Evaluation

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Evaluation of the Karnataka Urban Infrastructure Development Project
Completed: 2007

The Karnataka Urban Infrastructure Development Project, completed in 2004, was ADB's first urban infrastructure project in India. The Project was based on an $85 million loan for an integrated urban development project in Karnataka State in the central south of India, implemented in four towns surrounding Bangalore: Mysore, Tumkur, Channapatna, and Ramanagaram. A $20 million loan was also included for low-cost housing finance in Karnataka State. Later the towns Maddur and Mandya were also included in the project.

Summary of Findings

OED rated the Karnataka Urban Infrastructure Development Project as successful, although at the lower end of the scale. The Project was assessed as relevant and effective, but less efficient and less likely to be sustainable.

The best outcomes were achieved from the components in road development, housing finance, slum development, self help group support, and to some extent water supply and sanitation.

Outcomes of wastewater treatment plants, residential sites and services, bus and truck terminals, and sanitary land fills were often less successful. The significant wastewater treatment investments were delivered in good order, but their full use lagged behind, due to lack of household connections to the sewage systems, and other problems.

Experiences with the creation of female self help groups were very encouraging. The Project hit on the right approach fairly late in the Project. But then, within a short period, 772 urban and female dominated self-help savings groups were created. OED documented their experiences in Promoting Urban Social Development through Self Help Groups in Karnataka.

Lessons Identified

The Project was the first loan funded integrated urban development project approved in over a decade in India, and the experiences with this helped many subsequent projects, as needed to develop India's many large cities. It had important spill-over effects. For instance it helped set the climate for the creation in 2005 of India's National Urban Renewal Mission. While one lesson was that integrated urban development projects can work in India, another was that these should be kept as simple as is feasible under the circumstances.

Questions were raised about the central government's model of allocation of such loan opportunities to certain states and cities. This was viewed as not sufficiently demand driven. Local governments viewed the available financing as a one time opportunity. They attempted to include as many components in the project as possible. They appeared less aware of need for financial viability and post-project operation and maintenance requirements.

The Project was intended to help relieve pressure on Bangalore, but it did not succeed in this. This objective would have required another approach. Investment should have been more directly geared to job creation in the surrounding cities. It is not sufficient to offer housing sites, two industrial sites, and improved services in such cities. This will not significantly divert business and migrants from coming to Bangalore.