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Regions and Countries Country Partnership Strategy Document
IV. Country Perdormance and Lending LevelsA. Lending Level Proposed29. Although annual lending has averaged about $1 billion in 1999–2000, this amount is small for India’s needs. If assessed in purely dollar terms, ADB’s contribution is relatively modest: it can provide less than $1 for every $100 India needs to invest to achieve and maintain annual growth of 7 percent¾a prerequisite for sustainable poverty reduction. To maximize the development impact of ADB assistance, the 2002–2004 pipeline will build on the success achieved through (i) support for policy reform; (ii) innovation in project design, including public-private partnership; and (iii) leveraging ADB assistance with nonlending activities. The India operations have been highly innovative, with ADB taking the lead in holistic state-level operations in several key sectors, and with particular lending modalities. ADB has also brought additionality to India’s development agenda by leveraging its assistance through cofinancing, development of synergy between public and private sector operations, and the strong demonstrational impact of the projects. B. Loan Program30. Consistent with India’s developmental needs, based on the priorities enunciated in the country strategy, and taking into account ADB’s strategic emphasis on poverty reduction, the lending program will focus on (i) creating conditions for accelerated growth, which are conducive for the private sector; (ii) generating jobs and increasing incomes from faster and broad-based pro-poor economic growth; and (iii) improving basic social services to enhance human development. The proposed pipeline will continue to be selective sectorally and geographically. 31. The proposed firm lending program for India during 2002–2004 consists of 16 projects totaling about $3.7 billion, or an average of $1.2 billion per year (Appendix 4). Projects aim at directly reducing poverty, improving allocative efficiency of resources to enhance productivity and foster economic growth, increasing private sector participation, improving environmental management, and addressing key governance issues. Sectorally, assistance will concentrate on energy, transport, and social infrastructure. Geographically, it is envisaged that over the medium term up to half the annual lending will be made available for state-level operations. Poverty intervention projects, in accordance with ADB’s new classification, constitute about 31 percent of the lending pipeline (in terms of lending volume and number of projects) over the program period. The contribution to poverty reduction may be further strengthened through modification and/or augmentation of the proposed pipeline with poverty-focused interventions as part of the country strategy revision, taking into account possible alternative funding arrangements to enhance concessionality of ADB assistance. In conjunction with ADB’s lending program, ADB will continue to actively pursue cofinancing from official and commercial sources to address the important thematic priorities for ADB’s India operations. C. Technical Assistance and Economic and Sector Work Program32. The focus of the TA program is on (i) institutional strengthening and capacity building to develop effective sectoral, institutional, and regulatory frameworks; (ii) policy support; (iii) ADB’s strategic focus; and (iv) project preparation. The TA program also reflects the expanding state operations and the strengthening of the poverty focus of ADB’s India program. Continuing earlier ADB support provided under a regional TA, it further envisages assistance for the Government’s reform of secured transactions laws. For 2002–2004, 30 TAs for about $20 million have been identified, 13 of which are project preparatory TAs. The TA program will be supported with cofinancing resources. Project selection briefs and TA concept papers are in Appendix 6. 33. The ESW program forms the basis for ADB’s strategic support to India. Macroeconomic analysis, particularly fiscal sustainability analysis, will be complemented by sector studies linked to ADB’s proposed lending operations over the next few years. The studies will be on (i) institutional and regulatory frameworks for urban services, and updating of urban sector strategy; (ii) financial sector strategy, with focus on preventing financial sector vulnerabilities, and on developing the long-term debt market; (iii) evolving a programmatic approach to road sector development; and (iv) capacity building for efficient public sector management at national and state levels and for local government resource mobilization. Governance assessment, private sector assessment, and review of gender issues through participatory consultation are also being undertaken in 2001. Following completion of the national poverty analysis, a participatory poverty assessment at the state level and sector work on reducing poverty in urban areas are ongoing, and will be the basis for state-level poverty reduction strategies which, together with the sector strategies, will feed into the CSP review. The ESW program for 2002–2004 is in Appendix 5. D. Summary of Changes34. Reflecting the progress in policy dialogue and loan processing, the 2001 lending program differs from the corresponding program as reflected in the Country Assistance Plan 2001–2003 as follows: advancing the Private Sector Infrastructure Facility at State Level and the Madhya Pradesh Power Sector Development Program to 2001 (firm); and postponing Power Finance Corporation Project to 2002 (firm). The Gujarat Earthquake Rehabilitation and Reconstruction Project was also included in the 2001 lending program. In view of the pending finalization of the Expert Committee’s report on restructuring Indian Railways, as well as the uncertainty of the future pace and direction of reform, the proposed Railways Improvement (Sector) Project has been taken out of the lending pipeline. 35. Changes to the 2001 program impacted on the 2002–2003 program as follows: (i) The Taj Mahal Environmental Improvements Project (formerly Environmental Improvement and Sustainable Development for Agra-Mathura-Ferozabad Trapezium) has been deferred to 2002 firm (2001 standby); (ii) Madhya Pradesh State Roads Project has been upgraded to 2002 firm; (iii) Energy Efficiency Enhancement Project has been deferred to 2003; (iv) Integrated Urban Development in Madhya Pradesh (formerly Urban Poverty Reduction [Madhya Pradesh]) has been upgraded to 2003 firm; and (v) Public Resources Management Program II (Gujarat) and Rural Electrification Project have been added. In light of delays in implementing the approved Housing Finance II project, further housing finance interventions have been postponed.
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