pnnrvlatirrn t%l 1 7 19 1 9*L.aborforco (% 21 2.3 23 GNP Gross

Most recent *stimatelast*xt year available. 1993-99) capita p anrimrynt

Poverty (% of ooDulation below national oovesyv line) 3Sllrhrn nnnofitonn tI% of lotsl ooouttlion) 27 7R J1Lifo exnectancv at birth fvoarsl 63 62 s0In-nt mnrtalilv (oar 1.000 live birthttsl 72 7* 77r.hild nralnnltnth,n (% of cijtldren lJfdatr Sl S3 S1 43 Access to safe waterAccess to imoroved wator source (li of oovulation) 81 77 64illito-rarv (I of nooulsltiOn antn 15.1 44 4r 19Grom; orimrarv enrollment 1% of school-aoe oooulaton) 100 t0tl 9f -India Low-income group

Mal. 1119 11n 1n2Fe,mle 40 9n AA

KEY ECONOMtC RATIOS and LONG-TERM TRENDS

1979 1989 1998 1999Economic ration'

GDP IUS$bilionsl 150.1 290.5 419.1 447.3

G-ros do jnPr inveslm,nt/lGnP 27 R 24 1 21 P. 9Pynortn nf nnndr. AndK Aervia.s/lnP fi 7 7 3 11 t 121 TradeGross dor,estic savinaslGOP 20.7 21.R 19.2 20.0Gross nratinntl avinnsiGnpP . 7>2 21 4 7;n A 2 1

Current account balancolGOP -0.5 .1 8 -0.8 -0.8 DomesticIntorrst ar-ymenlxfGDP l3 1 1 11 1 1.2 Investmenttntal dPbht/GO,P 119 728 234 22 9 avingsT

otal debt setvicolotxorts 10 1 28.6 17.0 15.6Present valueonf deht/G0P 20.1Present valua of dettlexnorts . 143 3

Indebtedness1979-S9 1f99.99 1998 1999 1999-03

(avaraDo annual orowthltiOP 57 5.8 f.i R5 8. India RLow-incomegroupGNP n,eranitr .33 t, 9 4 9 4 9 4 7Exoorts of coros and services 4.9 11.8 12.5 1.7 7.5

STRUCTURE of the ECONOMY1979 1989 1998 1999 Growth of Investment and GDP (%)

(I of GOPIAarirl.,ture 3f.8 31.6 29.1 27.7Industrv 25.0 27.6 25.7 26.3 1t

Man,,fachtrinn 17 4 17.4 15i 1. S 7 _Services 38.3 40.8 45.2 46.0 o9

Private r.n.-rmntinn f9 2 RC, 1 SR R R8.n -15G-neral novernment ronsm-otion 100 12.9 3 170 --I-GDPImDorts of ooods and services 8.7 9.6 14.0 15.0

1979-89 1989-99 1998 1999 Growth of exports and Imports (%)(averace annual arowthlAnricolt.re 34 3 7 72 I1 3 4eIndustrv 6.6 6.5 4.0 8.8 30-

Man0faOt-rino 7 n 7.0 3 8 8 5 20Servires 8.7 7 R A.3 79 t_

Private r.nns,mntinn S.5 S.2 3 2 .9 o _ _ _ _ _ _

rpeneral envernment cons,,mntinn 78 S 9 14 5 1093.3Gross domestic investment 5.7 6.2 4.3 11 5 -10Imnorts of nondc and services Fi s R 8 -2.5 -3 R Eexports *'ImportsGross national Droduct 5.5 5.8 6.7 6.8

Note: 1999 data are preliminary estimates.

The diamonds show four kev indicators in the country tin boldl comoared with its income-orouo averaae. If data are missinn. the diamond willhe incomnlete.

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In dia

PRICES and GOVERNMENT FINANCE1979 1989 1998 1999 Inflation (%)

Domestic prices(% change)Consumer prices 6.2 13.2 4.6 1_

Implicit GDP deflator 15.8 8.3 8.9 3.3

Government finance(% of GDP, includes current grants)Current revenue 23.5 21.8 23.6 94 95 96 97 98 99Current budget balance 0.4 -1.7 -0.01 -GDP deflator CPIOverall surplus/deficit -12.5 -10.6 -11.4

TRADE1979 1989 1998 1999 Export and Import levels (USS mill.)

(US$ millions)Total exports (fob) 16,613 33.667 38,326 60oo0o

Tea 550 547 564Iron .. 557 380 374 40,000

Manufactures .. 12,730 26,870 31,314Total imports (cif) 21,219 41,858 55,385 27 M IIFood .. 714 2,543 2,459 290500Fuel and energy 3,768 6,435 10,682

Capital goods .. 5,288 9,122 10,192 93 94 95 96 97 98 99

Fxnnrt rinr index f1995=1001 11 94 r9ImDort Drice index (1995=1001 .. 89 92 90

99Exports 'Imports

Terms nf trade. 11995=1001 19R 17 '107 I

BALANCE of PAYMENTS

IUSS millions)l1979 1989 1998 1999 Current account balance to GOP (%)

Exports of goods and services 9,980 21,201 47,484 54.047 oImports of goods and services 13,120 27,934 58,565 67,250Resource balance -3140 -6,733 -11,081 -13,203

Net income 527 -798 -2,955 -3,133Net current transfers 1,852 2,281 10,587 12,638 '1 l i tCurrent account balance -761 -5.249 -3,449 -3,699

Financing items (net) 985 4,400 7,382 9,487Changes in net reserves -224 850 -3,933 -5,788 -2

Memo:Reserves includina oold fUSS mnillions) 7.581 4.582 33.584 38.150C.onverrinn ratA (DEC. locallUSS) 8.1 16.7 42.1 43.3

EXTERNAL DEBT and RESOURCE FLOWS1979 1989 1998 1999

fUSS miltions) CompositIon of 1999 debt (USS mill.)Total debt outstanding and disbursed 17,898 75,407 98,232 102.626

IBRD 728 6,615 7,993 7,879 G 4,329 A 7,879IDA 4,505 12,521 18,562 18,984

Total debt service 1,282 6,955 10,001 10,527 18,984IBRD 127 881 1,627 1.415IDA 43 188 1,372 458 _

Composition of net resource flows F: 42.241 c:26Official grants 717 698 476 300Official creditors 646 2,489 1,727 1,701 4,503Private creditors 13 2,870 -1,433 414Foreign direct investment 49 252 2,635 2,155Portfolio equity 0 168 342 3,026 E:24,664

World Bank programCommitments 766 2,987 2,055 909 A - IBRD E - eilataralDisbursements 695 2,011 1,421 1,592 5B-IDA 0- Other multilateral F - PrivatePrincipal repayments 77 450 2,193 1,211 CC-IMF G-Short-ermNettlows 619 1,561 -772 381Interest payments 93 619 806 663Net transfers 525 942 -1,578 -282

Development Economics 8125/00

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AdditionalAnnex 11

Environment & Social Assessment, Environmental Management Plan, and ResettlementAction Plan

India: Grand Trunk Road Improvement Project

This Annex is divided into four sections covering the (i) overall design process; (ii) analysis ofalternatives; (iii) major issues and associated management measures; and (iv) implementation andmonitoring. The material presented is based on the Executive Summary of the Final Report onEnvironmental and Social Assessments and Management Plans dated February 2001, and hereafterreferred to as the Executive Summary report, which is available in the project files.

1. Overall Design Process1.1 Environmental and Social AssessmentThe EA process for each consultancy package employed an iterative approach in whichenvironmental issues have been identified in successive levels of detail and specificity at eachstage. This process included Preliminary Environmental and Social Screening, documentation ofBaseline Conditions, Assessment of Potential Impacts, Community Consultation, Integration ofEnvironmental Assessments in the Design Process, Assessment of Alternatives, Mitigation &Enhancement Measures and Environmental Management Plans. These resulted in Base EA/EMPs.A Feasibility Study Report, Preliminary Project Report, Detailed Project Report, and EIA havebeen prepared for each consultancy package as well as an EMP for each contract package.

A social impact assessment had been carried out on the basis of a census to (i) ensure that allimpacted persons are identified and (ii) provide the basis for establishing a cut-off date fordetermining who may be entitled to relocation assistance or other benefits from the project. Theassessment informed engineering designs and helped minimize negative impacts. Communityconsultations at various levels were undertaken to gather and disseminate information about theproject from and to potentially project affected people. A RAP was prepared for each of theconsultancy packages. A socioeconomic survey was conducted on 25% of the PAPs to provide adatabase to develop indicators for the monitoring and evaluation of the RAP. The entitlementframework was derived entirely from NHAI's R&R Policy, which was earlier endorsed by the GOIand the World Bank.

The emphasis during project preparation has been to ensure that the environmental and socialmanagement measures are fully integrated into all stages of project development and operation.

1.2 Independent ReviewThe Base EA/EMPs were subjected to a review by independent consultants, who identifieddeficiencies, obtained additional information as necessary and consolidated the Base EA/ EMPs.During consolidation, the consultants ensured that these met relevant World Bank safeguardstandards and also ensured that the project design addressed the key environmental and socialissues. Independent consultants also carried out a review and consolidation of the variousindividual RAPs. This resulted in (i) uniformnity across the RAPs; (ii) additional provisions forparticipation of women in the project; (iii) additional plan components for safety and hygiene; (iv)enhancement of common property resources; (v) prevention measures and awareness campaign

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for highway related diseases; (vi) a revised and detailed budget; and (vii) a detailed monitoringplan for the EMPs, completed with monitoring procedures and reporting formats.

1.3 Environmental and Forestry ClearancesThe environmental legislation applicable to the project included: the Forest Conservation Act;Environment Protection Act (including the EIA Notification); Wildlife Protection Act; Air Act;Water Act; and Motor Vehicles Act. The laws that formed the basis of planning, construction andoperation of the project in relation to the social and cultural environment included: the LandAcquisition Act; the National Highways Act; Environment Protection Act (including the EIANotification); and Ancient Monuments and Archaeological Sites and Remains Act.

The project has obtained all the necessary Central (MOEF) and State Government (PollutionControl Board, Forest Department, Groundwater Board) clearances.

1.4 Community ConsultationPublic participation and community consultation has been integrated into the social andenvironmental assessment process of the GTRIP. Consultation was used as a forum to establish atwo-way process for sharing information, to build awareness among the stakeholders and totranslate the outcomes into project design. It assisted in the identification of problems as well asthe needs of the population likely to be impacted. This public consultation - carried out duringscreening, feasibility and assessment stages - has been conducted through various means:door-to-door interviews, focus group discussions (9 different types), expert consultation (atdistrict level) and stakeholder consultation. As per MOEF guidelines, district level public hearingswere conducted.

The main issues raised during consultations were related to resettlement, safety, cultural assets,bypasses, air pollution, noise, flora, roadside drainage and roadside amenities. All of these issueshave been incorporated prior to finalizing the project design. For instance, the density and speciesselection of trees was altered; service roads, underpasses and parking bays were included toimprove road safety; and landscaping activities were planned to enhance cultural assets.

1.5 Public DisclosureA list of locations where the EIA, EMP and RAP reports of the various packages have beendisclosed is provided in Table 1. Additional public information dissemination was carried out afterthe EA documents were prepared through public notices, newspaper advertisements, briefingmaterial (in Hindi), maps, charts, banners, reading material (sunmmary of the EMPs and RAPs inHindi) and audio visual presentation materials in Agra, Kanpur, Sasaram and Barhi.

Table 1: Public Disdosure Locations for EIA, EMP and RAP reportsPackage - Route Description Locations

I - A Agra- Shikohabad NHAI, PMU Office, Agra, UPDM Agra, UP

I -B Shikohabad - Etawah Bypass (start) DM Ferozabad, UPEtawah bypass (end)- Bhognipur DM Etawah, UP

I-C DM Auriya, UPGovt. Library, Lucknow, UPRegional Office, SPCB, UP

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11- B Bhaunti - Fatehpur Border NHAI, PMU Office, Kanpur, UPDM Office, Kanpur Nagar, UPDM Office, Kanpur Dehat, UPUP State Pollution Control BoardState Library, Kanpur

IV -A Raja Talab - Mohania NHAI, PMU Office, Varanasi, UPIV -C Sasaram bypass Library, BHU, Varanasi, UP

DM Office, Kaimur [Bhabhua], BiharDM Office, Varanasi, UPDM Chandoli, UPUP, State Pollution Control BoardState Library, Kanpur

V- B Raniganj - Barakatha NHAI, PMU Office, Kodenna, BiharDM Office, Gaya, BiharDM Office, Hazaribagh, iharkhandState Pollution Control Board, Jharkhand

2. Analysis of Alternatives

2.1 General ApproachThe analysis of alternatives in the project has been carried out at 3 levels: strategic, program, andproject levels. Various options were considered and eliminated at each successive level.Environment and social issues were included in the criteria against which the various altemativeswere evaluated at each level.

2.2 AlternativesAt a strategic level, alternatives consisted of choices between various modes of transport. Thiswas carried out as a part of the Eighth and Ninth Five-Year Plans. A number of studies wereundertaken by the MoST and Planning Commission with regard to development of the surfacetransport network. The studies demonstrated the net positive impacts expressways andhigh-capacity highways might have in terms of social and economic development. The studiesconcluded that additional highway capacity would have positive net environmental benefits;primarily in terms of a reduction in the pollution load due to less congestion.

At a program level, during the late 1980's the MoST commissioned a study of the need for andidentification of major expressways to be developed over the longer term. However, to date, thefinancial and institutional resources to embark on expressway construction have been limited.Therefore, the MoST proposed that a medium term programme be prepared for highwayimprovement and capacity augmentation. As part of this medium term program, studies forprioritization and analysis of options were carried out in 1995 for 3 high density corridors -Delhi-Ambala, Delhi-Kolkata, and Chennai-Trichy.

At a project design level, altematives were considered in terms of: (i) no action vis-a-vis theproject; (ii) various alignment altematives available within the existing RoW; (iii) bypasses asaltematives, and various bypass alignment altematives; (iv) road configuration alternatives; and (v)other engineering alternatives. Environment and social considerations were integral to the analysisof alternatives at these design stages. The avoidance and minimization of negative environmentaland social impacts have been considered in project design.

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3. Major Issues, Avoidance, Mitigation and Enhancement Measures

3.1 ClimateThe GTRIP is located in a humid sub-tropical region with marked monsoon effects. The weathergenerally remains dry and hot, while in winters cold weather prevails. By and large, no change inthe macroclimatic setting is envisaged. The micro-climate is likely to be temporarily affected byvegetation removal, potential decrease in surface water bodies and the addition of pavementsurface. The proposed compensatory afforestation, landscape development and retention pondswill positively influence the microclimate.

3.2 Air QualityAmbient air quality monitoring was carried out to establish the baseline concentrations atreceptors. The SPM levels already exceed permissible limits at major urban locations and in theTaj Trapezium Zone. Other air pollutants were within the permissible limits. During construction,an increase in the concentration of air pollutants is likely from hot-mix plants, batching plants andvarious construction activities. Adequate mitigation measures - restrictions on the including thelocation of plant, the use of dust extraction units on hot mix plants and spraying of water in dustyareas - have been included to address these temporary impacts.

During operation, the project should improve air quality, other things being equal, through theremoval of bottlenecks and congestion in built-up areas. Special mitigation measures for theabatement of pollution in the Taj Trapezium - acquiring additional land for the planting ofpollution resistant species - have also been included.

3.3 WaterThe project corridor traverses the Ganga drainage system. The baseline water quality monitoringcarried out at 17 locations indicates that concentrations of major physico-chemical parametersalong the entire GTRIP is within limits. Overall, the water table varies between 2 to 9m for mostpart of the year, and, therefore the availability of ground water is not a limiting concern.Waterlogging occurs at certain stretches along the road and is due to previous borrowingoperations.

No major adverse hydrological impacts are anticipated under this project. Construction activitiesaround surface bodies can affect water quality and, therefore, adequate mitigation measures havebeen incorporated. These measures include protection of water body banks and edges, cascadingto protect for scour, silt fencing to prevent construction run off entering water courses and oilinterceptors. Many water bodies will be partially filled up due to the proposed widening. A totalof 190 wells and 548 hand pumps will be relocated due to the project. Relocation of all thesecommunity water resources has been designed in consultation with the community. Allcommunity resources impacted due to the project will be relocated to suitable locations beforeconstruction starts. The project's water requirement will not alter the water availability scenario.

3.4 Soils - Erosion & Quality

Soils along the road corridor are generally neutral to slightly alkaline. Heavy metal concentrationin the soil is well below USEPA limits. Loss of topsoil, especially in irrigated areas, due to land

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acquisition is a long-term residual impact. However, land acquisition has been minimized,particularly along the stretches where agricultural use of land predominates.

The potential for erosion is limited to a few high embankment areas due to shallow slopes andmoderate rainfall in the corridor. Once trees are removed during pre- construction and groundcover is cleared on the expanding side for widening, erosion could increase. To mitigate soilerosion, slope protection works, including turfing of slopes, reinforce earth walls, stone and brickpitching and gabion structures - will be undertaken as applicable.

Contamination of soil can take place due to leakage or spillage of fuel, lubricants, asphalt andbitumen as well as refuse and solid waste generated from labor camps. Proper equipment andconstruction camp management practices will be adopted to ensure that these impacts do notoccur.

3.5 Quarries and CrushersExisting quarries and crushers that are already in operation (with the required environmentalclearances and approved redevelopment plans) will be used. No new quarries will be opened.Unless these crushers control the pollution level specified under the Air and Water Acts andsatisfy CPCB norms, they will not be used. Though quarry materials are to be transported overlong distances to construction sites, almost all quarries identified have proper access roads.Therefore, no major impact during the hauling of materials is envisaged.

3.6 Borrow PitsBorrow areas have been identified along the vicinity of the GTRIP corridor. These are barrenareas (or areas which are not cultivable), areas where the owners are willing to create ponds, orfishponds, and agricultural areas where the existing level of ground is higher than the surroundingand the owners want these parcels of land to be lowered to facilitate irrigation. Borrow areaslocated within the Gautam Buddha Wild Life Sanctuary or any other forest will not be used.Productive agricultural areas have been avoided for borrowing. The selection of borrow areas tobe used have been based on environmental as well as civil engineering considerations. The specificcontractual requirements for borrowing have been developed for non-cultivable lands, productivelands, elevated lands, fish ponds and borrow areas near settlements. If the borrow area pits are nottreated properly, stagnant water pools will be formed and these pose health hazards. To mitigatesuch impacts, specific redevelopment measures - filling and providing layer of preserved topsoil,plantation of trees along the edge of borrow areas - have been developed and included in contractclauses.

3.7 Fly Ash UtilizationThere are seven coal-based thermal power plants in the states of UP and Bihar, within a distanceof 1 OOkm from the corridor. Fly ash generated from these plants has the requisite physicalproperties for use as embankment fill material. Although fly ash is an excellent fill material, itposes potential adverse health impacts. Therefore, extreme care will be taken during handling andtransportation of this material as fly ash gets air borne easily and causes dust nuisance. No adverseimpact from fly ash is envisaged during the operation phase, as it will remain within theembankment in a compacted form and topped by a layer of turf to prevent erosion.

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3.8 NoiseNoise level monitoring was carried out for various land uses along the project corridor. The noiselevels ranged between 5OdB(A) and 88dB(A). Along the Gautam Buddha Wildlife Sanctuary, ahigh daytime noise level of 76-78 dB(A) was observed. Noise levels close to the highway arealready higher than permissible levels. These are predicted to remain high during projectoperation. At several locations, noise level will increase by as much as 5-l OdB(A). Some locationshave very sensitive receptors such as schools and hospitals.

During construction, noise standards will be strictly enforced for all vehicles, plant, equipment,and construction machinery. Construction sites will not be located within 300 m of settlements.No hot mix, batching and aggregate crushing plants will be located within 200m of sensitive areassuch as schools and hospitals. Noise barriers will be erected at several places where noise duringoperation is expected to be high and would severely impact sensitive receptors.

3.9 Flora-Roadside treesThe total number of trees existing on the entire RoW is about 95,000. These are generally treesplanted through social forestry programs, although some of the trees are quite old and some are indecay. A total no of 48,119 trees are to be felled due to the project. The cutting of trees may haveseveral impacts including loss of shade, loss of tree products, temporary increase in erosion,reduction in air quality and rising ambient noise.

NHAI has developed a tree plantation strategy, which will be followed. Tree felling has beenminimized and a significant proportion of trees (46 to 61% arnong different packages) has beensaved through design modifications. The forest departments of UP, Bihar and Jharkhand will plant2 saplings for each tree cut. In the case of trees which have significant cultural or societal valueand which are healthy, transplantation will be undertaken - about 700 in all. There will be nopesticide use either for removing the existing vegetation or in promoting the growth of newroadside vegetation.

The implementation of NHAI's tree plantation strategy will be monitored by the state High PowerCommittees and by the project level supervision consultants and NGOs. The quarterly reviewmeetings of the High Powered Committees will review and monitor funds transferred from NHAIversus fund received by each district forest officer by quarter, and compare these with amountedrequested and released, to identify any delays in implementation for tree plantation. Memorandaof understandings are under negotiations between NHAI and the concerned state forestrydepartments to ensure funds for tree re-plantation will be released based on survival rates, whichhave been included in the project performance indicators. District forest officers will report toNHAI Environment Managers on number of trees planted by quarter and their survival rates in thefollowing years (and at end of project).

3.10 Flora- Reserved Forests and Wildlife SanctuaryThe project corridor traverses the Agra and Kaimur Hills Reserved Forests. Both these aredegraded areas. The highway also passes through the buffer area (bands of 400m on either side ofthe highway) of the Gautam Buddha Wildlife Sanctuary. The forest cover in the sanctuary is

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deciduous, with grassland and scrubland. None of the flora found in the area is classified as rare,endangered or threatened as per the IUCN guidelines. Part of the Agra Reserved Forest that isclose to the road is currently used as a rubbish dump, including unprotected disposal ofslaughterhouse waste.

The major threats to flora in these areas come from deforestation for fuel, overgrazing and illegaltree felling. The road construction activity itself will not have an impact on the already degradedstatus of the reserved forests and sanctuary. No land is to be acquired for road construction inthese areas. A total of 12,000 saplings within the sanctuary area will be planted. To prevent anyfurther dumping of waste within the RoW or in the adjoining Agra Reserved Forest, a physicalbarrier to prevent trucks from emptying rubbish from the highway will be erected. The projectwill prohibit the use of quarries located within the forest areas. In addition to compensatoryafforestation, measures such as regular policing and patrolling by the NHAI authorities have beenplanned to prevent unwarranted intrusion in forest areas.

3.11 FaunaNo endangered or rare species have been reported in the area, except for the wildlife sanctuarystretch. However, the presence of endangered fauna, especially the tiger, in the area was a majordriving force in the original declaration of the Gautam Buddha Wildlife Sanctuary. Otherimportant species thought to live within the sanctuary include the wolf, leopard, hyena, jackal,spotted deer, sambhar, barking deer, chinkara and nilgai.

The envisaged impacts on fauna during construction and operation are disturbance due to noise,and an increased risk of accidents given rising vehicle speeds. The only real potential road safetyimpact on fauna may occur within the stretch through the Gautam Buddha Wildlife Sanctuary,although there is no evidence of any road-kills in the recent years.

Several mitigation measures for the Gautam Buddha Wild Life sanctuary have been proposed onthe basis of consultatioiis with the local community, forest officials, wild life experts and also asper the recommendations of the Forest Management Plan. All the measures recommended by thestakeholders especially the wild life officials and NGOs have been incorporated in form ofmitigation measures which form part of the respective contract documents - for example,construction activity restricted to ROW, location of construction camps outside Sanctuary,prohibition of use of water resources within the Sanctuary and inclusion of wildlife crossings.

3.12 Project Affected PersonsAdverse socioeconomic impacts include all disruptions on the social and economic interactions ofcommunities due to the road project. This involves effect on both the adjacent communities(mostly direct) as well as the nearby communities (mostly indirect). Although 11,155 familieswould be impacted, less than 60% would be actually displaced. The number of affected persons is29,483 while that of the displaced persons 20,105 (68% of the total affected persons). Size of thedisplaced families (3 persons per family) is significantly higher than that of the affected families(2.6 persons per family) who are not displaced (mainly squatters and encroachers). Of the 11,155families affected, about 6,614 families will be displaced. Of the displaced families, the share of STand WHH families is low. The number of ST population displaced is only 45; that too dispersedover the entire 422km length of GTRIP (i.e. about 1 family per 10km).

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An Entitlement Framework has been developed and this provides for distinct entitlements andassistance for each category of the displaced families/persons. Families or persons experiencingminor impacts (or partial impacts not resulting in displacement) are also entitled for separateawards. The Framework is shown in the Executive Summary report.

Vulnerable groups - woman-headed families, scheduled caste families, scheduled tribe families,families below poverty line, disabled persons, destitute persons and orphan families - constituteabout 37% of all affected families. Most of the affected vulnerable group families live below thepoverty line.

There are 2,714 non-titleholder families affected by the project, which is about 24% of the totalproject-affected families. Of these families, 1,912 will be displaced. Of the non-titleholder farnilies,323 (about 12%) are encroachers, and 1529 (about 56%) are squatters.

Of the 11 ,155 families affected by the project, around 10% are impacted due to full or partial lossof residential structures. Of the rest, about 71% derive their livelihood from agricultural activities,and the remainder from commercial activities. A large number of families who derive theirlivelihoods from agriculture, are either marginal farmers (farmers with marginal land) or aresharecroppers/tenants. Similarly, the residual families derive their livelihood from petty roadsidebusinesses (includes petty roadside industrial units). All of them will fully or partly lose theirlivelihood as a consequence of acquisition or eviction. Income restoration plans are developed toadequately compensate or mitigate losses for the affected people regardless of their tenure.

3.13 Land Acquisition and Community resourcesThe total land required for widening and upgrading the project corridor is about 666 ha of which622 ha will be acquired from private holdings (agricultural land, residential land, commercial landand residential-cum-commercial land). The other 44 ha will be transferred from government andforestlands. Families will be affected and displaced due to the acquisition of this land. The landacquisition plan is available in the Executive Summary Report.

Community resources - 52 schools, 8 police stations, 14 petrol pumps, 14 hospitals, I post office,and I powerhouse - are likely to be impacted due to the project, but none will be displaced. Thelocation of some of these amenities along the National Highway is a concern as poorly plannedlocations is contributing to congestion of the highway.

3.14 Avoidance and Mitigation of Social ImpactsFear of future uncertainties, inducement of land prices, inducement of squatter influx, public healthand safety, as well as road safety were social issues identified by PAPs. Precautionary measures -such as public participation in decision making, PAPs/NGOs involvement in valuing land, use of abaseline cut off date to establish whether PAPs are eligible for assistance or not - have been orwill be taken to avoid or mitigate such general social impacts.

Several measures have been adopted for minimizing resettlement in different packages of theproject. These include applying alternative alignments, adopting contextually suitable roadcross-sections, lateral shifting of alignments, designing appropriate street furniture and facilities.The participatory planning with people has helped minimization of losses, savingresidential/commercial structures, cultural properties, and community infrastructure (schools,

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colleges, governmental buildings and bus shelters).

Support will be provided to affected or displaced persons and families to compensate for thelosses incurred by them. The project's entitlement framework has been developed. This addressesthe loss of land and other assets, loss of diminished livelihood and indirect impacts. The supportincludes replacement costs (specified in a detailed entitlement framework), as well as additionalsupport for displaced families, both titleholder and vulnerable non-titleholders (includesindigenous people). The sites for resettlement have yet to be identified. However, according toSection 8.3 of NHAI's R&R Principles and Policy Framework, the standards of services for theresettlement sites should be better, and no worse, than those lost.

The Bank does not require provision of assistance to those non-vulnerable people supplementingtheir agricultural income from land they hold legally by cultivating other adjacent lands in publiczones that are near enough to use as opportunity (but not law) allows. In specific projects (suchas in the India State Highways program), a distinction has therefore been made betweenvulnerable and non-vulnerable encroachers. Non-vulnerable encroachers are asked to vacate thepublic property without compensation or assistance, while vulnerable groups among them areaccorded more targeted development assistance.

To assist PAFs regain their previous living standards, income restoration plans have beendeveloped and included in the RAP. In addition, there are special income restoration plans forproject displaced persons/families, project-affected vulnerable group persons/families and, theother project-affected person/families needing assistance in skill upgradation or in alternativevocation. The income restoration plan is available in the Executive Summary report.

3.14 Cultural Sites and ArchaeologyMany important cultural and historical settlements lie along the highway, including the cities ofAgra, Varanasi, Allahabad, Sarnath and Gaya. There are three archaeological protectedmonuments and sites of significance within 1km of the project corridor - Budiya ka Taal andRambagh in Package I, and Sher Shah Suri's tomb in Package IVC. No other protectedmonuments, sites or cultural relics are close to the highway. Of all the protected monuments, onlyBudiya ka Taal is located on the edge of RoW of the project road, but there will be no adversephysical impact on the protected monument. .

Fifty-five km of the road lies within the Taj Trapezium, although the Taj Mahal itself is on averageabout 15km from the road and 9 km at its closest. The Taj Trapezium Zone includes over 40protected monuments, four of which are listed as World Heritage Site (WHS) namely the TajMahal, the Agra fort and the Fatepur Sikri and a the Bird Sanctuary within the Bharatpur NationalPark. The tomb of Akbar (at Sikandra) and Itrnad-ud-Daula's tomb have been proposed fordesignation as the World Heritage Site. In addition, there are more than 40 protected monumentswithin the trapeziurn. These monuments are not within 2km of the highway and are not directlyimpacted. As the proposed project involves the improvement of road geometries and quality of thepavement, the air quality is expected to improve during the operation stage (in comparison to the'no-project' scenario). Other heritage sites within the Taj Trapezium Zone are fiurther away fromthe project corridor.

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Though shrines and other sacred structures are not of any significance at the regional level, theyare important to local communities. Most of these structures are within or adjacent to the existingRoW. There are a total of 152 temples, 14 mosques, 41 shrines, 2 churches and a Gurudwaraalong the Project Road. A number of other community resources also have some culturalrelevance to the community, especially when located close to religious assets. These will besubjected to varying degrees of impact depending upon their location in relation to the RoW.Mitigation and enhancement measures have been planned. These will be selected and implementedon a case-to-case basis.

3.15 Road SafetySafety of the project road will be substantially improved through widening from two lanes todivided carriageways with at least four lanes and paved shoulders. Bypasses, service roads, gradeseparated intersections, raised embankments and provision for pedestrians and local traffic throughparallel service lanes will be provided to minimize the conflict between local and through trafficwhich is so often the cause of accidents. A safety audit will be performed on the engineeringdesign of all project roads and detailed designs will be modified according to the safety auditrecomnmendations. Furthermore, the project includes a pilot component to address traffic andsafety management comprehensively through a corridor management program. Other actions thattackle the non engineering aspects of road safety - education, enforcement, institutionalframework for safety management etc. - are being addressed through the Third National HighwayProject.

4. Implementation and Monitoring4.1 Implementing AgenciesThe NHAI is responsible for the overall implementation of the environmental, social and R&Rmeasures and will supervise, through Project Management Units (PMUs) established at fivelocations along the corridor, the various implementing agencies - contractors, consultants, NGOs,local government bodies, pollution monitoring agencies and the respective state Motor Vehiclesdepartments.

The NHAI has demonstrated through its implementation of the Third National Highway Project,that it has the capacity to execute satisfactorily the necessary safeguards for a World Bankfinanced project. The NHAI has created an Environmental and Social Management Unit (ESMU)at the NHAI HQ, headed by a General Manager, supported by separate environmental and socialmanagers. At each PMU, environment and social managers have been appointed. District LevelCommittees and Grievance Redress Committees in each district have been set up. In addition, tofacilitate implementation of the RAP and the social actions in the EMP, NGOs have beenappointed. Co-ordination and policy support will come from the ESMU at the NHAI Corporate.

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4.2 TrainingAdequate provision (Rs.2. 1 and Rs 1.16 million for EMP and R&R respectively) is included in thebudget for the cost of training of staff from NGOs, NHAI (HQ and PMU), supervisionconsultants, contractors and PAFs. Environmental and social training under GTRIP has beendevised taking into account the training already imparted under TNHP. The environmentaltraining will use lecture, seminar and site visit formats to cover the topics appropriate for differenttarget groups and delivery will be timed to ensure that skills and knowledge are raised prior towork starting. To develop in house expertise of an international standard, some of theenvironmental and social staff within NHAI will take formal training overseas lasting severalweeks. There is also provision for broad based awareness raising of social and R&R issues withinNHAI and the road construction industry. A training plan for income restoration of PAPs isavailable in the Executive Summary Report.

4.3 Environmental Management Plan (EMP)Seven EMPs, one for each civil works contract package, have been produced, together with aconsolidated EMP for the project as a whole. These contain detailed actions to avoid, mitigateand manage the negative impacts and to enhance positive impacts on the project corridor. Foreach measure, its location, timeframe, imnplementation and supervision responsibilities have beenspecified. All the environmental elements have been incorporated in the design and biddocuments.

Overall, the budget for EMP implementation is Rs. 327 million and the summary break-up isincluded in Table 2. This is apart from the cost of works that have been internalized in the civilworks of the project.

Table 2: Environmental Budget in the project (in '000 INR)Budget Head. I-A I-B T-C 11B IV-A IV-C V-B TotalMitigation / Enhancement costs 51,321 49,382 48,088 33,053 47,192 22,335 43,630 295,001Monitoring Costs 1,549 1,651 1,648 1,807 1,693 1,277 1,777 11,402Training & Mobilisation Costs* 500 500 500 500 500 500 500 3,500Advocacy and Policy Planning 218 218 298 204 254 164 270 1,626Total Amount assigned 53,588 51,751 50,534 35,564 49,639 24,276 46,177 311,529Contingency @ 5% 2,679 2,588 2,527 1,778 2,482 1,214 2,309 15,576

Total (INR thousand) 56,267 54,339 53,061 37,342 52,120 25,490 48,486 327,106

'The provision for vehicle for monitoring will be made from contingency fimd for the EMP implementation.

4.4 RAP ImplementationThe Contract Resettlement and Rehabilitation Officer (CRRO) in each of the PMUs will beresponsible for planning, implementation and monitoring of R&R with assistance from NGOs.They will ensure that civil works are not started on any road segment before compensation andassistance to the affected population have been provided in accordance with the NHAI R&Rpolicy framework. The fund flow mechanism for the compensation and the assistance part of thebudget has been prepared.

The total budget for implementing the R&R component of the project is Rs. 1720 million (US$ 37million at February 2001 rate of exchange, World Bank Rs 617.8 million and NHAI Rs. 1,102.2million), which is about 6.6% of the total cost of civil works in the project.

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All civil works contracts will include a clause requiring the government to provide at least 30% ofthe land free of encumbrance, pay compensation to the affected people, and begin relocation andrehabilitation of affected people before works are begun.

4.5 Contingency PlansThe project includes an additional contingency provision of $1.5 million for use in (i) betterdefining and analyzing unforeseen environmental or social impacts that may arise duringimplementation in selected sensitive locations such as the Taj Trapezium Zone and GautamBuddha Wildlife Sanctuary and (ii) implementing additional mitigation measures as necessary. Forthe Gautam Buddha Sanctuary, a coordination committee is being constituted to overseeimplementation of the EMP for Package V which includes mitigation measures specifically relatedto the project area. The coordination committee will recommend whether further mitigationmeasures/additional funds will be necessary, and NHAI will decide on fund allocation inconsultation with the Bank.

4.6 MonitoringTo ensure effective implementation, monitoring plans have been included in the EMPs. Detailedformats for monitoring have been prepared. A reporting system with two important aspects hasbeen formulated: reporting on progress and environmental compliance monitoring. The reportingsystem will operate linearly with the contractor reporting to the Supervision Consultant, who intun will report to the PMU. The PMU will be responsible for preparing targets for each of theidentified EMP activities (the outline of such targets has already been prepared). All subsequentreporting by the contractor will be monitored as per these targets set by the PMU before thecontractors move on to the site. The compliance monitoring and the progress reports onenvironmental components will be clubbed together and submitted to the NHAI (through thePMUs) quarterly during implementation. The operation stage monitoring reports may be annual orbiennial provided the Project Environmental Completion Report shows that the implementationwas satisfactory. Otherwise, the operation stage monitoring reports will have to be prepared asspecified in the said Project Environmental Completion Report.

The Resettlement Action Plan contains indicators and benchmarks for achievement of theobjectives under the resettlement programme. Two levels of monitoring have been identified in theRAP - intemal (NGOs, Grievance Redressal Committees and Market Value AssessmentCommittees) and extemal (third party NGO). The basis for monitoring and evaluation will bephysical indicators, financial indicators, the perception on the RAP and estimation of quality oflife.

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