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MANILA, PHILIPPINES - The Asian Development Bank (ADB) is entering its second urban development program in the Indian state of Rajasthan, participating in a $390 million project designed to improve the living conditions of 1.6 million urban residents in the nation’s largest state.

The Rajasthan Urban Sector Development Investment Program is a seven-year, multi-tranche lending facility under which ADB will provide loans totaling $273 million, with the government of Rajasthan and other agencies funding the $117 million balance. The ADB will provide $60 million in the first tranche, with the state funding $15 million. The ADB will provide a minimum of $50 million in funding for each subsequent tranche.

In the 15 urban areas targeted initially, the program will address poverty reduction and develop urban infrastructure to improve the urban environment and living conditions as well as promote ongoing urban reforms.

“The environmental benefits of the program are expected to be large, including more and better-quality drinking water from water-supply subprojects; better public health, particularly fewer waterborne diseases through investments in water supply, sewerage, drainage and solid waste management systems; and reduced flooding through drainage improvements,” said Susanne Wendt, of the ADB’s South Asia Department.

While this is considered a low-risk project, the effectiveness of the project will depend on ownership and a continued commitment of the state and the urban local authorities to institutional change and financial reforms.

“The state and the local authorities have showed strong commitment to financial reforms, particularly cost recovery,” Wendt said. “There must be sustained political will to continue increasing tariffs and service charges to achieve cost recovery in a reasonable time.”

Rajasthan is home to an estimated 56.5 million residents, with 13.2 million, or about 23%, living in urban areas. While this is lower than the national average of nearly 28%, the state’s percentage of urban residents is expected to rise to 26% by 2021. In the 15 target areas, the urban population is expected to increase between 2% and 7% per year over the next 10 years.

Since 1998, the ADB-supported Rajasthan Urban Infrastructure Development Project (RUIDP) has provided significant improvements in six urban centers. However, the availability of services in other urban areas remains inadequate due to population increases, the influx of tourists and generally poor management and operation of public services, which is common in many Indian cities. The RUIDP, supported with $250 million in loans from the ADB, is ongoing.

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