Regions and Countries

	Table of Contents
p. 3 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Lending Levels

Country Strategy and Program Update 2003-2005: India

---

III. Portfolio Management Issues

A. Portfolio Performance

20. ADB has approved 60 loans for $10.3 billion⁷ up to 31 December 2001. Of these, 2 loans were cancelled before implementation, 26 have been closed, and 32 are ongoing including 5 yet to be signed by the Borrower. The ongoing loans have a net loan amount of $5.2 billion, of which $1.9 billion (35%) has been disbursed. In addition, ADB has provided 141 TAs for a total of $71.3 million (36 for project preparation and 105 advisory); 87 of the 141 have been completed. The remaining 54 TAs (for a total of $34.5 million) are under implementation.

21. For the 32 ongoing projects (excluding the loans closed during the year), the time taken from approval to effectiveness is 7.5 months, about 0.5 months more than the comparable ADB-wide average of 7 months. The contract awards ratio increased from 22.7% in 1997 to 23.2% in 1998 and 36.3% in 1999 but declined sharply to 18.0% in 2000 and was only 4.5% for 2001. The disbursement ratio also exhibits the same trend, increasing from 24.6% in 1997 to 32.9% in 1998 and 35.2% in 1999, with a sharp fall in 2000 to 22.2%. The disbursement ratio for 2001 fell further to 11.9%. One reason is that withdrawals totaling about $120 million were deferred to obtain advantage of the lower interest rates under the LIBOR-Based Lending facility of ADB with effect from 31 July 2002⁸ . Another major reason is the increase in portfolio share of urban sector basic human needs projects, that are typically more challenging, as a consequence of economic sanctions. Also, the portfolio composition is now skewed in favor of a large number of newly approved projects that are yet to commence full implementation. As of 31 December 2001, 26 of the 32 loans have been rated satisfactory or higher in terms of implementation progress, and 31 loans have been rated satisfactory or higher in terms of development objectives. Three loans⁹ have been rated unsatisfactory for implementation progress due to delay in loan effectiveness.

B. Performance Monitoring and Evaluation

22. ADB has been monitoring project implementation through regular tripartite consultations with the implementing agencies and the Ministry of Finance. The 2001 Country Portfolio Review Mission had indicated that noncompliance with key policy covenants constrained project implementation and sustainable sector development in the energy and transport sectors. Projects in urban infrastructure are implemented by urban local bodies (ULBs) that depend for a major part of their resources on grants from the state governments. State governments need to accelerate the implementation of reform measures to empower ULBs to raise resources on their own. Their financial management skills are also weak, and the accounts of many ULBs have not yet been audited. The sector is also affected by the lack of contractors with adequate skills and capacity to implement large contracts. Since the last country strategy and programme update in July 2001, only one project in India has been evaluated, Loan 1016-IND: The Second Ports Project. It has been assessed as successful.

Back II. Implementation of the Country Strategy and Program	Next IV. Country Performance and Lending Levels