|Project Rationale and Linkage to Country/Regional Strategy
NCRPB is a regional planner and financier of NCR, which is one of the fastest growing urban agglomerate regions in India. NCRPB's Regional Plan 2021 envisages massive scaling- up of urban infrastructure investments in NCR. However, due to domestic debt market limitations, the tenure that NCRPB is able to currently offer is a maximum of 10 years. Moreover, due to weak project development and project management capacities in a number of subborrowers of NCRPB, adequate number of projects are not generated, and there are systemic weaknesses in project execution. Before weak urban infrastructure becomes a binding constraint on rapid pace of economic growth in NCR, among others, NCRPB needs to enable scaling-up of urban infrastructure by implementing priorities of Regional Plan 2021. This is partly possible by NCRPB providing longer tenure low cost debt; implementation support for subborrowers (borrowers of NCRPB) in urban planning, project development, project implementation; identification of bankable projects and enabling private sector investments; and improving urban basic service provision, among others, through partnership with private sector. Adequate incentives need to be provided by NCRPB to motivate cities and state government entities to undertake public and environmental urban infrastructure projects that can mitigate greenhouse gas emission, and introduce private sector efficiencies. The proposed Facility is built around this rationale.
National Capital Region (NCR) and Counter Magnet Area. NCR is a 33,578 square kilometer area covering Delhi and sub-regions of the states of Haryana, Rajasthan and Uttar Pradesh. NCR consists of 9 districts of Haryana (Faridabad, Gurgaon, Rohtak, Rewari, Palwal, Jhajjar, Mewat, Sonipat and Panipat), 1 district of Rajasthan (Alwar district) and 5 districts of Uttar Pradesh (Meerut, Ghaziabad, Gautam Buddha Nagar, Bulandshahr and Baghpat). The population of NCR is 37 million (urbanization level of 54% as per 2001 census), which is expected to increase to 64 million by year 2021. In addition to NCR, NCRPB has identified and supports Gwalior (Madhya Pradesh State); Patiala (Punjab); Hissar (Haryana); Kota (Rajasthan); and Bareilly (Uttar Pradesh) as Counter Magnet Areas (CMA) where development strategies need to be implemented in order to ease the projected population pressure on National Capital Territory (NCT) of Delhi.
Rapid economic growth in NCR is likely to generate increased demand for drinking water, waste water management and solid waste management of the order of Rupees (Rs) 230,000 million ($5 billion approximately), which is excluding the demand for urban transport infrastructure in the region. While the NCT of Delhi is making rapid strides in urban infrastructure development, the remaining portions of NCR are still lagging behind in infrastructure resources, especially the sub-region administered by the Government of Uttar Pradesh. Environment and public health related infrastructure water supply, sewerage, solid waste has been relatively neglected in the past, and should be one of the key thrust areas. Analyses of the economies of States and cities in NCR suggest that self generated funds and technological know-how are insufficient to provide the desired rapid growth in urban infrastructure.
NCR's strength is that it continues to attract the largest share of foreign direct investments in India and there are efforts to enhance this potential by developing Delhi and Mumbai corridor inclusive of a high-speed rail connectivity. In this context, the supply of urban infrastructure needs planning and financing to ensure that regional impacts of growth are maximized to foster competitiveness and environmental sustainability. Since most of these infrastructure demands require coordination, a regional approach is needed to minimize geographic and functional fragmentation. This is one of the primary motivation of NCRPB s creation and is the basis of the proposed NCRPB business plan and the Facility.
National Capital Region Planning Board. NCRPB came into being by virtue of the NCRPB Act, 1985 passed by the Parliament and duly confirmed by the legislatures of Haryana, Rajasthan and Uttar Pradesh. As a financier, NCRPB s role is to facilitate financing of the investments in the region, and in pursuance of this, NCRPB has provided loans to 239 projects of Rs 64,610 million as of 30 October 2009. These loans have been advanced out of grants received from GOI, Delhi Government, internal accruals and market. Over the years there has been a shift in focus of NCRPB in terms of diversification of sectoral allocation of resources, more importantly towards environmental infrastructure and connectivity. The current policy of NCRPB is to diversify the State focus in its lending and the project development fund set up by NCRPB in 2009 is one of the measures to achieve this objective as well as improve the supply side and enhanced access to capital markets by NCRPB and subborrowers.
1. Road Map: Regional Plan 2021. NCRPB in 2005 notified the Regional Plan 2021 with focus on core sectors of transportation, power, water and sanitation and solid waste and an investment requirement of Rs 1,937,520 million. Regional Plan (2021) aims to facilitate growth and balanced development of NCR by providing for economic base in the identified major settlements (metro centers and regional centers) for absorbing economic development impulses of Delhi, efficient transport network, development of physical infrastructure, rational land use pattern, and improved environment and quality of life. Since the input studies in formulating the Regional Plan 2021, NCRPB, in 2009 has progressed substantially in developing a Transport Sector Plan (2009) and a Water Supply Plan and its Management (2009). The functional plans for water resources sector and urban transport define the long term needs, and the investment needs are placed at Rs 8 billion and Rs 1,750 billion respectively. The sector investment plans for sewerage and solid waste management including regional landfill sites are under preparation.
Being a statutory body created as a result of Act of the Parliament, NCRPB is not regulated by Reserve Bank of India guidelines for a non-banking financial company or by the Securities and Exchange Board India under the Company Act. It is primarily a fund which blends GOI grants (not accounted for as equity or contribution) with market borrowings and lends out to the state governments and local governments. While NCRPB has been previously financing investments, NCRPB is in the process of repositioning itself to achieve its scaled-up mandates.
The basic vision of NCRPB is in terms of being a financier of relevance and planner of significance. This entails: (i) planner of relevance for entities that operate at a regional level and financier of relevance in case of local bodies; (ii) move away from unlimited liability, administered credit pricing and low leverage; and (iii) fill an institutional vacuum pertaining to urban infrastructure planning and development to address the unique challenges and constrains in scaling-up urban infrastructure investments in NCR and CMAs. NCRPB needs to address institutional aspects to enable scaling-up of infrastructure financing and mitigate specific challenges pertaining to urban infrastructure development in NCR.
There is also a lag in conversion of functional plans prepared by NCRPB into projects and in part constrained by limited technical assistance resources within the subborrowers and NCRPB. To a certain degree the project development fund established by NCRPB would address this constraint. However, there is a need to enhance the skills and improve project design and management in the subborrowers as well in NCRPB to convert functional plans into implementable projects. It is difficult for public institutions like the local municipalities and other urban local bodies alone to meet this