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Seminannual Report on Project Administration and Technical Assistance Implementation for the Period Ending 30 June 1999 : Country Implementation Highlights
IndiaThe number of loans under administration declined to 24 as a result of no loan approvals and the closing of two during the period. Of the ongoing loans, seven were rated as partly satisfactory and two unsatisfactory in terms of implementation progress, while three were rated partly satisfactory and one unsatisfactory in terms of the achievement of development objectives. The portfolio quality deteriorated compared with the second half of 1998 when only one loan was classified as unsatisfactory in terms of implementation progress. Three loans approved during the second half of 1997 were declared effective during the period. Two loans, one approved in 1996 and the other in 1998, were not signed. One project underwent a major change in scope. The key causes of implementation delays in public sector projects included (i) complex and prolonged government internal procedures, (ii) lengthy procurement approval procedures, (iii) ineffective contract supervision, and (iv) weak project supervisory personnel. Some projects continued to suffer from delays due to weak management and supervision by the EAs, and the inexperience of domestic contractors. Measures were taken to improve project implementation and portfolio performance. These included (i) better quality at entry (in terms of project design and readiness to initiate disbursements), (ii) simplification of internal procedures and the use of standardized bidding documents for procurement on aid-funded projects, (iii) creation of a central project monitoring unit in the Ministry of Finance, and (iv) decreasing intermediation by the central Government in new loans to public sector entities. Semiannual tripartite portfolio review meetings between the Government, EAs, and the RM were held on a regular basis to review project implementation performance. During the 1998 CPRM and the semiannual tripartite portfolio review meetings, the Government agreed to take a number of steps to improve project implementation. Some of the steps had been initiated. For example, in the road sector, the situation improved, at least for the National Highway Project by the establishment of the National Highway Authority of India. With assistance from the financing agencies active in the sector, the Authority should be able to manage this project efficiently and effectively. The Bank, with the full support of the RM, is continuing its efforts to improve project implementation by fielding frequent review missions and having in-depth discussions with the Government and EAs. As the RM is also deeply involved in the administration process, this has improved the Bank's coverage of projects. Procedures remain a problem, however. There is a need for further dialogue, in concert with other financing agencies active in the sector, to have procedures simplified and made more consistent. There is also a need to make institutional reform a substantially more important component of projects. Four more loans were delegated to the RM, and one delegated loan was closed during the period. Eleven delegated loans are now being implemented by the RM. Contract awards reached $178.2 million, or 81 percent of the semiannual projection of $219.5 million, and 44 percent of the annual projection of $400.7 million, mainly due to the lower than expected contract awards in the transport and communications, and urban development sectors. The disbursement performance was satisfactory at $135.8 million, or 113 percent of the semiannual projection of $120.4 million and 35 percent of the annual projection of $389.5 million, due to the higher than expected disbursements from the energy sector. The disbursement ratio increased from 7.7 percent as of 30 June 1998 to 9.1 percent as of 30 June 1999 but was slightly lower than the Bankwide average of 11.9 percent. There were no disbursements from program loans. Net resource transfer decreased further from a negative $14.6 million as of 30 June 1998 to a negative $50.8 million as of 30 June 1999 due to the large amount of loan service payments. Audited project accounts and financial statements were due for 15 loans; 10 were submitted during the period and the remaining 5 were delayed by less than six months. The compliance level deteriorated compared with the status as of 31 December 1998. Of the 24 ongoing loans, environmental covenants were met for 12 and compliance for 9 was in progress. No covenants were applicable to the remaining three loans. Social covenants were met for four loans while compliance was ongoing for 11. Covenants were not met for one, and are not applicable in the case of eight. The data on India are summarized in Tables 27 and 28.  
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