Document of The World Bank

Public Disclosure Authorized Report No: 24004-IN

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

Public Disclosure Authorized IN TEHE AMOUNT OF US$ 463.0 MILLION

AND A CREDIT IN THE AMOUNT OF

SDR62.5 M]LLION (US$79.0 MILLION EQUIVALENT)

TO

INDIA

FOR THE

MUMBIAI URBAN TRANSPORT PROJECT Public Disclosure Authorized May 21, 2002

Energy and Infrastructure Sector Unit India Country Management Unit South Asia Region Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective April 30, 2002.) Currency Unit = Indian Rupee (INR) 1 INR = US$0.020 US$1 = INR 48.00

FISCAL YEAR April I -- March 31

ABBREVIATIONS AND ACRONYMS BEST Brihan Mumbai Electric Supply and Transport Company MCGM Municipal Corporation Greater Mumbai CEMP Community Environment Management Plan CR Central Railway Zone of India Railways CTS Comprehensive Transport Study (1994, PHRD funded) FMR Financial Monitoring Report FOP Financial and Operating Plan, MCGM GOM Government of Maharashtra HLRC High Level Review Committee HDFC Housing Development Finance Corporation HPSC High Powered Steering Committee IMP Independent Monitoring Panel IR Indian Railways, Ministry of Railways MCGM Municipal Corporation of Greater Mumbai MMR Mumbai Metropolitan Region MMIRDA Mumbai Metropolitan Regional Development Authority MRVC Mumbai Railway Vikas Coorporation Limited MSRDC Maharashtra State Road Development Corporation MUTP Mumbai Urban Transport Project MOU Memorandum of Understanding NGO Non-Governmental Organization NSDF National Slum Dwellers Federation PAP Project Affected Persons PAH Project Affected Household PCC Project Coordinating Committee PMR Project Monitoring Report PMU Project Management Unit at MMRDA RAP Resettlement Action Plan RIP Resettlement Implementation Plan R&R Resettlement and Rehabilitation SPARC Society for Promotion of Area Resource Centre TMU Traffic Management Unit, MCGM WR Western Railway Zone of Indian Railways

Vice President: Mieko Nishimizu Country Director: Edwin R. Lim Sector Director: Vincent J. Gouarne Task Team Leaders: A. K. Swaminathan and Edward Dotson INDIA MUMBAI URBAN TRANSPORT PROJECT

CONTENTS

A. Project Development Objective Page

1. Project development objective 3 2. Key performance indicators 3

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Government strategy 3 3. Sector issues to be addressed by the project and strategic choices 6

C. Project Description Summary

1. Project components 10 2. Key policy and institutional reforms supported by the project 11 3. Benefits and target population 12 4. Institutional and implementation arrangements 13

D. Project Rationale

1. Project alternatives considered and reasons for rejection 15 2. Major related projects financed by the Bank and other development agencies 17 3. Lessons learned and reflected in the project design 18 4. Indications of borrower commitment and ownership 19 5. Value added of Bank suppolt in this project 20

E. Summnary Project Analysis

1. Economic 21 2. Financial 22 3. Technical 23 4. Institutional 24 5. Environmental 25 6. Social 29 7. Safeguard Policies 31

F. Sustainability and Risks

1. Sustainability 32 2. Critical risks 32 3. Possible controversial aspects 34

G. Main Conditions

1. Effectiveness Condition 34 2. Other 34

H. Readiness for Implementation 35

I. Compliance with Bank Policies 36

Annexes

Annex 1: Project Design Summary 37 Annex 2: Detailed Project Description 41 Annex 3: Estimated Project Costs 50 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 51 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 57 Annex 6: Procurement and Disbursement Arrangements 58 Annex 7: Project Processing Schedule 74 Annex 8: Documents in the Project File 76 Annex 9: Statement of Loans and Credits 77 Annex 10: Country at a Glance 81 Annex 11: Assessment of the Financial Capacity of MCGM and BEST 83 Annex 12: Environmental Assessment 88 Annex 13: Resettlement and Indigenous Peoples 96

MAP(S) IBRD 31931 Rail and Road Components IBRD 31949 Resettlement Component INDIA Mumbai Urban Transport Project Project Appraisal Document South Asia Regional Office SASEI Date: May 21, 2002 Team Leader: A.K. Swaminathan Country Manager/Director: Edwin Lim Sector Director: Vincent J. Gouarne Project ID: P050668 Sector(s): TU - Urban Transport Lending Instrument: Specific Investnent Loan (SIL) Theme(s): Transport Poverty Targeted Intervention: N Project Financing Data [X] Loan [XpCredit [ ] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Amount (US$m): US$542.Om (Loan US$463.0m/Credit SDR 62.5m) Borrower Rationale for Choice of L.oan Terms Available on File: 1 Yes Proposed Terms (IBRD): Variable-Spread Currency Loan (VSL) Grace period (years): 5 Years to maturity: 20 Commitment fee: 0.75% Front end fee (FEF) on Bank loan: 1.00% Proposed Terms (IDA): Standard Credit Grace period (years): 10 Years to maturity: 35 Commitment fee: Standard Service charge: 0.75% Financing Plan (US$m): Source Local Foreign Total BORROWER 397.00 6.00 403.00 IBRD 139.62 323.38 463.00 IDA 75.20 3.80 79.00 Total: 611.82 333.18 945.00 Borrower: GOVERNMENT OF INDIA Responsible agency: MUMBAI METROPOLITAN REGION DEVELOPMENT AUTHORITY MMRDA Address: Bandra-Kurla Complex, Bandra (E), Mumbai - 400051. Contact Person: Mr. U. P. S. Madan, Project Director, MUTP. Tel: 91-22-6591235 Fax: 91-22-6591264 Email: [email protected] Other Agency(ies): Mumbai Railway Vikas Corporation Limited Address: 2nd Floor, Churchgate Station Building, Mumbai - 400020. Contact Person: Mr A. K. Varma, M:anaging Director Tel: 91-22-2080015 Fax: 91-22-2096972 Email: [email protected] Municipal Corporation of Greater Mumbai and Brihan Mumbai Electric Supply and Transport Undertaking Address: MCGM: Mahapalika Marg, Fort, Mumbai - 400020. BEST: Parivahan Bhavan, Mumbai - 400001 Contact Person: MCGM: Mr Gautam Chatterjee, Additional Municipal Comrnissioner BEST: Mr Rahul Asthana, General Manager Tel: MCGM: 91-22-2620149 & BEST: 91-22-2856262 Fax: 91-22-2626437/91-22-2851244 Email: TBA Estimated Disbursements ( Bank FY/US$m): FY 2003 2004 2005 2006 2007 2008 Annual 50.00 85.00 95.00 105.00 120.00 87.00 Cumulative 50.00 135.00 230.00 335.00 455.00 542.00 Project implementation period: 5 years Expected effectiveness date: 10/31/2002 Expected closing date: 06/30/2008 Om PAD

-2 - A. Project Development Objective

1. Project development objective: (see Annex 1) To facilitate urban economic growth and improve quality of life by fostering the development. of an efficient and sustainable urban iransport system including effective institutions to meet the needs of the users in the Mumbai Metropolitan Region (MMR).

2. Key performance indicators: (see Annex 1) The achievement of the project development objective would be measured through the ability of the project to (i) meet user needs; (ii) iunprive system efficiency; (iii) bring about sustainable improvements; and (iv) make institutions more effective. The key performance indicators for these project-specific objectives are listed below. More details are provided in Annex 1. (i) rail travel comfort ,substantially improved; incidence and severity of pedestrian traffic accidents reduced; (ii) suburban rail service frequency and train availability enhanced; road journey times and junction delays reduced; (iii) improvement in public transport cost recovery; poor households resettled satisfactorily from hazardous slum/squatter areas to permanent housing with improved living condition; and

(iv) increased technical capacity for planning, traffic management, road safety, road maintenance, air quality monitorng and vehicle emission control.

B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex I) Document number: 21852-IN Date of latest CAS discussion: April 5, 2001 The CAS identified infrastructure bottlenecks as one of the major constraints to faster poverty reduction. Designed to be the first of a series of programmatic interventions, this project attempts to help MMR start a process of inmproving urban transport conditions in an environmentally and financially sustainable manner by supporting urgently needed physical investment and strengthening the institutional capacities required for this process. The project supports the important CAS goals by: (a) reducing transport bottlenecks; and (b) improving the performance of the public sector in urban transport. Through resettlement of a large number of poor households from hazardous squatter areas to permanent housing with adequate access to jobs and social services, the project is expected to directly improve the living condition for these households and contribute to urban poverty reduction. Resettlement would also reduce accident fatalities and injuries to squatters and commuters.

2. Main sector issues and Government strategy: The main sector issues facing urban transport in India and the Government Strategy are discussed in Background Paper No.6 to the Bank's Paper "Challenges for India's Transport Sector". The main national issues are summarized below.

Urbanization: India's populalion is fast urbanizing. The urban population is expected to grow from the current level of 300 million to 410 million by 2010. The role of cities in the national economy is

- 3 - increasingly important, as the share of urban GDP over national total has grown from 50 percent in the early 1990s to 60 percent in 2000. However, urban growth is also accompanied by a shift of poverty concentration from rural to urban areas. Today, about 70 million urban residents representing 23 percent of the total urban population live below the national poverty line.

Urban transport is a crucial component of urban infrastructure and services. It provides access to opportunities, supports urban economic activities, and facilitates social interactions. Poor transport not only constrains urban economic growth, but also deprives the poor of opportunities to work or imposes on them excessive travel time. The extent to which Indian cities contribute to macroeconomic performance and poverty reduction will be closely linked to how efficiently, safely and sustainably their transport systems move people and goods.

Motorization: At present, motor vehicle ownership in India is slightly over 40 vehicles per 1,000 population, including two-wheelers and three-wheelers (which account for 60 percent of the motor vehicle fleet). By international standards, this is at the low end of the ownership curve. During the last decade, vehicle ownership in the 15 metropolitan cities (including Mumbai) grew at over 15 percent a year. Poor quality and coverage of public transport as well as income growth contributed to this growth. This growth pattern is expected to continue with the growth of per capita incomes.

Congestion: Traffic growth has reduced peak-hour speeds to 5-10 kilometers per hour in central areas of an average Indian city. The lack of effective public actions to mitigate them, particularly traffic management is a key cause of worsening congestion.

Public Transport Operations: Public transport is the backbone of urban transport in India, with buses as the prevailing mode, except in the largest cities (including Mumbai) where rail has a role. Intermediate public transport provides a viable supplement to these services. While the private sector is increasingly active in supplying bus services, the concern that the private sector might exploit vulnerable groups and the urban poor, and the lack of effective regulation, have allowed public sector operators to maintain their dominance, despite their inefficiencies.

Road Networks: In most Indian cities, road space is limited, occupying only 6-10 percent of land area. Usable road space is further limited by poor maintenance and drainage systems, and ineffective use of pedestrian spaces. Maintenance of urban roads is generally the responsibility of the local/city government.

Road safety: Indian cities are facing a growing risk of traffic accidents. By international standards, they are considered to be more accident-prone in spite of a relatively low level of vehicle population. Only 5 percent of those killed in traffic accidents were in vehicles, the rest were pedestrians and cyclists. The urban poor, who are likely to travel more on foot or bicycle than the non-poor, are likely to face higher traffic accident risks.

Pollution: Despite relatively low level of motorization, motor vehicle emissions are already considered to be a major source (60 to 70 percent) of air pollution in Indian cities. Two-stroke engines (which equip nearly all three-wheel and the majority of two-wheel vehicles), and diesel engines are a major source of motor vehicle emissions, especially particulate matter. Despite the large number of high polluting vehicles on the roads, few cities have an effective inspection and maintenance program to detect illegal emission levels and to enforce standards. Motor vehicle pollution impacts all income groups, but the impact on the poor is likely to be more severe as they are the least protected and more frequently exposed to the hazards.

- 4 - Institutional arrangements: Nationally, there is no shortage of technical knowledge about the solutions to the above problems. But most Indian cities have failed to effectively address these problems. Institutional weaknesses which prevent authorities from translating knowledge into actions include:

* fragmented functional responsibilities with no single agency in charge of overall coordination; * limited technical capacities for transport planning, traffic management, and integration of land use and transport planning, especially at the local level;

* lack of financial resources combined with insufficient attention to cost recovery and user charges; absence of enabling policy, regulatory and financial fi-ameworks for private sector participation

Urban Transport Funding: Urban infrastructure is primarily funded through budgetary support from the state budget and to a much lesser extent, local governments through their Five Year Plans. The private sector has been discouraged by lack of clear policy support and regulatory environment, as well as long gestation period and massive size of capital investments. However, most local governments do not have adequate capacity to finance urban infrastructure, and revenues are barely sufficient for recurrent expenditures. The Strategic Thinking of tIle Union Government In 1998 the Ministry of Urban Affairs and Employment (MUAE) endorsed a report entitled "Traffic and Transportation Policies and Strategies in Urban Areas in India", which reflects much of the current strategic thinking of the Union Government on urban transport issues. However, the report has not been widely circulated. Nonetheless, the Ministry of Urban Development (formally MUAE) has adopted several of the key recommendations as their policy and is granting aid to cities which are ready to follow the policy.

Urban Transport Issues in NIumbai

Urbanization - Land Use and Transport System Mumbai Metropolitan Region (MMR) is not only the largest urban area in India, but it is also one of the world's largest and most crowded. It has a population of 14 million and an area of 1,467 sq. km. Its population is forecast to grow to 22 million by 2011. As the commercial and financial center of India, MMR generates about five percent of national GDP and contributes over one-third of India's tax revenues. At the center of MMR lies the City of Mumbai on a 18 km long peninsula running generally North to South. At the southern tip is the "island city" where the Central Business District (CBD) is located. This is a dominant employment center.

The urban transport network is linear in a North - South direction along the peninsula. Two suburban rail services, and the three urban arterial roads are the backbones of MMR's transport system. Cross road links are less developed. The streets in most part of Mumbai city are old and narrow, and their capacity is seriously reduced by lack of apipropriate management of traffic and parking.

Public transport plays a dominant role in MMR. Rail and bus services combined carry 88 percent of the region's motorized personal trips. The suburban rail services carry a total of over six million passengers per day. Buses carry over 4.5 million passengers per day, 60 percent of whom transfer to rail. Despite their crucial role, public transp)rt modes in Mumbai face formidable problems, discussed below.

- 5- Motorization and Future Travel Demand - Comprehensive Transport Strategy Responsibilities for the general direction of urban development and urban transport rests with the State Government of Maharashtra (GoM) through Mumbai Metropolitan Region Development Authority (MMRDA), a regional agency under the Department of Urban Development. In order to assess future travel demand and determine investment needs and assist in policy formulation, a Comprehensive Transport Study (CTS) was carried out in 1994 under the auspices of MMRDA with Bank assistance. The objective was to develop a coherent transport strategy for 2011 linked with a rational land use plan. By 2011, motorized travel demand (and private car trips) were forecasted to increase by 50 percent over 1994 levels, with little change in mode share (excluding walking) for public transport (85 percent compared with 88 percent).

The CTS Study considered four alternative strategies to meet this forecast travel demand - a "do minimum" strategy and three investment options. The investment options included two rail based options (comprising combinations of enhancement of existing corridors and construction of new corridors) and one road oriented option. All strategies were evaluated using economic, social, environmental and performance criteria. The preferred strategy and a related short term implementation plan were then developed. The preferred strategy was to strengthen the public transportation system and put in place appropriate demand management measures in congested parts of the MMR like the island city of Mumbai.

Government of Maharashtra (GoM) and IR have accepted the general recommendations of the CTS strategy. CTS also evaluated and recommended a number of investment and policy actions for implementation. The priority actions included: (a) suburban rail capacity expansion; (b) improving East-West connectivity; (c) better parking controls and traffic demand management; and (d) improved road safety. However, the provision of urban transport infrastructure has been lagging behind the growing demand.

3. Sector issues to be addressed by the project and strategic choices: The highest priority issues in Mumbai to be addressed by the project relate to the capacity and speed of rail services; decision making for rail services; and resettlement and rehabilitation (including land acquisition). The next priorities are East-West connectivity, traffic management, and road safety. Equally important issues but of a lower priority include bus services, pollution from motor vehicles, road maintenance, limited involvement of stakeholders, institutional weaknesses and funding.

Capacity and Speed of Rail Services: Rail passengers suffer from some of the most severe overcrowding in the world (with 9 car trains carrying over 4,000 passengers at 11 persons per square meter against a normal capacity of 1,800) due to lack of track capacity, lack of trains etc. Overcrowding is so severe that doors of coaches cannot be closed and passengers dangle outside from open doors. Squatter settlement near and encroachers within the rail right-of-way safety zone seriously reduce train speeds, increase travel time, limit capacity and hamper track maintenance work. Deaths of squatters and trespassers after being struck by a train, and passengers falling off trains are a daily occurrence. Suburban rail fares in Mumbai are among the lowest in the world on a passenger-km basis. The rail services cover operating costs, but still require financial support for capital investment. The project will support measures to increase the capacity and speed of the rail service--provision of additional trains; rail system efficiency measures; as well as R&R of squatters in the safety zones of existing tracks (which will allow speeds to be increased), and to permit increases in the numbers of tracks.

- 6- Decision making for Suburblan Rail Services: Since the planning and provision of suburban rail services were in the past the responsibility of Indian Railways (IR), MMRDA had little influence over them. The allocation of resources for rai'l services are subject to the approval of the Planning Commission and the IR. Two zonal railways, Westem Railway (WR) and Central Railway (CR), operate within the MMR as independent agencies with their own lines and no integration of services. These arrangements seriously limit the user responsiveness of the suburban rail system which is the key to maintaining (and expanding) passenger numbers due to lackc of participation of the state and city governments in the decision making process. During project preparation the Mumbai Railway Vikas Corporation (MRVC), jointly owned by IR and Government of Maharashtra (GoM), was established for implementing suburban rail improvement projects in the MMR. A separate business and operating plan, including separation of costs for the suburban railway system, was developed with Bank's assistance. This will be updated annually. Separate railway tracks for intercity passenger and for the suburban system are expected to be in place within the end of this decade. The involvement of GoM in decision making, and the suburban rail business plan are the first steps towards overcorning the issue mentioned. The project supports these initiatives to bring decision making for the suburban rail system closer to users and to get the suburban railway system in Mumbai seen as a distinct business, with adequate funding.

Land Acquisition, Resettlement and Rehabilitation (R&R): Almost every infrastructure improvement activity in MMR involves acquisition of land and consequent displacement of people, primarily squatters, from their dwellings and livelihood. Land acquisition is time consuming and difficult. In the past, there was no state R&R policy on urban infrastructure and institutional capacity for handling R&R issues was very weak. Lack of consultations and involvement of affected persons in the planning and implementation of R&R have been considered a key factor for R&R failure. This situation has changed significantly during project preparation, stating with a highly consultative process of development of a resettlement policy for the project in 1997. In the last few years, thanks to the relationship established between the Project Affected Persons (PAM') and the Non-Governmental Organizations (NGO) including women's organizations like Mahila Milan (Women Together). IR and GoM have developed a working relationship with NGOs like Society for Promotion of Area Resource Centres (SPARC) and the National Slum Dwellers Federation (NSDF) in the orderly resettlement of a substantial number of people. Both SPARC and NSDF have a long-standing relationship of trust with squatters on the railway lines which has enhanced their capacity to consult with and organize the PAPs for relocation. The implementing agencies and partner NGOs have a strong participatory process in place which has already resettled about 10,000 families to permanent and transit housing. There is a good track record of successful community mobilization and follow-up at interim and final housing sites through participation of NGOs and the slum dwellers themselves. The projesct supports measures to improve the policy framework, institutional and implementation atrangements iFor R&R, as well as funding R&R associated with transport investments based on CTS recommendatiotns.

East-West Connectivity: East-West road links are not well developed, which limits the functionality of the overall primary road system. CTS recommnended improving these as a priority action. The project provides investment to complete two major East-West road links, including road bridges over the railway lines to avoid level crossings.

Traffic Management: The road system in Mumbai suffers from a lack of application of basic traffic management measures which would increase road capacity, reduce delays, reduce accidents and provide more favorable road operating conditions for buses. The only widely and indiscriminately used measure is "speed breakers" (small humps asphalt across road carriageways) to slow traffic, even on major roads. The project will support a program of traffic management measures (including Area Traffic Control of traffic signals), and pedestrian ifacilities. The planning and implementation of traffic management schemes

- 7- is now a responsibility of MCGM. However the Traffic Management Unit in MCGM has only just been re-established and it has little technical capacity for this increasingly important task. TA will be provided to assist in the development of the Traffic Management Unit, classroom and on the job training for its staff.

Road Safety: The number of personal accident injuries reported annually in Greater Mumbai has remained approximately constant (25,000-30,000) over the last 30 years. The number of fatalities, however, has fallen by 50 percent in Greater Mumbai since 1981. The rate of fatalities per year in Mumbai Metropolitan Region (MMR) is 35.6 per 10,000 vehicles. The project will support efforts to improve road safety through the provision of IT tools for accident analysis, and funding for blackspot and public education programs.

Bus Services: The bus services within Mumbai are provided by a municipal company, the bus division of the Brihan Mumbai Electric Supply and Transport Undertaking (BEST). BEST is a vertically integrated monopoly provider and operator of bus services in Mumbai city. BEST is considered to operate a good quality service when compared with similar undertakings in India with over 95 percent fleet utilization. However, operating costs/km are high and cost recovery is now around 80 percent (including provision for capital investment and depreciation). BEST bus operations are cross-subsidized by revenues from its electricity distribution business. BEST management recognizes the problems and has prepared (at the Bank's request) a five year Business Plan, including measures to improve efficiency and reduce the costs of BEST as an operator. It has instituted a series of cost-reduction measures, including "wet leasing" (bus with driver) or gross cost contracting out (BEST conductor collects the revenue) of bus operations and a Voluntary Redundancy Scheme (VRS). The project will provide TA to assist BEST in developing and implementing these and other reform measures.

The BEST bus fleet is aging and while existing buses are not gross polluters, emission levels are higher than desired standards. There is a need to develop a new generation of urban buses to better meet user needs and higher emission standards. The project will assist in developing the specifications for lower emission buses of a more user friendly design, and funding for an initial order.

Pollution: Ambient and roadside air quality monitoring shows that sulphur dioxide (S02) and oxides of nitrogen (NOx) are generally well below National Ambient Air Quality Standards (NAAQS) at residential and industrial locations. However, NOx levels exceed the standards at road junctions. Suspended Particulate Matter (SPM) and Particulate Matter less then 10 microns in size (PM 10) exceed NAAQS at almost all residential and industrial locations and at road junctions. Lead levels are not significant as unleaded fuel is mandatory.

Motor vehicle emissions are estimated to be responsible for 70 percent of this pollution, however no systematic study exists. Current vehicle emission standards are poorly enforced. In response to a Public Interest Litigation in December 1999, the High Court had constituted a committee under the chairmanship of the Transport Commissioner to recommend measures for reducing urban air pollution in Mumbai. The Lal Committee (as it came to be known) gave a set of one hundred and one recommendations in April 2000 which are currently being debated in the High Court. Some of the recommendations of the Lal Committee on which the high court has already ruled, are already under implementation, such as the decision to scrap obsolete commercial vehicles. The project will support improvements to air quality monitoring, particularly roadside monitoring and the development and subsequent implementation of a Motor Vehicle Emission Control Strategy.

Road maintenance: Within Mumbai, road maintenance rests with MCGM. Some of the arterials through the city are maintained by the PWD. About 6.5 percent to 7 percent of the total budget and expenditure of

- 8 - MCGM is for operating and maintaining roads, bridges and traffic management. Based on rough estimates done for preparation of a report for quantifying road user charges it is estimated that budget provision by MCGM corresponds to about '5 percent of actual needs. MCGM lacks modem computer based tools for maintenance planning and budgeting. The project will provide MCGM with such tools.

Institutional Weaknesses. It is not uncommon in a mega-city like Mumbai that many institutions are involved in urban transport. The central issue is that the responsibilities assigned to different agencies do not seem to respond to the changing needs effectively, and the mechanism for multi-agency coordination is weak. The institutional mechanisms for implementing the integrated CTS policies still need to be developed. Similarly there is no agreed legal or policy framnework for considering unsolicited private sector proposals for transport investments. This results in ad hoc decision making on road investments.

Road planning, construction and maintenance for the state is the responsibility of GoM's Public Works Department. However the Public Works Department can contract out construction (and operation) of roads and flyovers to the Maharashtra State Road Development Corporation. The Road Development Corporation operates on a commercial format and has the ability to raise money on the open market and recover its costs from tolls on road users. It can, therefore, with the agreement of GoM, promote road projects in its own right.

Limited involvement of stakeholders: Mumbai has an active media and a vibrant NGO community with organizations representing diff,rent topics and interest groups, both poor and middle class. The most notable contribution has been the very successful involvement of SPARC and NSDF in R&R. However, involvement, so far, of other NGOs and citizens' groups in the project has been limited. The Mumbai project authorities have acknowvledged that NGOs can be involved in a bigger way during project implementation, monitoring and evaluation. They have also agreed to a communication strategy to be implemented once the project thas been approved by the Bank. The project will support the involvement of stakeholders, including NGOs in discussions and decisions on project implementation

Funding: Funding arrangemenits for urban transport infrastructure and services in Mumbai are split between a number of national, state and local govemment agencies. No single agency has the role or responsibility for preparing integrated investment and operations budgets which meet travel demands and policy objectives, optimize the use of scarce resources, and are affordable. Overall levels of investment have been lagging demand (most notably on the railways), while maintenance expenditure is about half what is needed to maintain roads in good condition. BEST bus operations are cross subsidized from electricity supply operations, but recent legislation puts this arrangement at risk.

-9- Strategic Choices Transport development in a mega-city such as Mumbai is a complex, multi-faceted, continuous and long-term process. The CTS recommended strategy and priority actions provided the framework for the design of this project However, it is not possible for either the Bank or the Mumbai authorities to tackle all the issues in five years or in a single project. Decisions based on professional and value judgments have to be made. The proposed project will address, to varying extents, most of the key sector issues and the critical areas where actions need to be initiated. It is particularly designed to support the urgently needed physical investments in the rail and road system, and to strengthen the institutional capacities required for sustainable transport development, particularly in traffic management, the bus system, road safety, emission control and R&R.

This is intended by the Borrower and the Bank, as the first in a series of loans through which the Bank will support transport and institutional development in a programmatic manner. The timing and volume of future loans will be based on evaluation of impacts of the project and the commitment of the counterpart agencies involved.

C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The main components of the project along with their costs are listed below.

I . Rail Transport: The component aims to improve the capacity and performance of the suburban rail system through service efficiency improvements, (increasing existing track capacity, DC to AC conversion, improving signaling, electrical and telecommunication systems), procurement of new rolling stock and upgrading of existing rolling stock, and expanding network capacity. The component would also support studies and technical assistance, amongst other things, to improve the maintenance capabilities of Indian Railways for their railway tracks and rolling stock, the financial management and control systems, the railway safety and Quality Assurance systems.

2. Road-based Transport: This component will support increases in the capacity, efficiency and safety of the road network, better facilities for pedestrians, improvements to the operating efficiency and quality of bus services, and reductions in motor vehicle emission levels. It will also strengthen the capacity of the responsible agencies to plan, deliver, maintain and operate efficiently road based urban transport infrastructure and services. Subcomponents will:

(a) support traffic management programs including Area Traffic Control (ATC) to optimize the functioning of traffic signals, pedestrian facilities, Station Area Traffic Improvement Schemes (SATIS) and parking control;

(b) increase the road network functionality by improving two east-west link roads and eliminating the main road level crossings across railway tracks;

(c) improve the bus system through support of organizational reforms, efficiency measures and procurement of environment and user friendly buses; and

(d) strengthen the capacity of transport agencies in Mumbai in road in traffic management, road maintenance, road safety, and communication, and air quality monitoring as well as

- 10 - providing TA for updating of the CTS, review of User Charges, and developing a Motor Vehicle Emission Control Strategy (MVECS).

3. Resettlement & Rebabilitation: This component will enable GoM to undertake the timely implementation of the Resettlement Action Plan (RAP) and resettle those affected by investments under the rail and road based transport components. It will also provide assistance to those displaced to improve their overall living standards. This component is to be financed through IDA funding. This component will provide for the procurement of about 19,200 housing units to resettle project affected households. In response to the Bombay High Court Order to relocate encroachers on the Harbor Line by March 2001, actions were taken under agreed procedures, with the expectation by GoM of retroactive financing from the Bank. Already built houses were purchased to permanently resettle 3,935 project affected households. In addition some 6,000 transit houses were built as an interim measure to provide transit accommodation for around three years. Further, 107 petty shopkeepers were also offered alternative shops in the new sites to re-establish their lost shops.

The other expenses under this component include the acquisition of a limited amount of land for civil works, reconstruction of some of the basic civic amenities for the left over population and payment of compensation for increased distance to work place and permanent loss of livelihood opportunities. The technical assistance under this component includes consultancies for baseline surveys, preparation of Resettlement Implementation Plans (RIP), supervision consultants, NGO support for implementation, and training of project staff/NGOs involved with the implementation. Indicative Bank- % of Component Sector Costs % of financing Bank- (US$M) Total (US$M) financing Rail Transport component Urban Transport 654.27 69.2 304.90 56.3 Road-based Transport component Urban Transport 183.02 19.4 150.47 27.8 Resettlement and Rehabilitation Resettlement 100.08 10.6 79.00 14.6 component. PPF repayment Non-Sector Specific 3.00 0.3 3.00 0.6 Total Project Costs 940.37 99.5 537.37 99.1 Front-end fee 4.63 0.5 4.63 0.9 Total Financing Required 945.00 100.0 542.00 100.0

2. Key policy and institutiontal reforms supported by the project: Bringing Decision-maklng for Suburban Rail Services closer to Users: Establishment of MRVC in Mumbai represents significant institutional progress by involving the state government as a partner with Indian Railways in joint investnents in the suburban rail system. This will encourage increased accountability for performnance (supported by clear separation of costs and railway tracks for the suburban rail system) and better response to the users through involvement of the state government in project implementation. Joint action to implement a suburban railway surcharge will be an important step. The project will also promote cooperation between IR, GoM and other agencies in Mumbai in exploiting the commercial potential of surplus railway land, stations and air space. Part of the resulting revenue would be made available for improving the suburban rail system.

Strengthening R&R Policy: R&R policy framework is crucial for urban transport improvement in Mumbai. The R&R policy includes the following key features: (a) assistance to all project adversely

-1 1- affected persons in the process of resettlement and rehabilitation and thus enable them to improve their living standards in the post resettlement period; (b) execution of the resettlement program in a manner that all affected persons are compensated prior to their move to the new sites and provided support during the transition period; (c) recognition of all adversely affected persons irrespective of their legal status for extending the R&R entitlements and assistance; and (d) adoption of community oriented resettlement in order to retain their social and economic linkages, including integration of the host community wherever required.

Strengthening the Coordination of Transport Sector Programs and Operations: The project will strengthen the coordination among major institutions involved in the planning and delivery of urban transport services in MMR. This is reflected in the establishment of a High Power Steering Committee (HPSC) to resolve broad issues, and a multi-agency working group to review and recommend policies relating to parking, road user charges, and demand management Also, the project seeks to strengthen the planning capabilities of MMRDA, which acts as the coordinating agency for the preparation and implementation of the project.

Traffic Management: The project supports the introduction of an institutional framework and technical skills necessary to implement modem traffic management techniques in the city of Mumbai. Amendments to the BMC Act to allow for traffic management function within the MCGM and introduction of charged parking and the implementation of the Demonstration Parking Plan have been done. The Traffic Management Unit (TMU) has been formed within MCGM and it has been agreed that this unit will be strengthened through appropriate staffing at the central/main office and at the ward levels.

Supply of Bus Services: BEST management is taking steps to improve efficiency and reduce costs in bus service supply and to eliniinate the cross subsidy from the electricity supply business. Of particular interest is the proposed contracting out of up to one third of the services to private operators. The project will support BEST in these initiatives and will also explore the potential to fully separate the bus operations from the electricity supply operations, and to separate overall service planning, provision and modal integration and procurement of bus services from bus operations.

3. Benefits and target population: The main expected benefits and target populations are expected to be:

Benefits Beneficiaries

Enhanced rail and bus system capacity, improved Rail Commuters and other travelers in MMR efficiency and service quality. currently representing over 80 percent of the public traveling on motorized means of transport.

Reduced congestion, travel times and delays for road All road users but in particular commercial traffic on project corridors/areas. vehicles on enhanced east-west roads and Road over Rail Bridges (ROB) and buses and bus users through bus fleet and BEST enhancement.

Provision of title to house with improved basic Families that will have to relocate or will be

- 12 - amenities and opportunities for economic rehabilitation. affected through displacement or through change in their economic status due to the involuntary resettlement.

Reduced emissions from buses and other intensively Entire population of MMR but in particular used road vehicles; improved safety conditions. pedestrians and those living on or near to main traffic routes.

Enhanced institutional capacity to plan, operate, All involved institutions in the sector; benefits manage and maintain the transport system. should flow through to all transport users through better services.

4. Institutional and implementation arrangements: Executing and Implementing Agencies. MMRDA has overall responsibility for the project, and is the executing agency for the road. transport and resettlement components. The road transport component will be implemented by MCGM, MSRDC and BEST. MRVC is the executing agency for the rail transport component, with implementation undertaken by CR, WR, ICF and RDSO.

Agency Broad responsibilities/accountabilities

MMRDA Overall project coordination of road, rail, R&R components, and implementation of EMPs. Procurement and implementation pertaining to the R&cR aspects. Coordination of procurement for the road based component by the concerned agencies like MCGM, PWD, BEST and Traffic Police (as detailed below). Control flow of funds for all R&R and road based works, supplies and services.

MRVC Overall coordination of all railway activities, including NBF works. All Bank-funded railway related procurement, implementation and payments, including rolling stock and kits, other equipment and works, Technical Assistance (TA) and consultant services. MRVC will project manage implementation by CR, Western Railway (WR), Railway Design and Standards Ornyanization (RDSO) and Integral Coach Factory (ICF) of the non-Bank funded rail sub-components. Civil works pertaining to additional lines, lengthening of railway platforms etc would be undertaken by CR and WR. Manufacturing of coaches under the project other than those supplied under the Bank funded conttract would be undertaken by ICF. RDSO will assist MRVC in finalizing teclnical specifications and testing of the trains manufactured and/or supplied under the project.

MCGM and ATC procurement, implementation and further design studies. Procurement, Mumbai Police construction and supervision of ROBs and pedestrian subways or bridges. Procurement and implementation of Station Area Traffic Improvement Schemes (SATIS). Procurement of TA consultants for TMU and Road Maintenance Management studies. Strengthening air quality monitoring and enabling of public disclosure of information. Mumbai Police will assist in the operation and

- 13 - enforcement of the traffic management schemes.

MSRDC Procurement, implementation and quality control of road works pertaining to Jogeshwari - Vikroli Link (JVLR) and Santacruz - Chembur link (SCLR) roads.

BEST Procurement and implementing the studies for preparing business plans and bus specifications. Procurement of buses.

Road Transport Office Study and implementation of items related to vehicle emission control. (RTO)/Transport Commissioner's office

Project Oversight: GoM has also set up a High Powered Steering Committee (chaired by chief secretary of GoM) a Project Coordinating Committee (chaired by principal secretary-urban development) to take care of inter-agency coordination. There is also a Independent Monitoring Panel (IMP) consisting of eminent persons from diverse field from the stakeholders of the project who would be reviewing and providing feedback on the adherence of the project to safeguard policies and principles.

Funds Flow: A chart representing flow of funds is presented in annex 6.

Rail Component: To reflect the cost sharing arrangement of rail component between IR and GoM, 50 percent of the funding for the rail component will be provided for in the budget of Indian Railways (IR) and 50 percent in the budget of Government of Maharashtra (GoM). The IR funds (for the counterpart share of the Bank funded portion of the project as well as for non-Bank Funded (NBF) subcomponents) will be passed on to Central Railways through a budget order and then from Central Railways to MRVC on an annual basis through a bank transaction effecting transfer of the annual allocation at the beginning of the financial year. MRVC will pass on a part of these funds to CR, WR and RDSO, for implementation of some specific NBF project subcomponents. The GoM funds ( including counterpart share) will be routed to MRVC through MMRDA. Since MMRDA has the responsibility of executing the R&R activities on behalf of MRVC, the payments to MRVC will be net of payment due from MRVC to MMRDA on R&R activities.

Although some of the payments related to the rail component will be made by MMRDA (for R&R expenditure related to the rail component) and some by CR, WR, ICF and RDSO, since these payments will be made by these agencies on behalf of MRVC, the entire expenditure pertaining to the rail component will be recorded in the books of accounts of MRVC. Thus MRVC financial statements will provide a complete picture of the expenditure on the rail component. On replenishment of the special account, Gol/Controller of Aid Accounts and Audit will credit IR (for IR portion) and GoM (for GoM portion) equally of the total amount replenished.

Road Based Transport Component: The amount for this component will be allocated in the budget of GoM. GoM will pass on these funds, on a quarterly basis to MMRDA for execution of the project. MMRDA, in retun, will advance these funds to MCGM, MSRDC and BEST for the project components to be implemented by them. The counterpart funds for the components to be implemented by MMRDA and MSRDC will come from MMRDA. However, the responsibility of providing counterpart funds for the components to be implemented by MCGM and BEST will rest with MCGM and BEST respectively. MCGM will account for these funds separately in its books of account without opening a separate bank account. However, besides accounting for these funds separately, BEST and MSRDC will also maintain

-14 - separate Bank accounts for the project funds. The funds will be transferred from GoM to all the implementing agencies, i.e., MCGM and BEST as a loan. The funds will be routed through MMRDA, as it is the coordinating agency. MSRDC will execute the two road works on behalf of GoM. On replenishment of the speciaI account, Gol/Controller of Aid Accounts and Audit will credit GoM for the total amount replenished.

Resettlement and Rehabilitation Component: This component will be implemented by MMRDA for both railway and road-based components described above. Costs would be shared between the IR and GoM based on actual R&R expenditure incurred for the rail and road-based components respectively. On replenishment of the special account, GolVController of Aid Accounts and Audit will credit IR (for IR portion) and GoM (for GoVM portion) as per amounts specified by the MMRDA in their reimbursement claims.

The Project Implementatioin Plan (PIP): MMRDA and all implementing agencies jointly prepared the PIP. It will be used as a worling document to guide the implementation of the project. A copy of the draft PIP is available in the Project. File. An updated PIP will be prepared by the Project Launch Workshop.

Progress Reporting and Annual Review: MMRDA will be responsible for preparing quarterly and annual progress reports and annual work programs based on the PIP. The progress reports will surnmarize physical and financial progress, address major problems and propose corrective actions to be taken. The annual progress report will review the progress achieved in the preceding year, revise the annual work program (AWP) for the following year, and confirm the availability of counterpart funds. The AWP will be the subject of a joint Bank`MMRDA/MRVC review.

D. Project Rationale 1. Project alternatives considered and reasons for rejection: Project Scope: The 1994 CTS provides the framework within which the scope of the project has been designed. The CTS considered four investment and policy alternatives to meet travel demand up to 2011. The alternatives were evaluated using technical, economic, social and environmental criteria. An alternative which focused on inivestment in public transport combined with demand management in congested areas like the island city (PT + DM) was selected. The general rationale of this altemative, especially the emphasis on public transport development and on strengthening of transport institutions, is widely accepted by all agencies and NGOs. Investments in this alternative were prioritized to produce long and short term investment plats. The project will finance the most pressing investment needs in the CTS (PT + DM) short term plan. It will also finance updating of the CTS. In the selection of project components and policies, there have been trade-offs, the most important of which are discussed below. Depending on satisfactory implementation and institutional progress, the Bank may be able to support follow up projects in a progranimatic manner, to address the items not included in this project so as to achieve the strategy outlined in the CTS.

Size of Project: The project, despite the estimated cost of about US$945 million, will not alleviate all of MMR's transport problems. A larger project could have been designed. However, given the past difficulties of project implementation in Indian urban areas, particularly in handling a large scale of R&R and counterpart funding constraints, it was considered prudent to restrict the scope of the project while still making worthwhile transport gains and building the institutional capacity to carry on the process in future investment programs and/or Bank projects. The project will also include funding for feasibility and detailed engineering studies for future investments.

- 15 - R&R: R&R matters were for some time considered as a separate but connected project - Mumbai Urban Rehabilitation Project (MURP) - with the expectation that this would provide a policy as well as an institutional basis for dealing with R&R not only for transported related investments but also for other infrastructure investment in Mumbai as well as other parts of Maharashtra. However, taking into account the reluctance of GoM to adopt this broader approach and to ensure close co-ordination between transport and R&R, it was concluded that R&R related to MUTP should be addressed within MUTP itself.

Selection of Rail Schemes: The proposed railway components were prioritized on the basis of a Rail System Simulation Study. The components included in the project have high priority, relatively moderate R&R problems and are capable of completion within four-five years and their inclusion has been confirmed by subsequent techno-economic evaluations.

Selection of Road Schemes: In line with the CTS strategy, the project has restricted road schemes to those which assist the operation of railways (e.g. the Rail Overpass Bridges) and strengthen the east-west links in the suburban areas (such as the Jogeshwari-Vikroli Link and Santacruz-Chembur Link). The other road improvement options were dropped after careful analyses taking into consideration environmental, social and technical assessments in favor of improved public transport coupled with demand management

Reform of Rail Operations: The MRVC has been established to implement the suburban rail service improvement projects in the project. A separate business and operating plan for the suburban system has been prepared and will be updated annually. It would be a logical next step for MRVC to be transformed into a suburban rail service provider, with responsibilities to integrate services across the central and westem railways and BEST, and to further develop services in response to consumer demand, which would be operated by CR, WR and BEST on contract to MRVC. This was discussed, but IR is not yet ready to take this step.

Reform of Bus Operations: Bus services in Mumbai are provided by a classic monopoly public sector enterprise which is vertically integrated and responsible for operations as well as overall service planning and design. It is the Mumbai authorities' view that: (i) bus services should be maintained at least at their present levels and preferably expanded; (ii) the quality of services should be enhanced; and (iii) these requirements are best met by BEST. BEST currently offers a reasonable level of service with a satisfactory daily availability of about 95 percent of the fleet. However staffing levels are high (12/bus) and cost recovery only 80 percent, despite fare levels above those charged on the railway. Passenger numbers and passenger numbers have remained almost unchanged for several years. There is a need to reduce costs and improve services, while at the same time ensuring that there is an acceptable network wide service at a fare level affordable by the poor. Deregulation of bus services, introduction of competitive tendering and privatization of BEST operations were considered. In view of the less than fully satisfactory experience in Delhi, and the limited experience to date in these areas in India, and the already broad scope of the project, it was felt most appropriate initially to support BEST in their lirnited reform efforts. This would allow more extensive reform proposals to be developed in consultation with BEST and GoM during project implementation.

Air Quality Management: Motor vehicle emissions are estimated to be responsible for 70 percent of current air pollution. The Lal committee has produced a set of 101 recommendations to address this pollution, some of which are under implementation. Consideration was therefore given to funding implementation of a major motor vehicle emission control program. The fragmentation and weaknesses of institutions responsibility for air quality, coupled with the lack of agreement on technical solutions and policy led to the conclusion that it was first necessary to develop a better understanding of current

- 16 - problems, and a strategic frarnework for the evaluation and prioritization of the Lal committee recommendations. The project will support these activities.

Creation of a Mumbai MetrDpolitan Transport Authority: The option of immnediate establishment of such a statutory authority, with responsibility for region-wide multi-modal transport planning and coordination as well as regula.ory frameworks, was considered. While there is some support for the concept, it was felt that phased development of the capabilities of existing agencies, particularly MMRDA was more appropriate at this time. However, the concept will be pursued further during project implementation and could forrn a key institutional development in a subsequent project.

Adaptable Lending versus Conventional Lending Operation: The proposed MUTP is a large intervention, but even so does not address all the issues. Adaptable Lending was considered. However, it would have been difficult to reach a complete agreement on policy changes and sound institutional framework with the different agencies involved with urban transport planning, development and implementation over the medium term. Therfore it is proposed to support development through successive loans in a programmatic mann-r, using the conventional lending process. This will permit both sides to gain experience and provide the context for further developments to be supported through future loans.

2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Latest Supervision Sector Issue Project (PSR) Ratings (Bank-financed projects only) Implementation Development Bank-financed Progress (IP) Objective (DO) COMPLETED/ONGOING Augmentation of bus fleet, depots and Bombay Urban Transport U S workshops, traffic management and Project (Ln. 1335-IN) flyovers in Mumbai Enhancement of institutional capacity State Roads Infrastructure S S to prepare projects at the state-level. Development Technical Assistance (Ln.41 14-IN). Capacity expansion, maintenance and Andhra Pradesh State Highway S S institutional development of state road Project (Ln. 41 92-IN). agency. Strengthening Public (Bus) Transport, Tamil Nadu Urban S S Traffic Management measures and Development Project - I ( FY systems, and urban infrastructure. 89-96). Support for basic urban infrastructure Tamil Nadu Urban S S and urban transport infrastruclure, and Development Project -II, (FY policy reforms in urban Tamil Nadu. 99-04). Support for urban infrastructure Gujarat Urban reform Project S S including urban transport and Iraffic (FY-2002-03) management improvements.

- 17 - Other development agencies

IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: The Bank has participated in the financing of one urban transport project in Mumbai, (formerly known as Bombay) "The Bombay Urban Transport Project (BUTP) 1976". The key lessons from BUTP, as well as from other completed transport and related projects in India, have been incorporated in design of the current transport projects including the proposed project:

Preparation: BUTP was slow to commence disbursement. To overcome this problem, for MUTP, it is envisaged that about half, in value terms of the project components will be either under execution or bids invited or in the final design stage with tender documents nearing completion before project approval.

Contracting: Projects have suffered in India from: (i) the disaggregation of works into small contracts; and (ii) the use of small and financially weak contractors that have taken long periods to implement projects often of low quality. Current MUTP components will be packaged in a way which permits a blend of international and national competitive bidding with clear post or prequalification criteria. Appropriate quality assurance, audit and supervision will be provided either through consultants or through the agencies.

Completion: Bank projects in India in the past have often extended well beyond the proposed completion date due to delays in completion of contracts arising from decision procedures, inability to acquire properties or land necessaxy for the works, and delays arising from small contracts (see above). To overcome this past deficiency it has been agreed that: (i) before any civil works contract is let, R&R/LA issues will have been substantially resolved; and (ii) HPSC will ensure that decisions are not unduly delayed.

Counterpart Funding: Past implementation has also suffered from delays in provision of counterpart funding. Detailed funding requirements were reviewed and GoM/IR allocations agreed during loan negotiations. It was agreed that GoM/MMRDAfMCGM/IR/MRVC/BEST would provide for the fund requirements for the project in their budgets during the project period. Fund flow process for this project has been elaborated under section C - 4.

R&R: There is little experience in India with such large scale urban R&R for development projects using policies acceptable to the Bank. However, based on past project experience, the following lessons from the sector in general have been incorporated into the proposed project:

* the R&R policy developed is acceptable both to the Bank and GoM; * Steering Committee, project coordinating committee and PMU have been established with sufficient authority and independence to by-pass cumbersome government procedures;

- 18 - * good R&R planning and implementation practice have been incorporated into the project design and implementation; and

* central role for NGOs in the preparation and implementation of R&R.

4. Indications of borrower commitment and ownership: Commitment has been demonstrated by various actions by MMR agencies including:

Project Preparation: - Establishment of a HPSC, Project Coordinating Committee (PCC) and a PMU, as well as an independent monitoring panel; and

- Funding by MMRDA, from its own resources, of several preparatory studies by international consultants (such as ATC and finalization of road component).

Rail Component: - Creation by IR of a Railway Suburban Infrastructure Unit;

- Signing of MOU between GoM and IR including the establishment of MRVC and the provisions for IR-GoM cost-sharing and subsequent formal establishment of MRVC;

- Agreement by IR to complete significant elements of project preparation with its own resources;

- Steps taken by IRJMRVC to identify and separate the costs for the suburban railway system; and

- Confirmation by IR/MRVC that counterpart funds will be budgeted and made available for the five year duration of this project.

Road based Transport Component: - Amendment to the BMC ALct has been carried out to enable the agencies to deal with traffic matters in general and to establish charged parking;

- Strengthening of the Traffic Management Unit within MCGM and decentralizing the functions to the ward level; and

- Setting up of a HPSC to coordinate the preparation and implementation of the traffic demand management strategy.

R&R Component: - Following recommendations of a broad-based task force, including civic society consultation, adoption of a comprehensive R&R F'olicy within the MUTP context and subsequent agreement on revisions needed to improve effectiveness;

- Successful relocation of about 10,000 households living on the safety zone of harbor, central and Western railways by relocating them either to permanent houses or transit housing constructed in partnership with NGOs as well as direct contracting to an agency having experience in the construction of houses using the prefabjicated materials; and

- 19- - Successful shifting of 900 families to transit housing involving the participation of the beneficiaries in self financing and construction under Thana-Kurla rail project in partnership with NGOs and the IR.

Air Quality Management: - Preparation by GoM, with Bank support, of an urban air quality management plan (URBAIR) in 1996-97; and

- Initiating studies on strengthening the air quality monitoring network and on Particulate Matter(PM) 10 reduction strategy during the project preparation.

5. Value added of Bank support in this project: The Bank has had extensive dialogue with the GoM and IR throughout project preparation. The Bank was able to assist in: (a) project preparation by arranging PPF and Policy and Human Resources Development (PHRD) funds which were utilized by the IR and MMRDA to fund some of their preparatory consultancy services; (b) by providing significant level of technical assistance to define and assist supervise several studies to evaluate options, prioritize components, prepare designs etc., (c) by stimulating the institutional and policy reform process; (d) by ensuring that social concerns in R&R and environmental policy were adequately addressed; (e) by encouraging a comprehensive rather than piece-meal approach; and (f) to share with GoM ideas and successful international experience in urban transport, particularly in relation to suburban railways, traffic management, and vehicle emissions. Other specific value added included:

Strategy Formulation: The formulation of transport strategy in a mega-city such as Mumbai is a complex matter. The GoM is aware that it is not possible to meet the unrestrained demands of all categories of transport system users or to meet the full aspirations of all NGO's (which in themselves do not necessarily provide a consistent policy direction). Compromises and trade-off are necessary. The international experience of the Bank has been valuable in assisting GoM in the selection of appropriate strategies and in supporting the GoM in their promotion.

Policy Assistance: The Bank has assisted the GoM and IR in arriving at the basic policy decisions (such as creation of MRVC and creation of the TMU in BMC) which are necessary for the establishment of an improved transport system in MMR.

Technical Assistance: The Bank has assisted the project preparation agencies (MMRDA and Railway Planning Unit) in all stages of the project preparation activity. Advice and assistance have been offered and accepted from the stage of the CTS to the present component design stage. The Bank, through its preparation missions, has participated in the preparation of the necessary study and design Terms of Reference (TOR) and has assisted in the review of the various outputs. Since many of the components are new in concept to Mumbai, the Bank has been able to bring an international and state of the art perspective to technical aspects.

R&R: The value added of Bank support for the R&R components include: (a) advice and assistance on the formal adoption of an urban R&R policy for the project by GoM, probably the first in India, and which may serve as an example for other projects and states; (b) ensuring that the voice of PAHs and their opportunity to participate in project benefits has been heard, (c) advice on the provision of an R&R model for implementing badly needed infrastructure projects in Mumbai; and (d) advice on establishing a sustainable capacity for undertaking future R&R activities in Mumbai and possibly in other cities in the future.

- 20 - E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): 0 Cost benefit NPV=US$1241 million; ERR = 37.65 % (see Annex 4) 0 Cost effectiveness 0 Other (specify) Methodology: A comprehensive strategic transport planning study (CTS) was used to identify project components on the basis ofeconomic cost-benefit analysis for the rail and road components. These were later subjected to detailed cost-benefit analysis to estimate the economic rate ofreturn. Methodology used for cost-benefit analysis ofthese two components is described in detail in Annex 4 and summarized below.

Rail Transport Component: A system simulation study was camed out to evaluate and prioritize rail components for enhancing line capacity in relation to projected demand. At the component level, all physical rail components have been subject to economic evaluation under terms ofreference agreed with the Bank. The economic evaluations were completed in June 2000 and only the components having satisfactory Economic Rate of Return (ERR) have been included in the project. The economic costs included all physical costs, R&R costs, physical contingencies, and other related costs. Benefits included: (i)savings in passenger time for rail passengers as well as those diverted from other modes; (ii)improved rider comfort from reduced loading per car; (iii)savings in vehicle operating costs for the diverted traffic; (iv) savings due to reduced pollution; (v) savings in the operating costs ofthe new Electric Multiple Units (EMU); and, (vi) savings in energy costs for DC to AC conversion. Since the R&R costs included provision of built houses with other facilities for the squatters free ofcost, these families will have large benefits from improved accommodation. Its benefits were included in the economic analysis by considering the prevailing rent value of similar housing in the vicinity ofthe areas ofsettlement ofthe squatters. To offset the cost ofadditional transport, if any, to their working place the average rental rates prevailing in the areas were reduced by 20%. Savings due to reduced accidents and reduction in long distance passenger train times were not included in the quantifiable benefits, though these could be significant. The overall ERR for this component is 36.4 percent; and the NPV, discounted at 12 percent, is Rs 47,740 million.

Road-based Transport Component: The cost-benefit analysis for this component used different approaches for each ofits sub-components: (i)road network strengthening; (ii)traffic management schemes, pedestrian facilities, SATIS and other traffic management schemes; and (iii)signalling systems.

Road network strengthening sub-component: The costs included physical works, R&R costs, design and supervision cost and physical contingencies and benefits included user benefits- savings in vehicle operating costs from decreased congestion and distance savings, savings in passenger travel time, new generated traffic, and non-user benefits like savings in reduced vehicle operating cost to the traffic using adjoining network due to reduced congestion and savings in passenger travel time on the adjoining network. In some cases there were some disbenefits of increased congestion on some links ofthe adjoining network. Standard methods ofeconomic analysis were used for 'with' and 'without' project. The economic analysis was carried out for a period of20 years after project commissioning. For ROBS the additional benefit due to savings in time for the rial passengers was also considered. The ERR and NPV for this sub-component was estimated at about 30 percent and Rs 4,440 million respectively. Benefits ofR&R component were estimated as described in the rail component above.

-21 - Traffic management: The costs included all physical costs, contingencies, and other costs. For pedestrian facilities benefits included savings due to reduced accidents, and savings in time for the pedestrians and passengers in the vehicles. A 20 year period was considered for the cost-benefit analysis. The ERR and NPV for this sub-component was 48.4 percent and Rs 2,940 million respectively. For SATIS, benefits included: (i) savings in pedestrian time due to reduced distance travelled in the station and delays at intersection crossings; (ii) reduced VOC of vehicles in the station area resulting from improved traffic movement; and (iii) savings in time of the passengers in the vehicles. The cost-benefit analysis was carried out for a period of 20 years. The ERR and NPV for this component was estimated to be 63.2 percent and Rs 2,390 million respectively.

The cost-benefit analysis for ATC was carried out for a period of five years. Benefits included savings in vehicle operating cost due to reduced idling time at the junctions and savings in passenger time due to reduced delays at the junctions. The ERR of the sub-component was 116 percent and the NPV of Rs 1,247 million respectively.

Resettlement and Rehabilitation Component: Baselines socioeconomic surveys have been carried out among the potentially affected persons to ascertain their baseline socioeconomic characteristics. Resettlement Action Plan and Resettlement implementation plans were prepared describing the details of impacts, implementation arrangements, time table and budget estimates. Based on these the project provides houses, cash compensation, financial assistance and other as'sistance like training etc. The costs of R&R has been included in each project sub-component and the tangible/quantifiable benefits have been included as described above in the rail component. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4)

Fiscal Impact: The fiscal impact of the rail component on IR and GoM will be minimized by the introduction of the rail surcharge. The investment cost of the component ($654 million) plus rail related R&R cost (about 70 percent of the total R&R cost i.e. about $70 million) is expected to be fully recovered through the proposed rail surcharge within 13 to 14 years.

The costs of the road-based transport component ($1 83m) and the remaining 25 percent of R&R will be the responsibility of GoM and the MCGM. This will likely have significant fiscal impact, for GoM has been in fiscal distress in recent years. However, Maharashtra has long been one of the better financially-managed states in India, and known for its fiscal conservatism. A recently announced medium-term Fiscal Reform Program by GoM aims to bring the state fiscal performance back on track. It is a quantitative statement of GoM's three to five year fiscal strategy starting in 2002-03, which takes into consideration the financial obligation incurred by MUTP.

The fiscal impact on GoM will be further reduced by the sharing of project costs by MCGM (about $82 million) and BEST (about $25 million). Both organizations have made appropriate plans to finance their investments. The detailed assessment of the financial capacity of these two organizations is contained in Annex 11.

- 22 - 3. Technical: Rail Transport Component

The technical specification for the EMU has been the subject of extensive discussion with IR. Two separate independent reviews have been undertaken, one conunissioned by IR, the other by the Bank. These confirmed that the specifications are appropriate for the particular conditions in Mumnbai (very heavy passengers loadings and difficult operating conditions during the monsoon season) and are in line with current international trends. Existing and new EMUs will be provided with three phase AC traction motors. This technology has been selected as a result of a "Techno-Economic Study" carried out in preparation of this project, and tested through prototype application on existing EMUs. Additional maintenance facilities and training of maintenance staff required to ensure the efficient operation of this new technology are included in the project.

The electric traction system in Mumbai is being converted from the existing 3000 volts DC to 25,000 volts AC to provide the increased triction power that the growth of the commuter train traffic will require. For technical reasons, DC to AC conversion normally requires upgrading of signaling in parallel. This is provided for in the project. The other items included in the optimization subcomponents to improve train services (increased train and platform lengths, removal of speed restrictions etc) represent good practice. The maintenance items proposed are required to upgrade the condition of track, to modernize and mechanize maintenance proced.ures and introduce maintenance planning IT systems. The proposed construction of walls or fences is necessary to reduce problems with trespassers.

Road-based Transport Component

Traffic Management: Traffic management is a current weakness of the agencies in MMR. T he successful implementation of the component will depend on the timely appointment of the consultant providing TA to guide the newly formed TMU in MCGM. Installation of ATC in the island city of Mumbai is good practice means to improve the traffic flow and the efficiency of the road system. The specifications are based on intemational best practice. Provision of pedestrian over-bridges and subways is based on technical and economic analysis of options, including street level pedestrian crossings. Support to the Traffic Police and MCGM/TMJ to develop and use an accident recording, analyses and reporting system (to come up with multi-year rolling plans for blackspot improvement) is standard practice where such systems do not exist.

Network Improvements: No particular issues are foreseen since the subcomponents are standard civil engineering works. The only dilFferences to current practice in Mumbai are the use of International Competitive Bidding (ICB), essential adherence to the environmental and social framework and adherence to the defined contract time limils. Supervision consultants financed under the project components are expected to help MSRDC implement these components to the desired quality and within the time frame.

BEST Program: The measures proposed in the five-year Business Plan prepared represent the first step in cost reduction and revenue enhancement. BEST management recognizes that the measures other measures will be needed. More detailed analysis of the cost, revenue and staffing impacts of the measures is needed, as provided for in the proposed 1A. BEST current bus design is not user friendly (particularly for anyone who has difficulty climbing stairs) and does not facilitate speedy entry and exit because of having a high floor body built on a truck chassis. This adds to delays at bus stops. The design is similar to that used in other cities, but lags considerably designs generally available

- 23 - internationally. Careful work will be required to update the specification without substantially increasing capital and operating costs.

4. Institutional:

4.1 Executing agencies: MMRDA will be coordinating the implementation of the whole project on behalf of GoM and will implement the project mainly through MRVC, MCGM, BEST and MSRDC. Under this project MRVC will be coordinating and implementing the suburban railway component using the central and western railway assistance and facilities. Before the setting up of MRVC, the suburban railway projects used to be conceived and implemented by the respective zonal railways - central and western railways. Similarly an amendment to the MCGM act done in December 2001 gives MCGM the powers for traffic demand management, charging user fees and with regulation of all matters concerned with traffic system including installation and maintenance of equipment. The setting up of TMU in December, 2000, both at central and ward levels will also help in better traffic management in MCGM. Government of Maharashtra (GoM) has also taken a decision to implement the road packages under this project through MSRDC instead of PWD. Because of the multiple agencies involved with the implementation of this project, each of the project components has their own institutional development/capacity building sub-components. Consultant services for technical assistance will assist in improving the efficiency of the organization and operations, cost recovery in operations, traffic and demand management and training aspects. 4.2 Project management: MMRDA and the MRVC are gearing themselves up to meet the task of implementing this large project more efficiently. The PMU set up by MMRDA to coordinate the preparation of the project will coordinate the implementation of the project. The response to the public consultations held as part of the environment and social assessments indicated the interest of the affected persons, NGOs, and other citizens of Mumbai in the project. Public relations, information dissemination and consultation will therefore be an integral part of project management. The Bank is supporting the MMRDA to develop and implement a communications strategy and action plan. 4.3 Procurement issues: A procurement assessment has been carried out which is included in Annex 6. Most of the procurement under the project will be carried out by MMRDA, MRVC, MCGM, MSRDC and BEST. All these agencies (except MRVC) have done procurement, either using Bank procedures or using FIDIC conditions, successfully. MRVC is an agency which is predominantly staffed by officers of IR on deputation, and IR has a lot of experience of Bank related and its own procurement. However, training/re-training would be required and is planned starting at project launch. 4.4 Financial management issues: Overall, the project has a financial management system which will be able to adequately account for project resources and expenditures. Based on the implementation arrangements for the project described in section C 4, a Financial Management (FM) assessment was carried out for BEST, CR and MSRDC, in addition to MMRDA and MRVC. The financial management arrangements in all these organizations were considered satisfactory for the implementation of the project. Further details, including internal & external audit arrangements are provided in Annex 6.

Disbursements: Disbursements from the Bank would initially be made in the traditional system

- 24 - (reimbursement with full docinmentation and against statement of expenditure) and could be converted to the FMR based disbursements at the option of the GoM and the Government of India (Gol) after the project successfully demonstrates generation of quality FMRs.

Retroactive Financing: Retroactive financing up to an amount of about US$21 million would cover eligible expenditure for implementing activities after August 2000. Credit of US$20 million will support the R&R of project affected people through construction/buying of permanent and transit houses and the consultants services for planning, designing and implementing the same. Loan of $1 million will support studies including air quality monitoring and particulate matter. 5. Environmental: Environmental Category: A (Full Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. The Environmental Assessment (EA) process commenced in 1994 with the draffing of the lTOR for a Sectoral Environmental Asses,ment Report. The EA process included the preparation of a Sector-level Environmental Assessment (SLEA), Programmatic level Environmental Assessments (PLEA) and Micro-level Environrmental Assessments (MLEA). The SLEA was a strategic document. PLEAs were prepared for small generic sub-components like road over rail bridges and pedestrian underpasses, while MLEAs were prepared for larger sub-components like major road widening. The assessments undertaken between June 1995 and May 1997 resulted in several outputs including a comprehensive final report in 1998.

Since 1998 both the design of the proposed project and the traffic and environmental baseline in Mumbai have undergone changes. In late 2000, it was decided to prepare a Consolidated EA that takes into account the changed baseline since 199,3 and presents a comprehensive overview of all environmental aspects of the project in one document. Public consultations followed the disclosure of the draft Consolidated EA report, the findings of which were incorporated in the Consolidated EA report. In parallel, all older PLEAs and MLEAs were updated, MLEAs were prepared for all sub-components added after 1998; EMPs were prepared for all sub-components earlier covered by PLEA; and for all sub-components to be implemented in the first year of the project. Further details of the environmental assessment process are given in Annex 12.

The significant issues that emerged from the environmental assessment, and efforts to address them are described below:

Air Quality Management: The need for better air quality management, and control of vehicle emissions (particularly particulate matter) has been identified as one of the major environmental management measures in the Sectoral EA. The Bank has engaged in a dialogue with the relevant agencies of the GoM, to assist in strengthening the air quality monitoring arrangements and promoting strategies for reducing vehicle emissions. A study on a Particulate Matter (PM) reduction strategy was initiated during project preparation phase and will be completed by July 2002. In the project assistance will be provided to develop a comprehensive Motor Vehicles Emissions Control Strategy (MVECS). MMRDA has agreed to facilitate the dialogue with other GoM agencies to incorporate the results of the PM study into the MVECS.

Noise: Noise impacts have also been highlighted as one of the major issue, particularly in the case of railways. Effort has been made to handle this by reduction at source by giving due consideration to the noise emissions from new trains to be purchased, and using welded railway lines, amongst other measures. Further, it is proposed to develop a "noise map" by way of extensive monitoring along the railway lines with respect to key sensitive receptors so that a strategic approach to noise mitigation can be evolved in the

- 25 - future. Certain sensitive receptors along roads will be impacted due to higher noise level as a result of increased traffic and also temporarily due to construction activities. In such cases appropriate mitigation measures are proposed to be undertaken during construction and operation stages of the project

EcologicallySensitive Areas and Regulatory Aspects: Two sub-components (JVLR, BVQR) impinge on the designated Coastal Regulation Zone (CRZ) area and involve cutting of mangroves. However, the JVLR is a permissible activity under the development plan approved by the GoM and there is no need to get a clearance from the GoM or GOI. The BVQR subproject is also permissible under the CRZ notification, but it requires a formal clearance from the Ministry of Environment and Forests (MOEF). GOI and MMRDA has applied for retroactive approval from MOEF. To mitigate the unavoidable impacts on existing mangroves, the subprojects include appropriate mangrove compensatory and regeneration plans. Two transit housing sites (2500 households) established to respond to tight deadlines set by the High Court to remove squatters along the safety zone of railway tracks, have been found to encroach on the CRZ area, triggering an inadvertent breach of CRZ regulations. MMIRDA is committed to ensuring that residents are moved to permanent housing as soon as it becomes available. Environmental Management and Restoration Plans have been prepared for these sites so that no pernanent damage remains on the site after the transit housing is dismantled. MMRDA is committed to restoration of these sites to their original conditions.

Environmental Management at Resettlement Sites: Environmental management at the community level in the case of resettlement housing is being addressed in the RAP. The focus is on ensuring that PAPs who have been used to living in slums are able to live in high rise buildings in a manner that is not detrimental to the environment, and does not pose an environmental health risk to the population. Separate Community Environmental Management Plans (CEMPs) have been prepared for each resettlement site. The primary objective of CEMP is to provide access to basic urban infrastructure services through community initiative and participation, and alleviate the environmental health risks of the community. The stress here is on participatory approaches through the Environmental Management Committees (EMCs) that are facilitated by NGOs that have been working with the communities.

Relevance of the CTS: The SLEA analyzed the different options proposed in the CTS and concluded that the option which focused on promotion of public transport plus demand management (PT + DM) in the island city was environmentally the most desirable. Given the changes in the external environment since the time that CTS was formulated, particularly the construction of flyovers, the issue of PT+DM being the appropriate strategic option was raised in consultations. This is addressed well in the Consolidated Environmental Assessment (CEA) by recognizing the limitations of the quantitative analysis undertaken in determining the appropriate option, and proposing a logical argument for decision making on enviromnental grounds that substantiates the selection of PT+DM as the appropriate strategic option in spite of the changed external environment.

Other Issues ofpublic concern: The public consultations brought forth the following issues, which have been addressed in project subcomponents:

(a) the project should cater more for pedestrians by building more footpaths and improving safety; (b) there is a need to strengthen the demand management aspects of the project;

(c) the project should not exacerbate the existing problems related to illegal quarrying; and (d) it should be ensured that transit housing does not turn into permanent housing over time.

- 26 - Concern was also expressed that given the complex nature of the project, effective implementation of environmental management measures would be a challenge. 5.2 What are the main feature; of the EMP and are they adequate? Environmental Management Plans have been prepared both at the sectoral- and sub-component level. These plans recommend mitigation actions covering at the sectoral level, policy and institutional measures and at the sub-component-level, design improvements, construction management, and operational safeguards.

The EMP at the sectoral level i; the basis for identifying the Air Quality Management aspects related to the transport sector. These include supporting government efforts to improve the air quality management in Mumbai; strengthening the development of strategies to reduce vehicular emissions; and environmental capacity building of other relevant agencies. Most of the policy measures recommended in the sectoral level EMP are those that are in the state governments purview, and do not require approval from the central government.

The EMPs at the sub-componernt level for rail and road investments provide a description of appropriate practices that should be adopted during the design and construction of different sub-components, and specific mitigation measures to be implemented during operations. Their main feature is the delineation of the design, construction, and operational impacts and the assignment of roles and responsibilities for implementing the appropriate environmental management measures at each stage. Hence, the EMP recommendations to be incorporated in the bidding documents of different civil work and monitoring arrangements during construction have been outlined; for the operation stage, the EMPs focus on mitigation of air and noise impacts with a particular focus on sensitive receptors. The institutional measures for EMP implementation envisage a role for all the agencies involved in actual implementation as well as supervision. Further, the EMPs provide for regular reporting of the key environmental issues from the contractor level all the way to MMRDA.

The CEMPs for R&R sites have a greater focus on the operation stage as compared to the construction stage since most of the construction of permanent housing is as per government housing norms. In cases where construction is yet to take place, the CEMPs have specified appropriate construction practices and the need to incorporate recommendations in the bidding documents for the contractors. The development of environmental mitigation measures during the operational phase has been undertaken in a consultative manner with the Project Affectecl Persons (PAP) since in a number of cases the PAPs are already residing either in transit or permanent sites. The primary focus on the CEMPs is on alleviating envirorunental health impacts of the PAPs. The institutional mechanism for CEMP implementation envisages a role of an Environmental Management Committee comprised of the PAPs, and initial assistance from the NGO working with them.

The measures specified in the EMlPs and CEMPs provide sufficient environmental safeguards, and are adequate, provided they are diligently implemented.

- 27 - 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: 3 1/March/2002 Preparation of the first set of EA Reports: June 1995-1997 Preparation of the Consolidated EA Report: December 2001 Initial Public Consultation: November 2000 Final Public Consultations: November 2001 Bank Review: January 2002 5.4 How have stakeholders been consulted at the stage of (a) environrnental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted? No consultation was undertaken when drafting the TOR for the SEA in 1994. However, a number of consultative meetings have been held on the results of the assessment, with the first one being held in June 1997. The participants included the representatives of the government departments, local authorities, project implementation agencies and the consultants in the transport and environment field. However, there was no systematic disclosure of EA documents at that stage.

With the passage of time and substantial developments like construction of flyovers that had occurred, the process of updating the EA was started in late 2000. A consultation meeting involving academia, environmental experts, consultants, NGOs and representatives of Project Implementing Agencies (PIA) and the World Bank was organized in November 2000 for presentation of the updated EA. A second similar meeting was organized in December 2000. After the preparation of the Consolidated EA, a set of two final public consultation meetings were organized in November 2001. Most of these consultations were very well attended, and in addition to providing useful feedback on the project, also highlighted the public support for the project.

In addition to the continuous informal consultation process during the preparation of CEMPs and RIPs for the R&R sites, the first formal consultation meeting with project affected persons was organized in December 2000. A second and final meeting with a similar group was in November 2001.

For the final consultation meetings on the environmental assessment in November 2001, it was ensured that all the leading newspapers carried advertisements well in advance of the meeting, posters and pamphlets were distributed amongst the project affected persons, the relevant documents were made available to the public through the Public Information Center (PIC) of the Bank (October, 2001) as well as the MMRDA (September, 2001) well in advance of the meeting and invitations were issued to the members of the media and press. This strategy of disclosure was found to work well with the general public as well as project affected persons. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? The monitoring and evaluation mechanisms recommended in the EMP at the sectoral level as well as sub-component level need institutional coordination mechanism in place, as well as technical input in terms of monitoring equipment etc. Both the issues are proposed to be addressed in the project. The indicators at both levels relate to promoting environmental sustainability of urban transport. The key attribute of the EMPs relates to systematic monitoring and reporting of information/data to the appropriate departments. Environmental capacity building of all the concemed agencies has been recommended in the Consolidated EA, and would facilitate the environmental sustainability of the project. Indicators on air and noise pollution would reflect the impacts of individual sub-components.

- 28 - 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. The project concentrates on rail and road public transport improvement and on management of the transport system (traffic management, road safety, equitable user charges, etc.). Given the public transport emphasis, the majority of project investments are, at least, partly directed at the lower income groups in MMR. The planned resettlement of affected persons living along the railway tracks will enable the railways to increase the speed of the local trains which in turn improve the overall efficiency of suburban train system in Mumbai.

A potentially adverse social impact could have arisen from the need to resettle/relocate large numbers of people affected by rail and road infrastructure works--generally squatters on public land from lower income groups. It has been this inabilit y to resettle/relocate low income groups that has deferred meaningful transport development in Mumbai for many years. Recognizing this issue, the project incorporates policies as well as institutional framework to ensure equitable resettlement and relocation of affected persons. Through this process, potential adverse social impact may in fact be turned into a positive social impact. The key social development outcomes expected from the project are: (a) mitigation of adverse impacts; (b) empowerment to the affected persons; and (c) ownership to formal housing.

The proposed community development fund linked to savings will provide access for the credit to the women and others who are in need to start the income generating activities. Further, the NGOs will promote saving and credit groups among the women in order to prepare themselves for greater role in community management and building confidence in managing their development activities. Joint titles in the names of both husband and wiife for houses allotted under this project will also help in establishing gender equality. 6.2 Participatory Approach: Flow are key stakeholders participating in the project? Primary beneficiaries will be all transport system users throughout MMR, in particular rail and bus passengers (accounting for over 10 million passenger trips daily), pedestrians and, to some extent, other vehicle users.

Adversely affected groups are primarily: (i) occupiers of residential and business premises, including a large proportion of unauthorized squatters on public land which must be acquired or freed to expand the capacity of the rail and the road system; (ii) operators of the most contaminating road vehicles which will be subject to more stringent corntrols; and (iii) users of cars in the Island City who will be subject to more stringent parking controls in the short term and more extensive demand management measures by the end of the project.

With particular reference to R&R, the project is being prepared with the full involvement of the affected persons. NGOs have been closely involved - SPARC, Slum Rehabilitation Society (SRS), Society for Initiatives and Development of Hiuman Interventions (SIDHI) and NSDF in preparing socio-economic surveys and are working with communities to ensure their participation in the preparation of the RIPs. Because of extensive experience of slum dwellers and housing in Mumbai and their well established relations with the PAPs , NGOs will play a major role in carrying out the balance of the baseline surveys, preparation and implementation of RAPs as well as providing guidance and advice on matters related to preparation and implementation of the R&R program in achieving the project objectives and provide sustainability. The PAPs are involved in offering suggestions and ideas on housing designs and lay outs as well as allotment of houses. The PAPs' preferences and feedback are being taken into consideration in

- 29 - finalizing the designs and lay outs. Continued involvement of NGOs through the PMU, will be an important part of the project design and implementation. Due to constraints on availability of land, there is practically no involvement of people in the selection of sites. However, this has been mitigated by giving weightage to the closeness of site to existing localities at the time of evaluation of proposals submitted by the builders/owners of the land. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? NGOs have potentially a very important role in this project, particularly in the implementation of R&R program because of their professional discipline, ability, commitment and community trust. They are thus able to act in a manner complementary to the government and may be able to achieve results that otherwise might be very difficult for government staff to reach even when the latter are committed and competent.

The services of NGOs and Community Based Organizations (C30) will be used extensively both during the preparation and implementation of RIPs and CEMPs. NGOs will be responsible for carrying out consultations among the affected persons, civil society and other stakeholders during the preparation and implementation of RIPs and CEMPs. As a result of direct consultation with the PAPs, the designs and space utilization inside the houses have, especially in finalizing the house designs and facility planning, been modified accordingly to the choices/preferences of the beneficiaries. The NGOs will assist MMRDA during the implementation of RIP and, particularly, they are responsible for education and communication on the project and procedures, supporting communities in participation and discussion of alternatives, motivating and assisting in the formation of housing cooperative societies, training in organizing, allotment and shifting of persons to the new houses, formation and registration of housing cooperatives, imparting training to the housing cooperative on operation and maintenance, assisting the PAPs on transfer of ration cards, enrolling in the voting lists, transfer of Saving Bank accounts, counseling on employment opportunities, etc. The project will directly disburse the costs to NGO (SPARC/NSDF) to'construct and develop the transit housing and also make transport arrangements for shifting the affected persons to the new location. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The project will affect about 80,000 persons (19,200 households) who will be displaced from their present habitat and in some instances from their source of livelihood. A project of this nature require strong institutional arrangements to address the social development and social safeguard aspects of the project. After examining various alternatives, a Project Management Unit (PMU) has been created in MMRDA, mainly to manage the preparation and implementation of all R&R activities along with coordination and monitoring of the transport investment program. 6.5 How will the project monitor performance in terms of social development outcomes? The RAP describes the performance monitoring indicators in terms of number of households related to the permanent houses, alternative shops, improvements in the basic amenities, formation and functioning of cooperative societies, etc. These will be monitored through quarterly progress reports, minutes of IMP's meetings and Bank's supervision reports. A rapid impact assessment of initial phase resettlement implementation was undertaken through independent consultations by the Bank. The findings of the study are summarized in Annex 13. Simultaneously, the borrower has also initiated the full length impact assessment study through an independent consultants based on primary survey of sample households to record the impact of benefits, adverse impacts and difficulties and lessons learned on the initial implementation experience. The findings of these studies will provide valuable inputs for

- 30 - undertaking any remedial measures or making any necessary alternations for the remaining resettlement implementation.

A summary of the key aspects of RAP are described in Annex 13.

7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? Policy Applicability Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) * Yes 0 No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) 0 Yes O No Forestry (OP 4.36, GP 4.36) 0 Yes * No Pest Management (OP 4.09) 0 Yes * No Cultural Property (OPN 11.D3) 0 Yes 0 No Indigenous Peoples (OD 4.2(1) O Yes i No Involuntary Resettlement (O'P/BP 4.12) 0 Yes 0 No Safety of Dams (OP 4.37, BF' 4.37) 0 Yes * No Projects In International Wniters (OP 7.50, BP 7.50, GP 7.50) 0 Yes * No Projects In Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* 0 Yes * No

7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. OP 4.01 Environmental Assessment: Environmental Assessment and Management Plans have been prepared both at the sectoral level as well as sub-component level. These present the alternatives considered, the consultations undertaken, the detailed framework for managing environmental safeguards, including budget estimates for environmental management, suggested institutional arrangements and capacity building measures. For details of the provisions made to ensure compliance with this policy, see section E5 above and Annex 12.

OP 4.04 Natural Habitats: The impact of two subprojects and two transit housing sites on natural habitats was revealed during the EA process, including through consultation with NGO. This impact is small. Audits have been taken and restoration and rehabilitation plans drawn up, implementation of which is covenanted in the project agreements. For details of the provisions made to ensure compliance with this policy, see section E5 above and Annex 12.

OP 4.11 Cultural Property: Inmpacts on cultural property (in the form of heritage and religious buildings) were identified during the EA process, including through consultation with NGO, and from the baseline socio-economic survey for the RAP. Heritage buildings are indirectly affected by pedestrian subways and designs will take them into account. Rehabilitation plans for shrines, small temples and mosques have been developed in consultation with the affected congregations. "Chance find" clauses for items of archaeological significance are invluded in civil works contracts. For details of the provisions made to ensure compliance with this policy, see section E5 above and Annex 12.

OP 4.12 Involuntary Resettlement: A Resettlement Policy endorsed by the Bank and approved by the GoM is in place. Full census and baseline socio-economic survey among the affected persons have been completed and analyzed, a RAP describing the overall magnitude of resettlement and entitlements, and RIPs for individual investment subcomponents have been prepared and disclosed together with summaries in local languages. Consultations with PAPs are an on going process. The implementation mechanisms are in place. An Independent Monitoring Panel has been established, which is to be strengthened. A rapid initial impact assessment study ha; been undertaken of the initial phase of resettlement. A full length

- 31 - impact assessment study is being commissioned by the Borrower. For details of provisions made to ensure compliance with this policy, see section E6 above and Annex 13.

A review was undertaken which concluded that OD 4.20 Indigenous Peoples is not applicable to the project. Details are given in Annex 13.

F. Sustainability and Risks- 1. Sustainability: Sustainability has both environmental and social dimensions. Socially sustainable development of the transport system in Mumbai requires a policy and institutional framework for effective handling of R&R and minimizing future encroachment of rail and road right of way. The project aims to leave behind the institutional capacity, efficiency delivery mechanism and enhanced NGO capabilities to address the adverse social impacts associated with urban infrastructure projects. The approach used for R&R is expected to serve as a model for other cities wishing to tackle large scale resettlement associated with urban infrastructure projects. The environmental sustainability of the project is dependent on the extent to which the overall level of local and global emissions due to increasing demand travel is monitored, contained or reduced. The formulation and implementation of a Motor Vehicle Emission Control Strategy is designed with these objectives in mind.

Adequate resources for operating the system, the maintenance and replacement of assets, and for increasing capacity in response to user demands are the key to financial sustainability. The project is instituting a surcharge on rail passengers which should ensure these conditions are met for the rail system. For the bus system, reform measures designed to reduce costs and eliminate cross-subsidies if successful, will ensure the long term sustainability of the system. If these reform measures are inadequate, other regulatory and competition measures are available. For roads, long term sustainability requires large and sustained increases in maintenance budgets. This in turn requires improved management of existing funds, ensuring provisioning in the budgets and possibly increases in user charges. These aspects are all being examined as part of the review of user charges.

Effective institutions are the key to economic sustainability. Those responsible for delivery of rail services and construction of roads are already fully effective. The effectiveness of agencies responsible for planning and programming of transport investments, bus service delivery and traffic management is being strengthened through the life of the project.

2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex l): Risk Risk Rating Risk Mitigation Measure From Outputs to Objective Cooperation between various stakeholders H GoM has created the HPSC and the PCC to of the project and from other govemment ensure this at different levels. departments is weak. Rail and road corridors and other assets M Appropriate TA services under the project are acquired or upgraded under this project being envisaged to strengthen the maintenance are not maintained satisfactorily. management systems. Lack of capacity to maintain and operate H Institutional strengthening studies/TA for the the existing and new assets and plan different PIA will be undertaken and the reforms new/major capital investments. initiated and carried out under this project. Creation of TMU in MCGM will help.

-32 - Sustained and adequate funding not M Credible plan for operating and maintaining available for operating and mairntaining these assets to be prepared one year before the the assets created and upgraded under this close of this project. project. Funding from IR for creating NBF assets S Provision made in the 10th Five Year Plan and rolling stock which are essential for document by IR. Awaiting approval of supporting this project is not adequate. Planning Commission. From Components to Outputs Delays in the procurement of consultants, S Ensuring that procurement plans prepared are contractors, and suppliers. Delays in realistic. Bid documents for the first year decision making by IR at key stages in project components already prepared. Close rolling stock procurement. monitoring of procurement process for major contracts. Delays in transfer of funds from GoM and M Fund flow arrangements and timelines for IR to MMRDA and MRVC. transfer of funds agreed at negotiations. Inadequate counterpart fundingg. Review of MCGM and BEST finances undertaken by Bank. Agreement by GoM/IR to make provisions for the annual expected requirement under their annual budgets. Delayed delivery of quality works, M Use of independent engineers and supervision services and equipment. consultants to review and aujdit quality of works and work program. Completion of pre-constructioii activities H Bids for construction of housing units for like land acquisition, resettlemcnt, tree relocation of affected persons have been cutting, and utility diversion is delayed. finalized for all first year works. Bids for civil works in later years will not be awarded unless pre-construction activities are completed. Slow approval/clearance from concemed S All necessary clearances have been obtained for regulatory authorities/ ministries. the first year works. Ensuring that clearances for works in later years are obtained well in advance of implementation. IR does not commit to agreed action H Setting up of MRVC as the implementing plans. agency for the rail component is expected to help in minimizing this risk. Problems in timely and orderly financial N Reporting formats and periodicity have been reporting as there are a large number of agreed with both MMRDA and MRVC. implementing agencies involvecL Reporting between the PIAs and the coordinating agencies have also been now agreed with. Waning of support for the project due to S Extensive public consultations by PIAs on improper perceptions of the project in the contentious issues. Project support to MMRDA mind of the public and stakeholders to implement a communicatons strategy to causes delays. develop better public relations. Continuous MMRDA and Bank dialogue with NGO. Overall Risk Rating H A high risk and high benefit project Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)

- 33 - 3. Possible Controversial Aspects: There are different perceptions regarding the resettlement planned in this project. While most NGOs welcome the approach adopted in the project, there are some who are opposed to relocating and extending support to the squatters and encroachers who normally are not entitled to any benefits.

The inadvertent construction of some of the transit houses in locations covered by Coastal Regulation Zone (CRZ) poses a reputational risk. The first step in mitigating this risk, namely the preparation of management and restoration plans is underway. The implementation of those plans will be the key step in risk mitigation. Government of Maharashtra (GoM) has agreed to dismantle transit housing units erected in CRZ areas and move their occupants to permanent housing units not later than end 2003. Clearing of small areas of degraded mangroves for road and rail components has been noted by environmental NGOs. Again the potential risk will be mitigated by the preparation (which is underway) and later implementation of mangrove restoration plans.

G. Main Loan Conditions 1. Effectiveness Condition Subsidiary financing agreements between GOM, MMRDA and each of the implementing agencies namely MRVC, MSRDC, MCGM and BEST to be concluded and the legal opinion shared with the Bank. Memorandum of Understanding to be concluded by IR and MRVC.

2. Other [classify according to covenant types used in the Legal Agreements.] Accounts/Audit: (i) MMRDA and MRVC shall maintain throughout the project period a finance/management professional as Joint Project Director (Finance) and Director (Finance) respectively with experience and qualifications agreed with the Bank.

(ii) MRVC shall maintain throughout the project period a firm of chartered accountants as internal auditors with TOR satisfactory to the Bank. (iii) MMRDA and MRVC shall develop by January 31, 2003 and thereafter maintain a computerized financial management system capable of generating project monitoring reports

Environment: (i) Quarterly monitoring reports to be submitted.

(ii) GoM to communicate the findings and recommendations of the studies on Air Quality Monitoring, Particulate Matter reduction strategy, and other Motor Vehicle Emission Control activities to the Bank and discuss the formulation of a Vehicle Inspection and Maintenance Program and an overall Motor Vehicle Control Strategy.

Resettlement: (i) Construction to be commenced by December 31, 2002, for all R&R housing for households affected by sub-components which are already completed, ongoing or to be implemented in the first year.

- 34 - (ii) Except as otherwi3e agreed, no project affected person will be in transit housing for a period of more than 3 years.

(iii) Quarterly monitoring reports to be submitted.

Monitoring, Review and Reporting:

(i) MMRDA will co-ordinate with MRVC and other implementing agencies and send to the Bank, a consolidated progress report on the project implementation status within 45 days from the end of each quarter in March, June, September and December starting from the quarter ending March, 2003.

(ii) Project to be subject to joint annual review by MMRDA and the Bank, looking at implementation results in the preceding year and proposals for next year.

(iii) Mid term review for the project shall be held not later than November 30, 2005.

Implementation: Rail Transport Component: (i) Suburban rail surcharge to be implemented before award of EMU rolling stock contract.

(ii) Preparing and submitting to the Bank, an annual updated report for the Business and Operating Plan/Forecast for Mumbai suburban railway system by IRIMRVC by May 15, starting in 2003 and the separate accounts for the suburban railway services by December 31 of every year starting 2002.

Road-based Transport Component: (i) BEST shall update the business/operating plan every year and provide it to the Bank every year by May 15, staiting in the year 2003. Separate revenue-expenditure statement and balance sheet for transport operations shall be provided to the Bank by May 15 of every year, starting in 2003.

(ii) The finance and operating plan for the MCGM will be updated and provided to the Bank by May 15 of every year, starting in the year 2003.

(iii) The traffic management program of MCGM will be updated and provided to the Bank by May 15 of every year, starting in the year 2004.

H. Readiness for Implementation 1 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. 0 1. b) Not applicable.

1 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 0 4. The following items are lacking and are discussed under loan conditions (Section G):

- 35 - 1. Compliance with Bank Policies 1 1. This project complies with all applicable Bank policies. O 2. The following exceptions to Bank policies are recomrmended for approval. The project complies with all other applicable Bank policies.

AZK. Swaminathan Team LUder GC ountry Manager/DIrctor E.B.Dotson 44~ Co Team Leadr

- 36 - Annex 1: Project Design Summary INDIA: Mumbai Urban Transport Project Key Performance Data Collection Strategy Hierarchy of Objectives Indicators Critical Assumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) Reduce wban transport bottlenecks, Impnoved urban quality of life. State budgets and annual reports. Government remains committed to support urban development and sector reforms. improve performnance of public sector. More effective institutions. The Bank's CAS progress assessment Non occurrence of any natural reports. calamnity/disaster. Stakeholders surveys. Project Development Outcome / Impact Project reports: (from Objective to Goal) Objective: Indicators: To facilitate urban economic growth 1. Meet user demands Reports of business and operating Increases indemand do not overtake and improve quality of life by fostering 1.I To reduce peak hour plans of suburban railway services capacity increases such that bottlenecks the development of an efficient and overcrowding (occupancy to updated annually. return. sustainable urban transport system capacity ratio), average loads in including effective institutions in trains reduced from at least Reports of business and operating Political will and institutional Mumbai Metropolitan Region (MMR). 4500 (baseline) to 3500 (2008). plans of BEST bus services updated commitment to implement efficiency 1.2 To reduce incidence and annually. measues ina successful and severity of pedestrian road sustainable manner. traffic accidents inareas where MTR reports and ICR reports. facilities are proposed from 100 User related benefits are fully realized (baseline) to 90 (2008). User satisfaction srveys and the by the final consumer. resulting reports. 2. System effldiency. Political will and institutional 2.1 To increase peak hour commitment to implement user average frequency for train chargetsurcharge collection in a services from 13 per hour successful and sustainable manner. (baseline) to 15 per hour (2008). Government commitment to implement 2.2 To increase train institutional refornms remains availability at peak (trains run unchanged. as %of fleet) from 91% (baseline) to 94% (2008). Political will and institutional 2.3 To reduce journey times by arrangements/strengthening to enforce road on IVLR from 30 mins. better environmental management (baseline) to 24 mins. (2008). .2.4 To reduce jowuney times by road on SCLR from 20 mins. (baseline) to 16 mins. (2008). :.5 To reduce delays at ATC c(ontrolledjunctions from 100 l)eu hours/hour to 85 pcu hoursthour.

i! SustainabUWy 3.1 To reduce working ratio (ratio of costs to revenue) of rail services from 0.88 (baseline) to 0.85(2008). 3.2 To increase cost recovery (ratio of revenue to costs) of bus srrvices from < 0.9 (baseline) to > 1 (2008). 3.3 To inerease %of PAH living inhouses of at least 225 s luare feet from 9% (baseline) to 100% (2007). 3.4 To increase %of PAH hiving access to individual tap water and toilets from 1% (taseline) to 100% (2007).

- 37 - 4. Effective Institutions 4.1 To increase the technical capacity of the traffic management unit in MCGM so that it is fully functional by 2008. 4.2 To increase the technical capacity of the transport planning, road maintenance, road safety, and vehicle emission control units so that new procedures to develop and implement the programs for which they are responsible are in place by 2008. 4.3 To strengthen the ambient air quality monitonng and reporting system so that it delivers regular and reliable reports by 2004.

Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: I. Railway component. I. Complete DC to AC conversion of Quarterly progress reports from the Rail and road comfdors are maintained 645 line km of suburban rail system by PLAs and protected. 2008. 2. Improve signalling and telecom Financial management reports. Railway and bus rolling stock systems established for the suburban maintained in a satisfactory manner. railway system by 2008. Supervision mission reports. 3. Construct new maintenance facility Organizational capacity to mamtam for suburban train fleet by 2008. and operate the existing and new assets 4. Increase size of train fleet by 40x9 and plan new/major capital car rakes by 2008. investments. 5. Replace/convert to dual voltage operation 179 trains in the existing fleet Sustained and adequate funding by 2008. available for operating and maintaining 6. Increase length of suburban railway the assets created and upgraded under tracks by 93 kine kms by 2008. this project. 7. Increase technical capacity through implementation of the results of 12 Effective cooperation between the studies by 2008. various stakeholders of the project and 8. Implement separate accounting and from the other departments like the financial management systems police. established for MRVC by 2008. Getting the right institutional structure in place for motor vehicles emissions reduction; setting-up vehicle I&MIC programs and better enforcement for vehicular pollution control.

Adequate funding from IR for creating Non Bank Funded assets and rolling stock which are essential for supporting this project. 2. Road-based transport component. I. Equip 250 junctions with ATC. 2. Construct 30 pedestrian subways. 3. Impletitent SATIS at 6 stations. 4. Develop annual TM program for MCGM. 5. Increase length of urban arterial road by 45 lane km. 6. Construct 3 ROBs.

- 38 - 7. Devclop annual busincss plan for BEST. 8. Prosure up to 450 low emission user friendly new buses for BEST. 9. TrE.ining of TMU staff completed by 2004. 10. E;tablish satisfactoty maintenance management system in MCGM by 2005. 11. Urdate CTS and implement PPBS systerrm in MMRDA by 2006. 12. Dvelop multi year blackspot improvement and road safety program by 2004. 13. tmolement MMRDA communication strategy by 2003. 14. Establish MMRDA road user charge policy by 2004. 15. Develop MVECS (including PM 10 reduction) and commence implementation by 2004. 3. R&R Component. I. Provide permanent housing to 19,200 project affected families with adequate physical amenities by 2004. 2. Ensure that about 200 PAP housing societies are functioning by 2004.

Project Components I Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) 1. Rail Transport $654.2" million Timely actions for procurement of I) Service Efficiency Improvements. (Bank 5 304.9 million) consultants, contractors and suppliers. 2) New tolling stock/kits. Timely deciaions by tR at key stages In 3) Suburban Rail Network Expansion. procurement process. 4) Institutional. strengthening and TA. Proper anid timely fund flow Adequate counterpart funds available.

Timely delivery of satisfactory quality works, services and equipment.

Timely completion of pre-construction activities like LA, R&R, tree cuting and utility shifting.

Timely approval/clearances from the concemed regulatory authorities/ Ministry.

Administrative continuity and government/Indian railways commitment to abide by agreed action plans.

Timely and orderly financial reporting by all implementing agencies.

Continued support for the project from the public and other stakeholders.

- 39 - 2. Road-bsed Transport 5183.02 mHlUon I) Traffic Management. (Bank 150.5million) 2) Road Network Strengthening. 3) Buses. 4) hIstitutional strengthening, TA training and other studies. 3. R&R Component 5100.08 milillon I) Providing permanent housing. (IDA $79.0 million) 2) Construction of Transit Tenements. 3) Monitoring, Impact Evaluation and Training. 4. Repayment of PPF 53.0 milflon (Bank $3.0 million) TOTAL PROJECT COST $945 mililon (including pmvision for taxes, (Bank + IDA $542 million) incwreental operating costs and front-end fee).

-40 - Annex 2: Detailed Project Description INiDIA: Mumbai Urban Transport Project By Component:

Project Component 1 - US$654.30 million Rail Transport Component (IBRD US$304.9 million)

Overview: The component wil I improve the operating efficiency, service frequency and quality, and expand the capacity of the suburban rail network. New and improved infrastructure and the introduction of additional rolling stock will permit the operation of longer trains, with faster and more frequent services. These improvements include eliminating speed restrictions on trains by resettling squatters from within the 10 meter safety zone on either side of the tracks. This major resettlement activity forms part of project component 3.

1.1 Sub-component 1: Seirvice Efficiency Improvements (Total = $119 millioo/lBRD = $50 million)

1.1.1 Western Railway Optinizations: This includes lengthening of platforms, re-signaling, increasing power supply and one new station at Oshiwara. Thirteen additional (9 car) trains will be introduced. After implementalion the fast and slow tracks will be capable of operating 18 (12 car) trais per hour (although only 17 trains/hour will be operated during the project life due to availability of trains). All services on the fast tracks shall be operated with 12 car trains. This component will also include the works pertaining to increase in spacing between the centre-lines of the two tracks between Virar and Dahanu to enable the [R to ply suburban trains on this route. None of this work is Bank funded. About 622 squatter families will be resettled with IDA funding under Project Component 3.

1.1.2 Central Railway Optimization: This includes lengthening of platforms, increasing power supply, reconditioning of track, le-signaling slow and fast tracks, removal of one level crossing and removal of speed restrictions on turnouts at three stations. Twelve additional (9 car) trains will be introduced. After implementation, the fast and slow tracks will be capable of operating 17 trains per hour (although only 15 and 16 trains/hour will be operated during the project life due to availability of trains). All services on the fast tracks shall be operated with 12 car trains. None of this work is Bank funded. About 1903 squatter families will be resettled with IDA funding under Project Component 3.

1.13 Harbor Line Optimization: This comprises increased power supply, improvements in track and drainage, elimination of level crossings and re-signalling. These works are expected to allow 18 trains per hour to be run (although only 15 trains/hour will be run initially due to availability). Four additional (9 car) trains will be irntroduced. Train services will also speed up. None of this work is Bank funded. About 7831 squatter families will be resettled with IDA funding under Project Component 3.

1.1.4 D.C. to A.C. Conversion (including Signal and Telecommunications (Telecom) Improvements): This comprises conversion of the entire Mumbai suburban system from 1,500V DC to 25,OOOV AC traction. This work includes modification of the overhead catenary, setting up of new traction power sub-stations and modifications to signal and telecom systems. The conversion will be carried out in phases without disruption to normal services, starting from outskirts of Mumbai and ending at the two city terminals. The conversion is planned to be completed by the year 2007-08. Till the completion of conversion, it will be necessary for the trains to be capable of operating on dual

- 41 - voltage. The conversion will permit the operation of a higher frequency of 12 car trains, as well as reducing power consumption. The loan will finance procurement of off line equipment (such as sub-stations) and audio frequency track circuits/axle counters. The remainder of the investment is not Bank funded.

1.1.5 Provision of Maintenance Equipment and Facilities: The subcomponent will support improved track maintenance, improvement to drainage system and development of modern facilities for the maintenance of new trains. The loan will finance procurement of new car shed works and equipment at Virar.

1.2 Sub-component 2: New Rolling Stock/Kits (Total = $304 million/IBRD=$247 million)

In order to increase the capacity and frequency of train service on the Mumbai suburban rail system, the total fleet will need to increase from 200 to 240 (nine car) Electric Multiple Unit (EMU) trains by March 2007. About 219 of these trains will have to be capable of dual voltage operation during the period of DC to AC conversion. Around 21 trains will still run on DC on the CR at the end of this project. Due to the urgent need to replace life expired rolling stock, some of the replacement trains will be manufactured to the existing RDSO design. The majority will be manufactured to a new specification developed for this project.

In the interest of standardization of EMU trains and to exploit the significant lower cost for the construction of new design EMU trains in India, IR sought to procure the know how for the manufacture of stainless steel coach bodies and modern bogies frames through Transfer of Technology (TOT). This suggestion for the inclusion of the limited TOT covering the low technology aspects of EMU manufacture was agreed to as it would help in the speedy replacement of old design EMU stock and also promote standardization of EMU coaches, maintenance spares and practices.

The Bank loan will therefore fund the procurement of the following items in one supply contract package:

1.2.1 73 kits (electrical and communication equipment, traction motors and all other accessories except for coach structure and bogie frame) for inclusion in EMU trains manufactured in India.

1.2.2 20 complete new specification EMU trains along with limited transfer of technology related to (i) manufacturing of coach shells and bogies (excluding springs); (ii) purchase or sourcing information on electrical, suspension and other components and (iii) tools and capabilities required for assembly, testing, system engineering, maintenance and operation.

1.2.3 8 kits for new specification EMU trains which will include all components except bogie frames and the body shell. These 8 kits will be applied on bogie frames and shells manufactured in India as a result of transfer of technology for these two items.

The 73 kits procured above through Bank funding and another 118 kits procured by IR on its own without Bank finance would be fitted/retrofitted into new/existing coaches. IR has already procured with its own funds, kits of electrical equipment for retrofitting on 32 of the existing EMU trains to make them fit for dual voltage operation and replace the existing DC traction motors with 3 phase AC motors. A further 57 kits are in the process of procurement.

-42 - 1.3 Sub-component 3: Network Expansion (Total = $200 million/1BRD = $0 million)

1.3.1 Western Railway (WR) - Provision of 5th line from Borivali to Mahim: This work includes provision of 5 km of line between Santacruz and Mahim and modification to the larbor Line flyover at Mahim. This traclk will provide the capacity for eight additional suburban train services during the peak period between Borivali and Churchgate. It will pernit the complete segregation of the WR tracks from long distance tracks between Borivali and Mumbai Central stations as well as the suburban Harbor line. Four additional trains will be introduced. None of this work is Bank funded. 515 squatter families will be resettled with IDA funding under the project component 3.

1.3.2 Western Railway - Provision of additional pair of lines between Borivali and Virar (26 Km): This will provide two lines from Virar to Borivali and four lines from Borivali to Churchgate terminal for suburban services. The result will be complete segregation of suburban and main line trains. These lines will almost double carrying capacity during the morning peak hours from Bhayander to Borivali , whichi is the second heaviest loaded section in the Mumbai suburban network. Eight additional trains will be introduced. The subcomponent also includes a major bridge at Vasai Creek and a new maintenance shed at Virar. None of this work is Bank funded, except the car shed. 501 squatter families will be resettled with IDA funding under the Project Component 3.

1.3.3 Central Railway - Provision of 5th and 6th lines between Kurla and Thane (16 km): These additional lines will permit fbur tracks to be used for suburban trains and two for long distance trains. Eleven additional trains will be introduced. This work is not Bank funded. 2,131 squatter families will be resettled with IDA funding under the Project Component 3.

1.A Sub-component 4: l[nstitutional Strengthening and Technical Assistance Component (Total= $10 miUfion/[BRD= $8 million)

This will include training, and in addition technical assistance for studies in the following areas:

(i) Station design and engineering. (ii) Track maintenanee and drainage improvements. (iii) Strengthening of rolling stock maintenance system and design of facilities. (iv) Overhead equipment (OHE) system improvement study (iv) OHE and sub-station optimization. (vi) Developing/strengthening commercial development strategy of Indian Railways. (vii) Strengthening quality control and testing processes for suburban rolling stock (viii) Updating the urban rail transport strategy through a simulation study (ix) Enhancing reliability of signals and telecom. (x) Costing system for sharing of costs for common rail infrastructure. (xi) Signalling and telecommunications for improving headway. (xii) Pre-investment studies. (xiii) Developing and strengthening financial, costing and project management systems.

1.5 Sub-component 5: Incremental Operating Cost and Taxes for Rail Transport Component (NBF) (Total= $21 million/IBRD = nil)

-43 - Project Component 2 - US$183.00 million Road-based Transport Component (US$150.5 million)

Overview: This component will support increases in the capacity, efficiency and safety of the road network, pedestrian facilities, improvements to the operating efficiency and quality of bus services, and reductions in motor vehicle emission levels. It will also strengthen the capacity of the responsible agencies to plan, deliver, maintain and operate efficiently road based urban transport infrastructure and services.

2.1. Sub-component 1: Traffic Management (Total= $59 million/IBRD= $52 million)

2.1.1 Area Traffic Control (ATC ): Implementation of a computer controlled traffic signals system in two stages for 250 junctions - essentially all main junctions within the Island City. This includes traffic signals, controllers and vehicle detection equipment, central computer, communications system, control rooms, together with junction channelization and minor improvements. ATC will enable the traffic signals to be coordinated so as to pernit the road system to operate at optimum efficiency. It also provides for signal controlled pedestrian crossings.

2.1.2 Pedestrian Facilities: Pedestrian movements in Mumbai are intense but facilities are often poor (unpaved, encumbered footways) and/or are lacking (no footways or no facilities to cross majorroads in safety). The component will provide pedestrian crossings, pedestrian bridges or underpasses at critical locations (where there are heavy pedestrian and motorized traffic volumes) on major roads. It will also provide for a program of footpath improvements, the locations of which will be decided in consultation with NGO. The pedestrian facility deficit will be further addressed by the TMU program (see below).

2.1.3 Station Area Traffic Improvement Schemes (SATIS): The suburban rail system is the major transport mode in Mumbai and the efficiency of stations to handle passenger access to and egress from stations is a key element in the operation of the system. This component will improve roadside accessibility to/from six major stations (Andheri, Borivali, Chembur, Dadr, Ghatkopar and Malad). The works will include: (i) minor footway, pedestrian crossings and bus stand works to reduce conflicts between pedestrians, buses, taxis, and para- transit; (ii) traffic management-reorganized circulation arrangements, parking and minor road works; and (iii) regularization/relocation of street trading under Project component 3.

2.1.4 MCGM Traffic Management Unit (TMU) Program: Support for institutional strengthening and training of the newly created Traffic Management Unit (TMU) in MCGM is included in sub component 4 below. It is essential that the TMU achieve sufficient status and credibility throughout the life of the project to become a fully sustainable agency. To assist in this process, this project will provide resources for the implementation of traffic management measures and minor road works to be planned, designed and implemented by the TMU itself. The measures are envisaged to include programs for pedestrian facilities, parking control, further SATIS and remedial measures at accident blackspot actions. The final list of programs and priorities will be developed with TA provided under subcomponent 4 below and agreed with MCGM prior to implementation of any scheme.

-44 - 2.2. Sub-component 2: Road Network Strengthening (Total= $77 million/IIRD= $61.5 million)

2.2.1 Jogeshwari - Vikrholi L,ink Road (JVLR) ( about 11 km): This roads runs East-West and links the Eastern and Western E,xpress Highways (EEH and WEH). It provides, in particular, access between the Mumbai port area md the National Highway NH8 (Mumbai - Delhi). The JVLR scheme comprises improvements to the existing road to provide a 6 lane arterial road, including widening the dual carriageway western section and other narrower sections, traffic management and minor alignment improvements to the eastern section (which is already 6 lanes), junction improvements along the route and intersection improvements at WEH and EEH. The work is divided into three sections which would be implemented in two stages. The middle section, to be implemented in Stage 2, includes widening and realignment which links with tvwo flyovers (already under construction and not Bank financed). R&R is involved. About 900 PAHs are to be resettled under phase I of the this sub-component. Bank safeguard policies will apply to the whole 11 kms, including the NBF sections. The improved link should reduce congestion and reduce E-W traffic diversion to other congested parts of the network.

2.2.2 Santacruz - Chembur Link Road (SCLR) (about 6 kin): This is a further east-west connection, important to the decentralized Bandra-Kurla area development. It will reduce congestion and diversion of traffic movements to other congested links in the Island City. The works proposed include a major bridge crossing of the railway, approach roads and junction improvements at the WEH and EEH. R & R is involved fcr the SCLR. The numbers of PAP are currently being ascertained and taken care of under the Project C(omponent 3.

2.2.3 Road over Rail Bridges (ROBs) at Jogeshwari North, Jogeshwari South and Vikrholi: These three ROBs eliminate the residual main road-rail level crossings in the metropolitan area with consequent time savings to both rail and road users. The three ROB's complement and strengthen the JVLR corridor as a major east-west connector. The works comprise the road bridges over the railways, approach roads (with footpaths) and junction improvements. Where the current level crossing is an important pedestrian route, and rhe ROB is not at the current location of the level crossing, grade separated pedestrian rail crossing facilities will be built at the current location. The three proposed ROBs under the project would ivolve the resettlement of about 1,500 households which will be carried out with IDA funding under the Project Component 3.

2.3 Sub-component 3: BEST Program (Total=$25 million/IBItD=$24 million)

BEST is a municipal company that supplies bus services and electricity to residents of Mumbai. The BEST bus division -achieves good service delivery standards, but with a high staff/bus ratio and a cross subsidy from its electricity supply operations. BEST management has embarked on a series of measures to reduce costs and impqrove efficiency while reducing vehicle emissions and the age of the fleet. This subcomponent will support BEST in these endeavors.

2.3.1 Business Planning: The project will support TA in the preparation and annual update of rolling 5 year business plans. These plans will include (amongst other things):

(i) Bus Division accounts shown separately from the electricity division (to ensure financial transparency); (ii) Voluntary Retirement schemes (VRS);

- 45 - (iii) Contracting out of bus service delivery to the private sector (by wet leasing bus and driver) on a gross cost basis; (iv) Efficiency gains including: (a) reduction of staff/bus ratio; (b) increased contracting out of appropriate services/functions; and (c) improved operational controls such as crew and bus allocation, etc.

A primary objective of the Business Plan will be to reduce the cross subsidy to zero in year four of the project.

2.3.2 Procurement of Buses: BEST has an aging fleet and there is a need to renew and enhance the bus fleet to: (i) meet new and more stringent bus emission standards; (ii) improve quality of service to passengers; (iii) increase system capacity; and (iv) reduce costs of bus maintenance. The project will finance procurement of about 450 buses. The bus specification will require (amongst other things) the buses to meet at least Euro II standard emission levels and be capable of ICB procurement. It will be developed as a model for a user friendly low emission "city bus" for Indian conditions. The bus procurement program is conditional on a number of policy undertakings including the production and annual updating of the Business Plan.

2.4. Sub-component 4: Institutional Strengthening and Capacity Building (Total=$17 million/IBRD=$13 million)

2.4.1 Traffic Management Unit (IMU) in MCGM: A professional and sustainable TMU is a fundamental requirement for operating an efficient road transport system in any city. In Mumbai, it is also critical to the success of the traffic management sub-component. As a condition of Bank support for the TMU, the BMC Act of 1888 was amended to allow MCGM to undertake formally traffic responsibilities and to allow the creation of a traffic management budget and program. MCGM is re-establishing a TMU with a Core Team and a local traffic engineer in each of its 24 constituent wards. The project will assist in the re-establishment of a TMU in MCGM by increasing the status of traffic management and facilitating better coordination with the traffic police department. Long term technical assistance will be provided to both the core team and the local area junior traffic engineers. This will have three elements:

(i) An initial, intensive training prograrn will be undertaken (developed and delivered through a competitive process) at the commencement of the project to provide a basic grounding for TMU core and local staff such that the long term TA can be productive;

(ii) Assisting the TMU to develop and implement a "traffic management plan and program"; (iii) Significant practical "on the job" training for TMU staff.

2A.2 MCGM Road Department: The project will finance TA to the roads department in MCGM to assist in the creation of a road maintenance management system. The TA will set up procedures for developing programs, establishing priorities and preparing budgets to enable road maintenance to be undertaken in an efficient and targeted manner.

2.4.3 MMR Comprehensive Transportation Strategy (CTS) Update: CTS was undertaken in 1994 and for it to remain relevant as a planning tool, an update should be started by 2004. TA will be provided to MMRDA update the database, upgrade the existing model and update the long term

-46 - strategy and medium term plan for transporting people in the city of Mumbai. A separate TA will assist MMRDA in the creation of a planning, programming and budgeting system for transport investment and operations, and the formulation of 5 year rolling programs for all modes. These two TA will provide the tools necessary to strengthen MMRDA's role as transport planning agency for MMR.

2.4.4 Road Safety and Blackspot Improvement: This component is designed to strengthen the accident recording, analysis and reporting system of the traffic police, the linkage with the TMU in the MCGM and the design of remedial programs. It comprises TA to put together data available from the traffic police, based on which a multi-year blackspot improvement scheme and other remedial measures will be developed to be implemented during the duration of the project.

2.4.5 Communication Strategy: The planning and implementing agencies concerned with urban transport need to work towards better communications and public relations. This component will help MMRDA to implement a Conimunication Strategy agreed with the Bank over the period of the project.

2.4.6 Demand Management and User Charges: The CTS preferred option which provides the framework for the project includes demand management in the Island City, but without prescribing the mechanism. One possible mechanism is through adjustments to user charges. A working group in MMRDA has been established to study user charges, and has produced an approach note. B3ased on the views of the GOM on the approach note, the project will support TA to draw up a strategy and action plan.

2.4.7 Air Quality Monitorim!g and Vehicle Emission Control: The SEA assumes that vehicle emissions will be reduced throagh improved fuel and vehicle emission standards. Assessment of the impact of such standards requires monitoring of both ambient air quality and vehicle emissions. The Transport Commissioner (TC) and MCGM have programs covering these activities. The project will provide advice, support and TA to them in implementing these programs. TA will be directed particularly to the formulation by the TC of a vehicle inspection and maintenance (I/M) program, and an overall MVECS. The MVE,CS will be the subject of an annual review by the Bank and the implementing agencies.

2.5 Sub-component 5: Inicremental Operating Cost and Taxes for Non-Rail Transport Component (NBF) (Total=$'i million)

Project Component 3 - US$ 100.00 million Resettlement and Rehabilitation (R&R) (IDA US$79.0 million)

Overview. This component will enable GoM to undertake the timely implementation of the RAP and resettle those displaced by the rnain investment components of the project. It will also provide assistance to those displaced to improve their overall living standards. This component is to be financed through the credit facility of IDA. While there are 19,228 PAH, the project needs to procure over 20,000 housing units to provide space for welfare centers, housing society offices and pay schools. There are 14,479 PAH for the iail component, and 4,749 PAH for the road based transport component.

The implementation of this component has already commenced. In response to the Bombay High Court Order to relocate encroachers on the Harbor Line by March 2001, actions were taken under agreed procedures, with the expectation by GoM of retroactive financing from the Bank. So far 20 percent of affected households (3,935) have been resettled in permanent houses with all basic amenities, such as running drinking water, independent toilets and community facilities. Another 32 percent (6,125

-47 - households) have been moved to transit housing. In addition, 107 (eight percent) PAHs were also offered alternative shops to reestablish their livelihood. This first phase resettlement has had a significant effect in improving the operational efficiency of the suburban trains in term of speed and frequency. So far Rs. 689.10 million (US$14.5 million) has been spent for purchase of ready built houses, construction of transit houses and on NGO implementation support.

3.1 Sub-component 1: Procurement of Permanent Housing. (Total=$80 million/IDA=$72 million)

Procurement of about 19,200 housing units (225 sq. ft. gross floor area) for the permanent resettlement of the households displaced by the main investment components. Option "A" includes construction of about 4000 housing units following competitive bidding on government land or land procured through transfer of development rights (TDR). Option "B" involves procurement by competitive bidding of about 12,000 housing units through offering of land and houses on TDR basis with cash supplement. (TDR is a method of land acquisition in lieu of purchase through the provisions of the Land Acquisition Act. Under this method the owner of land surrenders the land for public purpose without loosing development rights. The development rights can be used elsewhere or sold on the property market Option "C" involved the direct purchase of 4240 already built houses from Maharashtra Housing and Area Development Authority. This was agreed in order to meet the timescale for the relocation of encroachers from the Harbor Line imposed by the Bombay High Court. MMRDA has submitted an application for retroactive financing for this purchase.

3.2 Sub-component 2: Construction of Transit Housing (Total=$6 million/IDA=$5 million)

Construction of 6,100 temporary tenements as an interim measure to relocate people from the safety zone of the Harbor Line in response to High court's intervention. The schedule for the construction of the permanent housing is based on the requirement that no PAH should spend more than three years in transit housing. In practice some PAH may spend longer time.

3.3 Sub-component 3: Land Acquisition (NBF) (Total=$10 million/lDA=nil)

Procurement of land for both civil works and resettlement. For the rail component land will be acquired using the provisions of the Land Acquisition Act. For road projects and resettlement the land will be acquired using TDR.

3.4 Sub-component 4: Training, Monitoring and Impact Evaluation (Total= $2 million/IDA=$2 million)

Includes NGO services for the implementation of R&R program and organizing the training programs for the project staff and NGOs who are associated with the implementation of R&R component This sub-competent also includes consultancy studies for undertaking the impact evaluation of resettlement program.

-48 - 3.5 Sub-component 5: Incremental Operating Cost,Taxes for non-rail transport component and cash allowances tD Project Affected Persons (NBF) (Total= $2 million)

The cash allowances will be available to PAPs for increased travel distance to work place from the new houses and those who lose livelihood opportunities permanently.

Project Component 4 - US$3.00 million P.P.F. Re-financing (IBRD- $ 3.0 million)

Project Component 5 - US$4.63 million Front-end Fee (IBRD - $ 4.63 million) Total Project Cost = $ 945 million and Total Bank Assistance = $ 542 million.

-49 - Annex 3: Estimated Project Costs INDIA: Mumbal Urban Transport Project

Local Foreign Total Project Cost By Component US $million US $million US $million 1. Rail Transport Component 350.62 243.07 593.69 2. Non-rail Transport Component 107.69 50.08 157.77 3. R&R and LA Component 88.55 3.45 92.00 4. P.P.F. reimbursement 0.00 3.00 3.00 Total Baseline Cost 546.86 299.60 846.46 Physical Contingencies 26.21 6.60 32.81 Price Contingencies 38.75 22.35 61.10 Total Project Costs' 611.82 328.55 940.37 Front-end fee 4.63 4.63 Total Financing Required 611.82 333.18 945.00

Local Foreign Total Project Cost By Category US $million US $million US $million Goods 132.15 254.19 386.34 Civil Works 426.43 51.51 477.94 Services 47.24 15.85 63.09 Unallocated 6.00 4.00 10.00 P.P.F. reimbursement 0.00 3.00 3.00 Total Project Costs 611.82 328.55 940.37 Front-end fee 4.63 4.63 Total Financing Required 611.82 333.18 945.00

Identifiable taxes and duties are 25.2 (USSm) and the total project cost, net of taxes, is 919.8 (US$m). Therefore, the project cost sharing ratio is 58.93% of total project cost net of taxes.

- 50 - Aknnex 4: Cost Benefit Analysis Summary INDIA: Mumbai Urban Transport Project

Introduction

The project components disciibed in Annex 2 were identified through a comprehensive strategic transport planning study (CTS) completed by MMRDA in 1994. The study used a state-of-the-art urban travel demand model 'Saturn'. The model estimated the traffic on different corridors using the network equilibrium approach (redistribution of traffic resulting from traffic diverted from alternative routes and modes because of change in relative trip costs). The CTS had studied three transport development options and recommended the strategy of strengthening the public transport system.

Alternatives analysis for different partially built transport development scenarios was carried out through a simulation model. The projeci: components were selected from the best altemative strategy. This exercise assisted in project design, particularly in fine-tuning the design of individual main components and ensuring their economic viability even when treated as a stand alone project.

[For projects with bonefits that are measured in monetary terms]

Prasent Value of Flows Fiscal Impact Economic Financial Analysis' Analysis Taxes Subsidies Benefits: Rail 73.12 Non-Rail 16.44 Total Project 89.56

Costs: Rail 25.38 Non-Rail 4.08 Total Project 29.46 _ Net Benefits: Rail 47.74 Non-Rail 11.82 Total 59.56 IRR: Rail 36.40% Non-Rail 39.75% Total 37.65% Note: Benefits are in billion rupees

If the difference between the pre:,ent value of financial and economic flows is large and cannot be explained by taxes and subsidies, a brief explanation of the difference is warranted, e.g. "The value of financial benefits is less than that of economic benefits because of controls on electricity tariffs."

Summary of Benefits and Costs:

The cost and benefits of each of the rail and road components were estimated separately. For rail component benefits from (i) saings in passenger time, both for the rail passengers and passengers diverted

- 51 - from other mode; (ii) improved riding comfort; (iii) savings in vehicle operating costs for diverted passengers; (iv) savings due to reduced pollution; (v) savings in the operating costs of the new EMU; and, (vi) savings in energy costs for DC to AC conversion. Savings due to reduced accidents and reduction in the long distance passenger trains time were not considered. Therefore, the ERR and the NPV for the rail component are on the conservative side.

The road-based transport component was further subdivided into four sub-components- improvement of road network including ROBs; traffic management scemes, ATC and SATIS; construction of pedestrian grade separators; and procurement of buses. For each of these sub-components the benefits from savings of passenger time and reduced vehicle operating costs were considered. In case of ROBs benefits to the rail commuter time was also considered. Other benefits of improved road safety and reduced vehicle emission were not assessed in quantitative term and not included in the estimation of ERR and NPV. The project has a very large component of R&R costs and the benefits accrued to the rehabilitated persons were assessed for the free housing component through a proxy variable, average rental value of similar tenaments in the areas of resettlement The project would, in addition, have other social benefits by upgrading the living standard for majority of 19200 displaced families.

The cost of each component, both rail and road, included costs for physical works or procurement of goods, detailed engineering and implementation supervision, and physical contingencies. Annualized operating costs and maintenance costs were also included in the operations.

Under the most likely traffic growth scenario the project will have an estimated ERR of 36.40 percent for rail component, 39.75 percent for non-rail component with an overall ERR of 37.65 percent. The NPV of the project rail and road components were calculated at Rs.47,740 million and Rs. 11,815 million, respectively.

Main Assumptions:

Traffic Estimates: Traffic for the MMR were estimated in the CTS study. Traffic growth for the region was projected on the basis of regional plan prepared by the MMRDA for 1993-2011. The basic data on residential workers, vehicle ownership and employment for the year 1993, was projected to 2011 using several parameters including population and per capita income. The region was divided into three subgroups viz. island city, suburbs forming the Greater Mumbai and other areas of the region. These sub-groups were divided into 47, 27 and 36 zones respectively. Three alternative scenarios for development of the region were considered and the traffic was forecasted for the 'as it is development scenario,' that is, without any intervention. The projected traffic by different modes is summarized below. Public transport (rail and bus) will continue to be the main mode of transport though their share will decline to 85 percent from 88 percent. There will be large increase in the use of private vehicles, though their share will be only nine percent. The overall trip lengths for rail, private vehicles and taxi and 3-wheelers will decline from 22.15 km, 14.17 kIn, and 5.77 lan in 1993 to 17.72 lan, 12.10 km and 3.99 km respectively in 2011 while that for buses will remain same.

Rail Component: However, in reality, data on suburban railways shows that the average trip length had increased from 22.15 km in 1993 to 26.62 km by 1999-2000. The earlier trip length estimates were made assuming that the east-west links, mainly Kurla-Bandra, will be operative by 2011 and the Bandra-Kurla complex will be fully developed. Both these assumptions have not materialized and will not be operative by 2011. In the absence of these two developments, the average trip lengths will continue to grow as the commuters will continue to change at Dadar between eastern and western suburbs and more trips will be

- 52 - bound to southern part of island city. The average trip lengths have therefore been revised to take these changes into account. The railwvay traffic was also updated in 1996 through a consultant study. The study had estimated demand elasticity with respect to crowding level, fare, service and route kilometer of 0.15, 0.30, 0.1, and 0.2 respectively. In addition, the study had recommended a growth of 0.2 percemt per annum in trip rate for suburban railways. Rail traffic has been estimated using these elasticity and the changes in real fare, crowding level, service level, population growth and route kilometers and the values are provided in the project files. Rail traffic has been forecast till 2031, for a 25 year life of the project after its implementation.

Road Component: The traffic estimates for individual road sub-components were also revised based on site specific past traffic growth rates, perceived development in the vicinity of the project coniponent, and experience of the project entities. These growth rates varied for the sub-components and were used for the project cost benefit analysis. The growth rates used are provided in the project files. The traffic forecast was extended to 20 years after the completion of the project for major projects like JVLR, SC'LR and ROBs, i.e. up to the year 2022-2024. For other projects (ATC, pedestrian grade separators and SATIS) a period of five years has been considered for the cost benefit analysis. Table 1: PFeak Hour Traffic Forecast by Mode (most likely scenario)

Year 2011 Percent Year 1993 Year 2011 of Total Trips Mode Number Percent Number Percent As Proportion of 1993 Trips

Public Transport 1393751 88 2770691 85 1.46 Private Vehicles 148167 7 289516 9 1.95 Taxi and 3-wheeler 112942 5 200224 0 1.77 Total Trips 2154860 100 3260431 100 1.51

Cost and Benefit Streams:

The discount rate for the economic analysis was taken as 12 percent and the standard conversion factor of 0.9 was used to convert the financial costs to economic costs based on the latest World Bank estimate for India.

Maintenance costs for different project components were assumed based on the level of maintenance required regularly every year anti for periodic renewal. The project life for economic analysis of different components were assumed on the basis of their economic life. For physical components like roads, rail track and railway rolling stock the project cycle life was taken as 20-25 years while for buses an economic life of 10 years was considered.

Economic analysis for road improvement projects and ROBs were carried out using the generalized cost function for the network adjoining the region of the project after distributing the traffic on the network using the equilibrium approach for 'with' and 'without' the project. The benefits included savings in vehicle operating costs, time costs, distance traveled, decongestion of some links in the adjoining region, as well as dis-benefits of increased congestion on some links. For ROBs additional benefits accruing to the road and rail traffic due to elimination of stoppages at the railway crossings were also included. For pedestrian facilities the benefits included savings in accident costs, delays to the pedestrians and the road traffic.

For rail operations cost streams included initial investments on rail tracks, electrification, signaling, etc.,

- 53 - cost of rolling stock and annual and specific maintenance costs and benefit streams were estimated for the savings in passenger time, savings in operating costs of road vehicles for the traffic diverted to the rail, comfort cost and others as explained above. The value of passenger time was taken at 35-40 percent of average wage rate for users of different modes.

The summaries of initial cost, maintenance and operating costs and different benefits for the rail and road components are given in tables below.

Table 2. Combined Cost Benefit Analysis of Road Component (excluding Buses)

Costs O&M Benefits Net Year B_nefits 2002 730.57 0.00 0.00 -730.57 2003 2208.21 1.26 249.13 -1960.34 2004 1722.86 9.96 281.39 -1451.44 2005 763.24 74.71 1960.94 1122.99 2006 56.76 101.20 2457.01 2299.06 2007- 0.00 104.64 2633.44 2528.80 2008 0.00 104.64 2752.65 2648.01 2009 0.00 104.64 2883.93 2779.29 2010 0.00 104.64 3028.23 2923.59 2011 0.00 104.64 3175.64 3071.00 2012 0.00 104.64 3337.17 3232.52 2013 0.00 104.64 3384.39 3279.75 2014 0.00 104.64 3435.26 3330.62 2015 0.00 104.64 3489.92 3385.28 201 6 0.00 104.64 3564.94 3460.30 2017 0.00 104.64 3646.32 3541.68 2018 0.00 104.64 3734.56 3629.91 2019 0.00 104.64 3830.16 3725.52 2020 0.00 104.64 3933.70 3829.06 2021 0.00 104.64 4045.89 3941.25 2022 0.00 104.64 4167.44 4062.80 2023 O.Q0 104.64 4299.19 4194.55 2024 - 1036.45 104.64 4143.88 5075.69 ERR 39.75% INPV 012% 1 4,080 543 16,438 11815.14

-54 - Economic Analysis of MUrP Phase I

90% 90% 90%°h 90% Replace Direct Indirect main fine Increme mert Savings Benefits benefits services ntal costs 8, in journey from from due to Dr, Savings due O&M teminod Value of &wiatng reduced reduced to AC to Benefis Net Year Investmeni cost value Comfort time VOC VOT _____ poDution conversk)n from R&R savings 0 2001- 2002 356.54 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 7.20 -349.34 1 2002- 2003 461.69 5.71 0.00 0.00 23.58 87.69 27.73 1.76 40.56 0.00 14.40 -271.68 2 2003- 2004 616.05 6.70 0.00 5.05 46.82 84.13 27.21 0.66 38.92 0.00 20.85 -399.11 3 2004- 2005 487.20 13.85 0.00 -63.49 73.99 157.03 51.89 1.86 72.64 4.42 20.85 -181 86 4 2006- 2006 560.06 21.67 0.00 -105.68 103.17 223.93 75.57 2.83 103.59 7.12 20.85 -150.36 5 2006- 2007 354.33 79.76 0.00 262.41 142.54 256.90 88.48 1.76 118.84 8.49 20.85 466.19 6 2007- 2008 0.00 128.04 0.00 373.82 193.22 418.84 147.13 6.30 193.75 12.61 20.85 1238.48 7 2008- 2009 0.00 130.91 0.00 238.50 233.37 544.01 194.79 6.67 251.66 15.50 20.85 1376.44 8 2009- 2010 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 9 2010- 2011 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 10 2011- 2012 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 137644 11 2012- 2013 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 12 2013- 2014 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 13 2014- 2015 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 14 2015- 2016 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 15 2016- 2017 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 16 2017- 2018 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 17 2018- 2019 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 18 2019- 2020 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 19 2020- 2021 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 20 2021- 2022 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 21 2022- 2023 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 22 2023- 2024 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 23 2024- 2025 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 24 2025- 2026 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 25 2026- 2027 0.00 130.91 33.54 1238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1342.90 26 2027- 2028 0.00 130.91 16.03 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1360.41 27 2028- 2029 0.00 130.91 47.77 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 132867 28 2029- 2030 0.00 130.91 81.72 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1294.72 29 2030- 2031 0.00 130.91 55.16 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1321.28 30 2031- 2032 0.00 130.91 19.12 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1357.33 31 2032- 2033 0.00 130.91 3.67 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1372.76 32 2033- 2034 0.00 130.91 0.00 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 33 2034- 2035 0.00 130.91 0.00 .238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 34 2035- 2036 0.00 130.91 0.00 :238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1376.44 35 2036- 2037 0.00 130.91 -438.37 238.50 233.37 544.01 194.79 8.67 251.66 15.50 20.85 1814.81 ERR 36AD%/. NPV at 12 % 1,931.8 603.8 2.7 1,070.8 1,164.1 2,650.3 935.5 39.9 1,226.0 73.1 153.5 4,774.9

- 55 - Sensitivity analysis / Switching values of critical items:

Rail Component: Sensitivity analysis has been done with respect to project cost escalation by 10 percent and 20 percent, average trip length growth of one percent per annum and with no trip length growth and combination of the worst scenario. The results are summarized below:

Scenario ERR Base case 36.40% 10% cost escalation 34.18% 20% cost escalation 32.20% Trip length growth rate 1% per year 31.78% No Trip length growth 26.68% 20% cost escalation and No Trip length growth 23.44%

Switching Values: The total cost, capital and O&M costs, of the rail component has to increase by 288.0 percent or the total benefits have to decrease by 65.29 percent before the NPV, discounted at l2percent, will become zero. From above sensitivity analysis it can be concluded that the economic benefits of the project are robust and even in worst scenario the economic returns will be well above the 12 percent cut-off norm for investments in the country.

Road Component: Sensitivity analysis has been done with respect to: (i) increase in cost by 20 percent; (ii) decrease in benefits due to lower growth in traffic and income by 20 percent; (iii) delay in project implementation by one year; and (iv) combination of increased cost and reduced benefits. The results are summarized below.

Scenario ERR Base case 39.75% Cost increased by 20% 34.27% Benefits Decreased by 20% 33.12% Delay in implementation by one year 37.13% Combination of increased cost and reduced benefits 28.67%

Switching Values: The NPV, discounted at 12 percent, will become zero if (i) the project costs increases by 402.9 percent; or (ii) the benefits decrease by 71.88 percent. This shows that the economic benefits of the project are quite robust.

-56 - Annex 5: Financial Summary INDIA: Mumbal Urban Transport Project

Implementation Period

FY 03 04 '05 06 07 08 Total Financing Required Project Costs Investment Costs 120.7 154.0 186.8 195.0 180.0 91.3 Recurrent Costs 1.6 1.6 1.6 1.6 1.6 1.6 Total Project Costs 122.3 155.6 188.4 196.6 181.6 92.9 PPF reimbursement 3.0 Front end Fee 4.6 Total Financing 129.9 155.6 188.4 196.6 181.6 92.9

Financing IBRD/IDA 57.5 Govemment 72.4 88.0 88.2 106.8 125.7 75.8 Others 0.0 67.6 100.2 89.8 55.9 17.1 Total Project Financing 129.9 0.0 0.0 0.0 0.0 0.0 _____155.6 ______188.4 196.6 181.6 92.9

- 57 - Annex 6: Procurement and Disbursement Arrangements INDIA: Mumbai Urban Transport Project

Procurement

Institutional Capacity

An assessment was carried out to deternine the institutional capacity of the agencies which would be carrying out the major procurement under this project.

Agency Procurement Activity by the Procurement Experience and remarks Agency Mumbai Metropolitan Region All R&R components and some MMRDA has been dealing with the Bank for the last two Development Authority TA/consultant services. years doing advance action on procurement of R&R (MMRDA) components under the project. They have already trained a few officers in ASCI, Hyderabad. They will train some more who will deal in procurement using the ASCI, Hyderabad (June 2002) and NIFM, Faridabad (May 2002) program. Mumbai Railway Vikas EMUs and all rail transport IR have implemented Bank's projects covered over 11 loans Corporation (MRVC) components including TA in modernization of the rail transport. Generally the officers are aware of the procurement procedures followed in Bank financed projects. However, MRVC agreed that they will depute some representatives of MRVC, Railway Board and RDSO who will deal with this procurement to the training programs organized by ASCI, Hyderabad (June 2002) and NIFM, Faridabad (May 2002) for updating their knowledge on procurement. More will be trained in subsequent programs. Municipal Corporation of ATCs road over bridges, SATIS, The Municipal Corporation has executed several Bank Greater Mumbai (MCGM) pedestrian sub-ways along with financed water supply projects (Cr. 390-IN, Cr. 842-IN, Cr. TA/consultant services. 1750-IN/Ln. 2679-IN) in the past. They are currently executing Bombay Sewerage Project (Cr. 2763-IN/Ln. 3923-IN). Hence their officers are conversant with the requirements in Bank projects. They are however being requested to depute one or two officers who are going to deal in this particular component for training in ASCI, Hyderabad (June 2002) and NIFM, Faridabad (May 2002). Maharashtra State Road Two link roads which are going to Although MSRDC has not dealt with any project under Bank Development Corporation be procured following ICB along financing, they have executed major projects using FIDIC (MSRDC) with supervision services for the conditions of contract They have been requested to depute works. a few officers who are going to deal with these contracts to ASCI, Hyderabad (June 2002) and NIFM, Faridabad (May 2002) for training. Brihan Mumbai Electric Buses and TA services for the BEST has procured buses under Bank financing in the Supply and Transport institutional development. BUTP-I (Ln. 1335-IN) project However, the officers who Undertaking (BEST) have dealt with this procurement are no longer available. During discussions the Chief Accounts Officer agreed to depute some staff that will deal with this procurement for training on procurement conducted by ASCI, Hyderabad ______(June 2002) and NIFM, Faridabad (May 2002).

To expedite project related procurement decisions, the following arrangements are agreed:

- 58 - Rail Component: MRVC has been delegated authority by IR to take procurement decisions for contracts up to a value of Rs. 1000 million (US$ 20 million). All contracts except the one for the procurement of Electrical Multiple Units (EMUs) and kits shall be within the threshold of the US$ 20 million. Bids within this limit will be evaluated by a tender committee consisting of 3 officers constituted by MRVC and the recommendations approved by ithe Director of the Corporation. MRVC has agreed on a time table for completion of the evaluation within 75 days of bid opening.

The EMU contract, is expected to be valued over US$ 200 million. In this case, the bid evaluation would be carried out by a committee o FMRVC and RDSO and forwarded to Indian Railway Board for review and approval of recommendationqs. MRVC/IR have agreed on a time table for completion of various stages of the bid evaluation and award of contract to ensure that the contract is awarded within 150 days of bid opening.

Road Component: Of the three major road packages, two will be invited following ICB procedures and one will be invited following NCB procedures and processed by MSRDC. Bids will be evaluated by a steering committee consisting of experts in that particular field and the recommendations will be approved by Vice Chainnan and Managing Director. MSRDC has agreed on a time table to complete the bid evaluation within 60 days of bid opening. The other road packages which are to be procured following NCB procedures will be processed by MCGM. The bids will be evaluated by a tender evaluation committee consisting of the Director, Engineering Services, City Engireer, Chief Engineer (Roads) and Chief Accountant The standing committee of the Municipal Corporation of Brihan Mumbai is to approve all award of contracts. A time table has been agreed for ensuring completion of the bid evaluation within 60/75 days of bid opening.

Procurement of buses: Buses will be procured by BEST. The tender evaluation committee will consist of 5 officers of BEST (technical, commercial and administration) and the recommendations for award will be approved by BEST management committee. A time table for completing the evaluation process within 90 days of bid opening was agreed.

Procurement of R&R Works: The various R&R works will be procured by MMRDA. The tenders will be evaluated by a committee of minimum 3 officers and recommendations for award approved by Executive Committee of MMRDA or by MMRDA. A time table has been agreed for ensuring completion of the bid evaluation within 60 days of bid opening.

The prior review thresholds (indicated in this annex) were derived after assessing the capacity of the above organizations to carry out the project procurement as per Bank's Procurement Guidelines.

Procurement methods (Table A)

All Goods and Works financed undier the Loan shall be procured in accordance with the World Bank's Guidelines for Procurement, January 1995, revised January 1999. Consulting services to be funded through the Bank's Loan shall be procured in accordance with the World Bank's Guidelines for the Selection and Employment of Consultants by the World Bank Borrowers, January 1997, revised January 1999. All civil works, goods and services will be procured using India-specific Bank's Model Standard Prequalification and Bidding Document. Specific procurement arrangements are summarized in Tables A and A], and are briefly described below.

- 59 - Works (USS 221.57 Million) InternationalCompetitive Bidding (ICB): US$58.88 Million Equivalent: The works relating to JVLR Roads and Bridges (Phase-I), Santa Cruz-Chembur Link Road, and ATC Works will be procured in three contract packages. The values range from US$12 million to US$26 million equivalent. Bids for all ICB works will be invited from April 2002 using Bank's standard bidding documents. Prequalification will be done for all bid packages valued over equivalent of US$ 10 million. Under ICB, preference will be given to domestic contractors in accordance with Appendix-2 of the Bank's Procurement Guidelines.

National Competitive Bidding (NCB): US$136.11 Million Equivalent: The works relating to Jogeshwari-Vikhroli Road (Phase-II), over-bridges, Pedestrian subways and bridges, SATIS/Related Safety Schemes Roads, Maintenance Car Shed Works and tenements for project affected persons will be procured in about 20 contract packages ranging from US$2 million to US$ 10 million. Foreign bidders are not expected to be interested in these works as the contract values are small.

About 3,600 transit tenements costing equivalent of US$3.55 million was procured following NCB procedures as per Bank's Procurement Guidelines. This is being financed under the credit retroactively.

Direct contracting/Shopping/ForceAccount - US$11.80 Million Equivalent: Small traffic management and safety schemes valued in aggregate US$11.09 equivalent and works related to relocation of community assets (US$0.70) will be procured in packages of US$50,000 equivalent or less on the basis of: (a) lump sum fixed price contract, soliciting quotations from not less than three qualified contractors (upto an aggregate ceiling of US$6 million); (b) direct contracting from a qualified contractor (upto an aggregate ceiling of US$ 4 million); or (c) as a last resort through force account departmentally (upto an aggregate ceiling of US$1.79 million).

Direct Contracting of built houses US$13.46 Million Equivalent: To expedite re-location of the project affected persons (by the side of the railway lines), direct contracting of 4,257 tenements which were built and readily available for occupation were procured from M/s. Maharashtra Housing and Development Agency at a total cost of US$3.46 million. This is being funded under the Credit retroactively.

Procurementof temporary tenements through NGOs - US$1.32 Million Equivalent: For the balance project affected persons, in order to relocate and accommodate them temporarily till such time permanent tenements could be procured, temporary shelters 2,500 Nos. were procured through Non-Government Organizations operating in the area were procured on urgency basis at a cost of US$ 1.32 million by direct contracting as per agreed procurement procedures. This is being funded under the credit retroactively.

Goods (USS310.35 Million Equivalent)

Rolling stock comprising of 73 kits for RDSO Technology Rakes, 20 new technology rakes and 8 kits for new technology rakes (including TOT for shells and bogies) costing US$246.78 million will be procured on a single ICB package. Similarly, for DC-AC conversion electrical equipment required (US$16.81 million), signal and telecom equipment (USD12.23 million), Track machines (US$6.46 million), maintenance car-shed equipment (US$2.36 million), buses for BEST (USD22.17 million) and IT related and other equipment (USD 1.18 million) will be procured following ICB procedures as per Procurement Guidelines. Under ICB, preference will be given to domestically manufactured goods in accordance with Appendix-2 of the Bank's Procurement Guidelines. Small IT related and other equipment valuing individually US$200,000 and below upto an aggregate of US$1.18 million will be procured following national competitive procedures in accordance with Para 3.3 and 3.4 of the Guidelines. Small items required and

- 60 - individually costing less than US$ 25,000 and below upto an aggregate of US$1.18 million will be procured by Intemational/National Shopping procedures in accordance with Para 3.5 and 3.6 of the Guidelines.

Services (US$43.91 million Equivalent)

Consultancy services under the project will be procured as follows:

S.No. Description of Services Estimated Cost Method of (USD) Selectdon 1. Construction Supervision Consultancy for Road Works (2 or 3 contracts) 1.68 million QCBS 2. Feasibility and Detailed Engineering Study for JVLR (Phase-l1) 1.12 million QCBS 3. Construction Supervision Ior Road Over Bridges (3 contracts) 1.12 million QCBS 4. Area Traffic Control One contract for Supervision of Phase-I and Design for Phase-lI - continuation of 0.6 million SS revious work One contract for Supervision of Phase 11 2.20 million QCBS 5. TA for Traffic Management Unit for MCGM and Training 1.40 million QCBS 6. Quality Assurance, technicil audit, revision of DSR (3 to 5 contracts) 1.40 million QCBS 7. Accident data recording analysis and reporting system 1.12 million QCBS 8. Environment Management (2-3 contracts) 2.87 million QCBS (a) Preparation of Particulate matter reduction action plan and its implementation (b) TA to TC's office for stiengthening vehicular emission control and inspection and maintenance systems 9. Pre-investment Studies 5.60 million QCBS 10. Transport Strategy Study 2.24 million QCBS 1. Implementation of Commurication Strategy 0.69 million LCS 12. User Charges and Demand Management Study 1.40 million QCBS 13. Institutional Study and Reform of BEST 2.80 million SFB 14. nstitutional Strengthening end Pre-investment studies for rail components (about 5.15 million QCBS 12 contracts): & i) Station Design and Engineering 5.15 million SFB ii) Track maintenance and D)rainage Improvements iii) Rolling Stock Maintenaice and Workshop Facilities iv) OHE System Improveme nt Study v) OHE and sub-stations vi) Commercial Developmeint vii) Quality Control and Testing for manufacture of EMUs viii) Simulation Study update (ix) Reliability Study for sigrnal and telecom x) Costing System for sharing of costs for common mail infrastructure xi) TA for signaling and telecom strengthening for improving headways

_xii) Pre-investment studies for phase H 15. Maintenance carshed study 1.03 million QCBS 16. Project Management Consultancy for R&R Housing (about 8 contracts) 2.88 million QCBS 17. Impact Evaluation Study 0.88 million QCBS 18. NGO support for RIP Implementation (2 to 3 contracts - partly completed) 1.41 million SS 19. Training Costs 1.17 million (To be claimed under SOE based on actuals) I Total 43.91 million

- 61 - The following consultancy contracts (SI. No. 8 and 18 of the above table) have already been awarded:

Name of Consultancy Value Preparation of particulate matter reduction action plan 0.1 million (M/s. NEERI) Baseline Socio-economic Survey, Preparation of Resettlement 0.88 million Implementation Plan and RIP Implementation Support (SPARC) Resettlement Implementation Support (Slum Rehabilitation Society) 0.08 million

NBF Assistance to PAPs for Relocation (US$ 0.71 million): R&R Assistance to individual PAPs will be offered in case of those who loose their livelihood opportunities permanently and those whose distance to work place is increase from the existing distance. It is estimated that about 1,000 PAPs may be eligible for rehabilitation assistance for loosing the livelihood opportunities and 4,500 PAPs are likely to be eligible for payment of assistance for increased travel distance. These amounts will be paid by cash directly to the PAPs through NGOs. The entire amount under this category will be non-Bank financed. The Bank and borrower agreed to convert the assistance to increased travel distance and loss of livelihood into a community revolving fund at individual housing society level on no objection basis in full agreement with the PAPs.

Procurement Planning

The procurement plan compiled for all the identified packages under the project, has been reviewed and found satisfactory by the Bank. Procurement of all packages will follow the arrangements outlined above in accordance the project's procurement plan.

Prior Review of Procurement Decisions by the Bank (Refer Table B)

(i) All ICB contracts for works and goods; (ii) All NCB civil works contracts valued at US$500,000 equivalent and above. (There is no prior review for NCB Goods as all Goods valued above US$200,000 equivalent will be procured following ICB only and are subject to prior review); (iii) Consultant contracts with an estimated value of US$ 100,000 equivalent and above for firms, and US$50,000 equivalent and above for individuals.

Overall, the Bank's prior review is expected to capture about 85 percent by value of the total procurement fmnanced under the Loan/Credit.

NCB Provisions

All NCB contracts shall be awarded in accordance with the provisions of Paragraphs 3.3 and 3.4 of the Guidelines for Procurement under IBRD Loans and IDA Credits published by the Bank and revised in January 1999 (the Guidelines). In this regard, all NCB contracts to be financed from the proceeds of the Loan shall follow the following procedures:

(i) Only the model bidding documents for NCB agreed with the GOI Task Force (and as amended for time to time), shall be used for bidding;

(ii) Invitations to bid shall be advertised in at least one widely circulated national daily newspaper, at least 30 days prior to the deadline for the submission of bids;

- 62 - (iii) No special preference will be accorded to any bidder either for price or for other teens and conditions when competing with foreign bidders, state-owned enterprises, small-scale enterprises or enterprises from any given State;

(iv) Except with the prior concurrence of the Bank, there shall be no negotiation of price with the bidders, even with the lowest evaluated bidder;

(v) Extension of bid validity shall not be allowed without the prior concurrence of the Bank (i) for the first request for extension if it is longer than eight weeks; and (ii) for all subsequent requests for extension irrespective of the period (such concurrence will be considered by Bank only in cases of Force Majure and circumstances beyond the control of the Project);

(vi) Re-bidding shall not be carried out without the prior concurrence of the Bank. The system of rejecting bids outside a predetermined margin or "bracket" of prices shall not be used in the project;

(vii) Rate contracts entered! into by Directorate General of Supplies & Disposals, will not be acceptable as a substilute for NCB procedures. Such contracts will be acceptable however for any procurement under National Shopping procedures; and

(viii) Two or three envelop system will not be used.

Procurement Information

Procurement infornation will be collected and recorded as follows:

1. prompt reporting of contract award information by the project management units for the respective components; and

2. comprehensive quarterly reports prepared by Project Authorities indicating:

(i) revised cost estimates for individual contracts and total cost; (ii) revised timings of procurement actions including advertising, bidding, contract award, and completion time for individual contracts; and (iii) compliance report by the borrower within three months of the Loan signing date.

Proposed Procurement Arrangements - Thresholds and Frequency of Supervision

The project elements, their estimated costs, and proposed methods of procurement are summarized in Table A. Thresholds are given in Table B. Figures in parenthesis are the respective amounts to be financed by the Bank.

-63- Table A: Project Costs by Procurement Arrangements (US$ million equivalent)

Procurement Method Expenditure Category ICB NCB Other' N.B.F. Total Cost 1. Works 58.88 136.11 26.58 276.13 497.70 (47.10) (118.46) (22.81) (0.00) (188.37) 2. Goods 307.99 1.18 1.18 76.00 386.35 (307.99) (1.18) (1.18) (0.00) (310.35) 3. Services 0.00 0.00 43.91 9.41 53.32 (0.00) (0.00) (35.65) (0.00) (35.65) 4. P.P.F. Reimbursement 0.00 0.00 3.00 0.00 3.00 (0.00) (0.00) (3.00) (0.00) (3.00) 5. Front-end fee 0.00 0.00 4.63 0.00 4.63 (0.00) (0.00) (4.63) (0.00) (4.63) Total 366.87 137.29 79.30 361.54 945.00 (355.09) (119.64) (67.27) (0.00) (542.00) Figures in parenthesis are the amounts to be financed by the Bank Loan/Credit. All costs include contingencies. 2 Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services.

-64 - Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent)

Selection Method Consultant Services Expenditure Category QCBS QBS SFB LCS CQ Other N.B.F. Total Cost A. Firms 29.85 0.00 10.18 1.40 0.00 1.31 9.41 52.15 (23.83) (0.00) (8.15) (1.26) (0.00) (1.19) (0.00) (34.48) B. Individuals 0.00 0.00 0.00 0.00 0.00 1.17 0.0( 1.17 (0.00) (0.00) (0.00) (0.00) (0.00) (1.17) (0.00) (1.17) Total 29.8'; 0.00 10.18 1.40 0.00 2.48 9.41 53.32 (23.88) (0.00) (8.15) (1.26) (0.00) (2.36) (0.00) (35.65) 1\ Including contingencies

Note: QCBS = Quality. and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selectio,i of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenihesis are the amounts to be financed by the Bank Loan/Credit.

- 65 - Prior review thresholds (Table B)

Table B: Thresholds for Procurement Methods and Prior Review

Contract Value Contracts Subject to Threshold Procurement Prior Review Expenditure Category (US$ thousands) Method (US$ millions) 1. Works US$10 million and above ICB About 3 Packages valued at US$58.88 million Less than US$10 million NCB About 18 Packages valued at US$136.11 million 2. Goods US $200,000 and above ICB About 12 Packages valued US$308.0 million Below US$200,000 NCB Post Review 3. Services For firms Bank Guidelines and as in $US42.74 million Consulting Services US$100,000 and above Paragraph B3 above

For individual US$50,000 and above 4. Miscellaneous 5. Miscellaneous 6. Miscellaneous

Total value of contracts subject to prior review: US$545 million

Overall Procurement Risk Assessment

Average

Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits)

Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement Documentation" and contact the Regional Procurement Adviser for guidance.

- 66 - Disbursement

Allocation of loan/credit proceeds (Table C)

Table C: Allocation of Loan/Credit Proceeds

Expenditure Category Amount In US$million Financing Percentage Works (of which IDA arnount ii 180.37 80% for IBRD financed Works US$73.41 million which will fund R&R 90% for IDA funded R&R Works works) Goods - no IDA funded goods 310.35 100% of foreign or ex-factory costs and 80% for other items procured domestically Services (of which IDA amount is 35.65 80% for consultant firms US$5.8 million 100% net of taxes for NGOs, educational institutions and taining Unallocated - no IDA 8.00 Depends on actual re-.allocation to a category on a later date P.P.F. repayment - no IDA 3.00

Total Project Costs 537.37 Front-end fee 4.63

Total 542.00

Financial Management Assessment

Country Issues

The following country issues will apply:

(a) The issue of availability of funds on a timely basis to the project implementing entities applies to the project. Fifty percent of the rail component funds have to be provided by GOM and the road transport component fumds have also to flow from GoM. However, GoM has expressed its commitment to the project; and (b) quality and timeliness of audit reports - to the extent that MMRDA audit will be conducted by AG (Audit) Maharashtra. However, the audit will be conducted based on ToR satisfactory to the Bank.

The following country issues will not apply:

(a) MMRDA and MRVC are both generating and using financial reporting effectively. Both will be able to generate FIARs; and

(b) annual audited financial statements are also generated for both MRVC and MMRDA.

Strengths and Weaknesses

Strengths: The project has the following strengths in the area of financial management:

- 67 - (a) Many of the agencies involved in the project viz. MMRDA, MCGM and BEST, have handled Bank projects in the past and are aware of Bank's disbursement procedures;

(b) Most of the implementing agencies viz. MMRDA, MRVC, MCGM, BEST, MSRDC, CR and WR operate on computerized accounting and financial reporting systems; and

(c) The necessary nucleus of finance and accounts staff is available in both the executing agencies - MMRDA and MRVC.

Signiflcant weakness Resolutdon Accounting and financial reporting are highly dispersed making Both MMRDA and MRVC are paying special financial reporting a difficult function. MMRDA will be passing on attention to formally structure the financial funds to three agencies and receiving financial reports from them. reporting requirements from the agencies to whom MRVC will be passing on funds to four agencies and receiving financial they pass on the funds. The form and content of the reports from them. reporting and the periodicity has been formalized.

Executing and Implementing Agencies

The overall executing agency for the project is MMRDA where a PMU has been created which is headed by a Project Director, a senior civil servant of GOM. For the implementation of the road transport component, MMRDA will be assisted by MCGM, MSRDC and BEST. MCGM will work mainly on traffic management and strengthening air quality monitoring, MSRDC on implementation and quality control of road works and BEST for procurement of buses. MRVC is the executing agency for the rail transport component, and will be supported by CR, WR, RSDO and ICF for implementation of some specific tasks of the rail transport component. MRVC is headed by a Managing Director who is a senior Indian Railways officer. Based on the structure for implementation of the project, the Financial Management (FM) assessment was carried out for BEST, CR, MCGM and MSRDC, as well as MMRDA and MRVC. The financial management arrangements in all these organizations were considered satisfactory for the implementation of the project

Fund Flow: This is discussed in Section C4 of the main text, and shown in the charts at the end of this Annex.

Staffing: MMRDA project finance and account department is headed by a Joint Project Director (finance), who is supported by an accounts officer and other support staff. MRVC finance and accounting function is headed by a Director Finance supported by a Financial Adviser and Chief Accounts Officer (FA&CAO), a senior accounts officer and support staff. The staff are well trained on the computerized accounts system currently being used at both MRVC and MMRDA. However, the consultants developing the system for enhancement will train the staff in the operation of the enhanced system at both MRVC and MMRDA.

Accounting Policies and Procedures

MMRDA uses an accounting manual which governs the MMRDA operations. This will be applicable to the project as well. The books of account are maintained on an accrual basis. Standard books of accounts (cash and bank books, journals, ledgers, etc.) will be maintained at the MMRDA on the computerized accounting system. MMRDA has developed a chart of accounts which links with GOM budget heads, project components, and disbursement categories.

- 68 - The responsibility of MCGM, E;EST and MSRDC will be to maintain separately the books of account recording expenditure incurred on the project and provide monthly expenditure and other reports to MMRDA.

MRVC has developed a financial management manual for the company. The books of account are maintained on an accrual basis. Standard books of accounts (cash and bank books, journals, ledgers, etc.) would be maintained at MRVC too - and on the computerized accounting system. MRVC has already developed a chart of accounts which links with Railways heads of accounts, project components, and disbursement categories.

CR, WR, RDSO and ICF will record expenditure separately for the project and provide monthly information to MRVC for consolidation.

Audit

Internal Audit: MMRDA has a separate internal audit department which carries out the internal audit of the entire MMRDA operations. The project activities will also in the purview of internal audit department. MRVC has appointed a firn of chartered accountants as internal auditors. However, the contract of the intemal auditors will terminate in August 2002. Subsequently, MRVC will employ a firn of chartered accountants as internal auditors, the ToR of which will be drawn in consultation with the Bank. MRVC and the Bank have reached an agreement on the ToR.

External Audit. MMRDA project audit will be conducted by the Auditor General (Audit) Maharashtra with ToR satisfactory to the Bank. The ToR of the auditors have been agreed with the Bank. The MMRDA project auditors will have access to the project accounts of MCGM, MSRDC and BEST. MMRDA annual accounts are also audited by Auditor General (Audit) Maharashtra.

MRVC accounts will be audited by a firm of Chartered Accountants to be appointed by Comptroller and Auditor General of India (CAG) with ToR satisfactory to the Bank. The terms of reference of the auditors will be agreed with the Bank by Juily 2002. MRVC auditors will review the monthly project expenditure statements received from CR, WR, RDSO and ICF. These statements will be audited by CAG, whose resident staff will carry out a six monthly audit of all these railways organizations. In addition, CAG will also have a right to audit MRVC. The project audit and entity reports of MMRDA and the project audit report for MRVC will be submitted within 6 months of the close of GOM's fiscal year. Thus the following audit reports will be monitored in Audit Reports Compliance System (ARCS):

Implementing Agency Audit Type Auditors MMRDA Project/SOE AG (audit), Maharashtra MMRDA Entity AG (audit), Maharashtra MRVC Project/SOE A firm of chartered accountants Department of Economic Special Account Comptroller and Auditor General Affairs/GOI

An entity report from MMRDA is considered essential as MMRDA is a revenue eaming entity and will be providing counterpart funds for the iion rail component of the project. Hence its financial viability is vital to project's success.

- 69 - All the audit reports due from MMRDA on trust funds executed by them (TF029213 and TF029399) have been received.

Reporting and Monitoring

Rail Component: For the rail component, CR, WR, RDSO and ICF will submit expenditure statements to MRVC on a monthly basis. MMRDA will also submit a statement of account for the expenditure incurred for the R&R on the rail component MRVC will then consolidate this expenditure with its own expenditures to arrive at the total expenditure claims to be filed for reimbursement.

Road-based transport component: Monthly statements will be received at MMRDA from MCGM, MSRDC and BEST and will be consolidated in MMRDA and will constitute a withdrawal claim to be filed for reimbursement.

FMR: Both MRVC and MMRDA will submit quarterly FMRs to the Bank. For the rail component, these reports will initially be generated manually and then are expected to be generated by the financial reporting software when it is operational. For the road based transport component, these reports would initially be prepared manually at MMRDA collating information received from MCGM, MSRDC and BEST and then through the computerized system once it is operational. The format of FMRs have been agreed with both MRVC and MMRDA and forns a part of the BPIP of both MMRDA and MRVC.

Information Systems

MMRDA is currently using an off the shelf software for its accounting and financial reporting needs. The system, combined with a manual effort, would be able to generate Financial Monitoring Reports (FMRs) for the project. However, MMRDA has, as an enhancement, engaged consultants to develop a system where informnation from all the agencies executing the road based transport component will be collated and consolidated with MMRDA data exported from the MMRDA system to generate the FMRs. MMRDA computerized system is expected to be fully operational by January 31, 2003.

MRVC is using the same software as MMRDA for its accounting and financial reporting. This system as well, combined with some manual effort, would be able to generate the FMRs for the component. However, MRVC too, has engaged consultants, as an enhancement, to develop a report generation software where the entire data from the current system will be transferred and then used to generate the management information required by Indian Railways, Govemment of Maharashtra and the Bank. The financial reporting software is expected to be fully operational by January 31, 2003.

The consultants developing the software will also be responsible for training the staff in the operation of the system.

Disbursement Arrangements

Disbursements from IDA credit/IBRD loan would initially be made in the traditional system (reimbursement with full documentation and against statement of expenditure). Disbursements could be converted to the Project Management Report based disbursements at the option of the GoM and Gol after the project successfully demonstrates generation of quality FMRs for both the rail and non rail components.

A Special Account would be maintained in the Reserve Bank of India. It would be operated by the Department of Economic Affairs (DEA) of Governnent of India (Gol). The authorized allocation of the

- 70 - Special Account would be $35 million that represent about four months of average estimated disbursements from the IDA creditllBRD loan. The Special Account would be operated in accordance with the Bank's operational policies.

The project will submit withdrawal applications to Controller of Aid, Accounts and Audit (CAA&A) in DEA for onward submission to ihe Bank for replenishment of the special account or reimbursement. The project may also use the direct payment route as per Bank guidelines.

Disbursement will be made on the basis of statement of expenditure for: (a) civil works for contracts not exceeding US$500,000; (b) goods for contracts not exceeding US $200,000; and (c) consultants for contracts not exceeding US$ 100,000 for firns and US$50,000 for individuals

Retroactive Financing: Retroactive financing up to an amount of about US$21 million would cover eligible expenditure for implementing activities after August 2000. Credit of US$20 million will support the R&R of project affected people through construction/ buying of permanent and transit houses and the consultants services for planning,. designing and implementing the same. Loan of $1 million will support studies including air quality monitoring and particulate matter.

Action Plan

Action Responsible Person Completion Date Actions Agreed for Enhancement of the Financial Management (i.e., completed as part of project implementation) Rail Component Development and installation of the project reporting Director Finance - January 31, 2003 software MRVC Appointment of auditors Director Finance - January 31, 2003. MRVC Road Transport Based Component = Development of a computerized financial Project Director January 31, 2003 management system

- 71 - Supervision Plan The project will need intensive supervision on FM due to the size of the outlay of the project and the large number of agencies involved. The focus during the supervision will be on the reporting arrangements between various implementing agencies, audit arrangements and funds flow issues.

Use of statements of expenditures (SOEs):

Special account:

FUND FLOW CHART - ROAD BASED TRANSPORT COMPONENT

Government of Maharashtra Bdt Provision

IQuarterly Payments

[ MAMRD Counterpart Funds for MMRA and MSRDC Components

|MCGM ||BEST ||MSRDC |

Counterpart funds for Counterpart funds for MCGM component BEST component

- 72 - FUND FLOW CHART - RAIL COMPONENT

Govt. of India (Min. of Finance)

/ \\ACA Release

Annual*. Budget Indian Railways Including Govt. of Maharashtra Provision (50%) J Counterpart Share (50%)

Annual Basis Budget Order

Central Rzilway MMR

Annual Payment by Net of R&R Cheque at the beginning of the year B oking R&R M R V C comes to

< WR ICF ~~RDSO

-73- Annex 7: Project Processing Schedule INDIA: Mumbal Urban Transport Project

Project Schedule Planned Actual Time taken to prepare the project (months) First Bank mission (identification) 09/03/1998 Appraisal mission departure 09/01/2000 03/04/2002 Negotiations 05/06/2002 05/06/2002 Planned Date of Effectiveness 10/31/2002

Prepared by: Road-based Transport Component and R&R Component: Follwoing agencies in the State of Maharashtra - Mumbai Region Development Authority, Municipal Corporation of Greater Mumbai, Brihan Mumbai Electric Supply and Transport Undertaking and Maharashtra State Road Development Corporation. Rail Transport Component: Indian Railways and the implementing agency called Mumbai Railway Vikas Corporation.

Preparation assistance: Project Preparation Facility of $3 million was made available to Gol for preparation of the rail component. Similarly, Trust Funds and PHRD Grants were used to finance consultancy services required by the client and the Bank to help in the project preparation. Details of these are given below.

Project Name Fund Grant Grant Closing Grant Amount Date US$ Project Preparation Fund (PPF) PPF 11/15/1994 07/31/2002 3.0 million 0/P259-IN Second Bombay Transport Project (replaced TF020375 02/05/1992 09/30/1995 1,499,054.82 by Mumbai Urban Transport Project) - Bank executed _ Bombay R&R Project (replaced by Mumbai TF029399 09/04/1996 07/31/2000 662,123.45 Urban Transport Project) - recipient executed _ Bombay Urban Transport 11 (replaced by TF009213 05/19/1995 09/30/1999 2,960,662.52 Mumbai Urban Transport Project) - recipient executed _ Mumbai Urban R&R Project (replaced by TF029300 09/04/1996 07/31/2000 192,488.80 Mumbai Urban Transport Project - Bank executed Bombay Urban Transport 11 Project TF029226 05/19/1995 09/30/1999 331,262.93 (replaced by Mumbai Urban Transport Project) - Bank executed .

- 74 - Bank staff who worked on tho project included: Name Speciality A.K.Swaminathan & Edward Dotson Task Team Leaders Christopher Hoban Operations Advisor, India (previous Task Team Leader) Harald Hansen Transport (former Task Team Leader) John Flora Transport Economist, Director, Transport and Urban Richard Podolski Urban Transport (initial Task Tam Leader) Sameer Akbar Environment P Illangovan Environment Bilal Rahill Environment I.U.B.Reddy Social Development Reidar Kvam R&R Lou Thompson Railway Adviser Sumir Lal Communications N Raman Procurement Rajat Narula Financial Management Arnab Bondyopadhyay Highway Engineer Raj Soopramanien Legal Counsel Alok Bansal Transport Economics Arun Mokashi Transport (Consultant) Ellen Schaengold R&R John Cracknell Traffic Management (Consultant) Gladys Stevens Program Assistant (Washington) Jit Sondhi Railways (Consultant) Zhi Liu Transport Economnist Mukundan Urban Finance and Planning Sangeeta Anand Team Assistant, (New Delhi Office)

- 75 - Annex 8: Documents in the Project File* INDIA: Mumbai Urban Transport Project

A. Project Implementation Plan Mumbai Urban Transport Project: Borrower's Project Implementation Plan - Main Volume and Annexes

B. Bank Staff Assessments Aide Memoires, Management Letters and BToRs of Preparation Missions for MUTP Aide Memoire of the Maharshtra Economic and Fiscal Study missions Procurement Capacity Assessment Report - South Asia Procurement Hub - New Delhi. Financial Management Assessment Report - South Asia Region Financial Management Unit Quality Enhancement Review - Quality Assurance Group, World Bank, November, 2000.

C. Other Comprehensive Transport Plan study - Final Report (July 1994) Consolidated Environment Assessment Report and individual component related EMPs - March -May, 2002 Resettlement Action Plan and individual component implementation plans - March-April, 2002 Study Report for preparation of Business and Development Plans for BEST - Final Report, January, 2002 MUTP Accident Study - Final Report, January, 2000 Draft Report on Road User Charging System For Mumbai - prepared for the consideration of the Working Group set up by GoM The Indian Railways Report 2001: Policy Imperatives for Reinvention and Growth - Expert Group on Indian Railways, New Delhi. Rapid Impact Assessment of Initial Resetthnent under Mumbai Urban Transport Project, May, 2002 *Including electronic files

- 76 - Ann-ex 9: Statement of Loans and Credits INIDIA: Mumbai Urban Transport Project 02-May-2002 Difference between expected and actual Original Amount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd

P050653 2002 KARNATAKA RWSS It 0.00 151.60 0.00 0.00 148.99 0.80 0.00 P040810 2002 RAJ WSRP 0.00 140.00 0.00 0.00 132.35 -5.00 0 00 P05067 2002 UTTAR PRADESH WATER SECTOR 0.00 149.20 0.00 0 00 141.99 -5.00 0.00 P089889 2002 RESTRUCTURING 0.00 80.00 0.00 0.00 59.43 0.00 0.00 P072539 2002 MIZORAM ROADS 285500 0.00 0.00 0.00 255.00 0.00 0.00 P071033 2002 KERALA STATE TRANSPORT 0.00 98.90 0.00 0.00 100(19 0.00 0.00 P035173 2001 KARN TANK MGMT 450.00 0,00 0.00 0.00 38804W 38 90 0 00 P059242 2001 POWERGRIDII1 0.00 110.10 0.00 0.00 100.37 -4.43 0.00 P050658 2001 MP DPIP 0.00 64.90 0.00 0.00 57 44 7.48 0.00 P010568 2001 TECHN EDUC III 381.00 0.00 000 0.00 340.58 78.25 0.00 P055455 2001 GUJARAT HWYS 0.00 74.40 0.00 0.00 68.67 0.41 0 00 P055454 2001 RAJ OPEP II 0.00 65 50 0.00 0 00 59 00 5.55 0.00 P070421 2001 KERALA RWSS 380.00 0.00 0.00 0.00 338.38 8.38 0 00 P007216 2001 KARN HWYS 0 00 100.40 0.00 0.00 97.20 2.78 0 00 P087543 2001 KAR WSHD DEVELOPMENT 0 00 33.00 0.00 0.00 25.57 3.04 0.00 P071244 2001 LEPROSY II 989.00 0.00 0.00 0.00 583.11 42.11 0.00 P038334 2001 GranvdTrunk Road Improvement VoJect 180.00 0.00 0.00 0.00 159.00 21.17 0.00 P049770 2000 RAJ POWER I 80.00 50.00 0.00 0.00 1 17.97 113.12 0.00 P045049 2000 REN EGYII1 0.00 111 00 0.00 0.00 98.77 8.73 0.00 P050657 2000 AP DPIP 0.00 110900 0.00 0 00 9863 14.94 0.00 P035172 2000 UP Health Systems Development I'rmject 150.00 0.00 0.00 0.00 88 89 19.58 0.00 PO50067 2000 UP POWER SECTOR RESTRUCTURING PROJECT 0 00 182.40 0.00 0.00 92.38 24.10 0.00 P059501 2000 UP DPEP Ill 0.00 45.00 0.00 0.00 38.60 0.93 0.00 P009972 2000 TA for EconiReform Project 516.00 0.90 0.00 0.00 444.68 70.05 0.00 P010505 2000 NATIONAL HIGHWAYS Ill PROJECT 0.00 100.48 0 00 0 00 89.45 17.08 0.00 P055456 2000 RAJASTHAN DPIP 62 00 0.90 0.00 0.00 57.89 30 89 0 00 P087330 2000 IN-TeleowmmunicatIons Sector Return TA 0.00 142.80 0.00 0.00 80.42 8.93 0 00 P041264 1999 IMMUNIZATION STRENGTHENING PROJECT 85 00 50.90 0 00 0.00 85.48 27.30 0.00 P050640 1999 WTRSHD MGMT HILLS 11 0.00 194 10 0 00 0.00 127.57 82 32 0 00 P050637 1999 UP SODIC LANDSII1 105.00 0.00 0.00 0.00 31.13 -3.29 0.00 P05085 1999 TN URBAN DEVII1 0.00 134 00 0.00 0.00 108.45 57.63 0.00 P049537 1999 MAHARASH HEALTH SYS 210.00 0.90 0.00 0.00 82.69 82.69 0.00 P045051 1999 AP POVWERAPL I 0.00 191190 0.00 0900 105,1I 21.73 0900 P045090 1999 2ND NATL HIVIAIDS CO 0.00 85.70 0.00 0.00 58.46 54.90 0.00 P049385 1998 RAJASTHAN DPEP 301.30 241.90 0.00 0.00 246.56 157.43 0.00 P049477 1998 AP ECON RESTRUCTURIN 0.00 39.00 0.00 0.00 19.38 9.98 0 00 P010561 1998 KERALA FORESTRY 86.80 100.00 0.00 0.00 112.38 71.16 0.00 P035169 1998 NATi. AGR TECHNOLOGY 0.00 52094 0.00 0.00 19.813 18.47 0.00 P010496 1998 UP FORESTRY 0.00 76.40 0.90 0.00 59.55 33.92 0.00 P038021 1998 ORISSA HEALTH SYS 0.00 152.90 0.00 0.00 105.20 94.00 0.00 P035824 1998 DPEP Ill (BIHAR) 79.90 50.00 0.00 0.00 83.51 81.95 0.00 P035827 1998 DIVAGRC SUPPORT 0.00 300.00 0.00 0.00 211.19 83.986 0.00 P035158 1997 WOMEN &CHILD DEVLPM 175.00 150.90 0.00 0 00 175.87 146074 0.00 P010531 1997 AP IRRIGATION Ill 0.00 240 30 0.00 0.00 78.19l 77 97 54.94 P009584 1997 REPRODUCTIVE HEALTHI 0.00 0901 0.00 0.00 7.72 9.47 0.00 P010511 1997 ECODEVELOPMENT 0.00 164.80 0.00 0.00 102.41) 101.01 0.00 P009995 1997 MALARLA CONTROL 350.00 0.00 0.00 0.00 159.31 107.65 0.00 P010473 1997 STATE HIGHWAYS h(AP) 0.00 142.40 0.00 0.00 98.50 102.47 0.00 P049301 1997 TUBERCULOSIS CONTROL 50.90 100.00 0.00 19 00 18.75 42.41 -0 17 P044449 1997 A.P. EMERG. CYCLONE 0.00 19.50 0.00 0.00 13.94 16.20 -1 71 P043728 1997 RURAL WOMEN'S DEVELOPMENI 0.00 50.90 0.00 0094 14.94. 18.31 0.00 P036062 1997 EW\,CAPACITY BLDG TA 0.00 28.00 20.00 0.00 13.89 16.22 0.00 P035821 1998 ECODEVELOPMENT DPEP 1I 0.00 425.20 0.00 0.00 75.15 26.39 0.00

- 77 - Difference between expected and actual Original Amount In US$ Millions disbursenaents Projed ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frn Rsv'd P010480 1996 BOMBAY SEW DISPOSAL 167.00 25.00 0.00 10.00 52.18 82.52 29.93 P010484 1996 UP RURAL WATER 59.60 0.00 0.00 7.20 22.01 27.88 19.68 P010485 1996 HYDROLOGY PROJECT 0.00 142.00 0.00 19.64 29.25 72.95 33.12 P010529 1996 ORISSA WRCP 0.00 290.90 0.00 0.00 75.56 81.91 0.00 P043310 1996 COAL ENV &SOCIAL MIGAON 0.00 63.00 0.00 6.09 11.53 24.67 0.00 P035S825 1996 STATE HEALTH SYS II 0.00 350.00 0.00 0.00 1.55 127.03 0.00 P035170 1996 ORISSA POWER SECTOR 350.00 0.00 0.00 60.00 133.85 187.17 0.00 P010461 1995 MADRAS WATSUPII 275.80 0o.o 0.00 18930 14.00 20288 1170 P010463 1995 INDUSPOLLUTIONPREV 143,00 25.00 0.00 68.31 41.54 112.25 26.81 P010522 1995 ASSAM4RURALINFRA 0.00 126.00 000 0.00 31.78 33.78 43.37 P010489 1995 AP 1ST REF. HEALTH s 0o00 133.00 0.00 0o00 1329 25.84 000 P010464 1995 DISTRICT PRIMARY ED 0.00 260.30 0.00 0.00 53.07 70.62 6.06 P010476 1995 TAMIL NADU WRCP 0.00 282.90 0.00 25.01 54.36 120.94 19.21 P010465 1994 BUNDNESS CONTROL 0.00 117.80 0.00 10.00 21.30 36.42 0.00 P009977 1993 ICDSI (BIHAR&MP) 000 194.00 0o0 000 1493 2173 21.74 P009963 1992 POPULATION Vill 000 7900 000 000 13.55 16.91 0.00 P009946 1992 NAT. HIGHWAYSII 15300 153.00 000 2.73 1925 11.27 11.27

Total: 5624.40 7023.62 20.00 418.22 7106.80 3140.44 275.95

- 78 - INDIA STATEMENT OF IFC's Held and Disbursed Portfolio Jan - 2002 In Millions US Dollars

Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 2001 LearningUniverse 0.00 0.25 0.00 0.00 0.00 0.25 0.00 0.00 1981/90/93 M&M 0.00 0.55 0.00 0.00 0.00 0.55 0.00 0.00 2001 Mahinfra 0.00 10.00 0.00 0.00 0.00 0.00 0.00 0.00 1996/99/00 Moser Baer 21.54 14.80 0.00 0.00 7.97 14.80 0.00 0.00 NICCO-UCO 2.59 0.00 0.00 0.00 2.59 0.00 0.00 0.00 1992/96/97 NUT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Orchid 0.00 0.00 30.00 0.00 0.00 0.00 20.00 0.00 2001 Owens Coning 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.00 2001 Pennar Steel 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.00 1997 Prism Cement 13.13 5.02 0.00 9.00 13.13 5.02 0.00 9.00 1981 RCIHL 0.00 1.97 0.00 0.00 0.00 1.97 0.00 0.00 1995 RTL 0.00 0.45 0.00 0.00 0.00 0.45 0.00 0.00 2001 Rain Calcining 14.82 5.46 0.00 0.00 14.82 5.46 0.00 0.00 2001 SAPL 0.00 0.07 0.00 0.00 0.00 0.07 0.00 0.00 1995 SREI 10.00 0.00 5.00 0.00 5.00 0.00 5.00 0.00 1997 Sara Fund 0.00 5.94 0.00 0.00 0.00 5.94 0.00 0.00 1997/00 Spryance 0.00 2.00 0.00 0.00 0.00 2.00 0.00 0.00 1995 Sundaram Finance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2001 Sundaranm Home 0.00 2.19 0.00 0.00 0.00 1.67 0.00 0.00 1986/93/94/95 TCFC Finanxe Ltd 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 TCW/ICICI 0.00 7.15 0.00 0.00 0.00 7.15 0.00 0.00 0 TDICI-VECAUS II 0.00 0.46 0.00 0.00 0.00 0.46 0.00 0.00 1998 TISCO 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1990 Tanflora Paric 0.00 0.51 0.00 0.00 0.00 0.00 0.00 0.00 1981/86/89/92/94 Tata Electric 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2000 Titan Industries 0.00 0.52 0.00 0.00 0.00 0.52 0.00 0.00 1989/90/94 UCAL 0.00 0.54 0.00 0.00 0.00 0.54 0.00 0.00 1987/88/90/93 United Ricelind 10.00 0.00 0.00 0.00 1.00 0.00 0.00 0.00 1989 VARUN 0.00 0.00 0.36 0.00 0.00 0.00 0.36 0.00 1996 Vysya Bank 0.00 7.30 0.00 0.00 0.00 7.30 0.00 0.00 1991/96/01 WIV 0.00 2.39 0.00 0.00 0.00 2.39 0.00 0.00 2001 Walden-Mgt ]India 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00 1997 AEC 3.87 0.00 0.00 0.00 3.87 0.00 0.00 0.00 1997 Ambuja Cement 0.26 4.94 0.00 0.00 0.26 4.94 0.00 0.00 1989 Arvind Mills 0.00 5.02 0.00 0.00 0.00 5.02 0.00 0.00 1994 Asian Electronic 0.00 5.50 0.00 0.00 0.00 5.50 0.00 0.00 1992/93 BTVL 0.00 20.00 0.00 0.00 0.00 20.00 0.00 0.00 1997 Basix Ltd. 0.00 1.00 0.00 0.00 0.00 0.98 0.00 0.00 2001 Bihar Sponge 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.00 2001 CCIL 9.00 0.00 0.00 11.50 5.50 0.00 0.00 7.00 1984/91 CEAT 19.60 0.00 0.00 0.00 19.60 0.00 0.00 0.00 2001 CESC 18.00 0.00 0.00 40.20 18.00 0.00 0.00 40.20 1997 Centurion Bank 4.00 0.00 0.00 0.00 4.00 0.00 0.00 0.00 1990/92 Chinai 1.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1995/97 2000

- 79 - Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1994 Chowgule 5.10 4.58 0.00 7.82 5.10 4.58 0.00 7.82 1997 Duncan Hospital 7.00 0.00 0.00 0.00 7.00 0.00 0.00 0.00 1997 EEPL 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00 1986 EXB-STG 0.31 0.00 0.00 0.00 0.31 0.00 0.00 0.00 1995 EXIMBANK 4.55 0.00 0.00 0.00 4.55 0.00 0.00 0.00 1995 GE Capital 2.50 4.39 0.00 0.00 2.50 4.39 0.00 0.00 1986/92193/94 GESCO 0.00 1.85 0.00 0.00 0.00 1.85 0.00 0.00 1988/94 GKN Driveshafts 0.00 0.33 0.00 0.00 0.00 0.33 0.00 0.00 2001 GTF Fact 0.00 2.39 0.00 0.00 0.00 2.39 0.00 0.00 1994/97 GVK 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1991/94/98/00 Global Trust 0.00 4.71 0.00 0.00 0.00 2.49 0.00 0.00 Gujarat Ambuja 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1994 HOEL 0.00 0.28 0.00 0.00 0.00 0.28 0.00 0.00 1990 IAAF 0.00 2.30 0.00 0.00 0.00 1.37 0.00 0.00 1998 ICICI-IFGL 0.00 0.14 0.00 0.00 0.00 0.14 0.00 0.00 1990/94 ICICI-SPIC Fine 0.00 2.79 0.00 0.00 0.00 2.79 0.00 0.00 1990/95/00 IDFC 0.00 15.46 0.00 0.00 0.00 15.46 0.00 0.00 1998 IIEL 6.80 3.10 0.00 0.00 0.00 0.00 0.00 0.00 2001 IL & FS 0.00 3.12 0.00 0.00 0.00 3.12 0.00 0.00 1990/93/94/98 IL&FS VC 0.00 0.60 0.00 0.00 0.00 0.60 0.00 0.00 1992/95 IndAsia Fund 0.00 15.00 0.00 0.00 0.00 0.35 0.00 0.00 2000 India Direct Fnd 0.00 7.47 0.00 0.00 0.00 6.73 0.00 0.00 1996 India Lease 0.00 0.30 0.00 0.00 0.00 0.30 0.00 0.00 1984/90/94 Indian Seamless 10.50 0.70 0.00 0.00 6.00 0.00 0.00 0.00 2001 Indo Rama 0.00 2.14 0.00 0.00 0.00 2.14 0.00 0.00 1993/94/96 Indus 11 0.00 4.34 0.00 0.00 0.00 4.34 0.00 0.00 1996 Indus 11Mgmt 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1996 Indus VC Mgt Co 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1992 Indus VCF 0.00 0.66 0.00 0.00 0.00 0.66 0.00 0.00 1992 Info Tech Fund 0.00 0.62 0.00 0.00 0.00 0.62 0.00 0.00 1992 Ispat Industries 0.00 3.00 0.00 0.00 0.00 3.00 0.00 0.00 1992/94/97 JSB India 0.00 0.84 0.00 0.00 0.00 0.84 0.00 0.00 1989/95 Jetair 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00 2001 Total Portfolio: 189.57 185.33 50.36 68.52 146.20 151.94 40.36 64.02

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic 2000 APCL 7.10 0.00 1.90 0.00 2001 GI Wind Farms 9.79 0.98 0.00 0.00 2001 GTF Fact 10.00 0.00 0.00 0.00 2000 IL&FS-GF 40.00 0.00 0.00 0.00 2000 Orissa NESCO 28.00 0.00 0.00 0.00 2000 Orissa WESCO 11.00 0.00 0.00 0.00 1999 Sarshatali Coal 4.00 0.00 0.00 0.00 2002 Sundaram Home 11 10.42 0.00 0.00 0.00 2002 Webdunia 0.00 0.00 2.00 0.00 Total Pending Commitment: 120.31 0.98 3.90 0.00

- 80 - Annex 10: Country at a Glance INCDIA: Mumbai Urban Transport Project

POVERTY and SOCIAL South Low- Indla Asia Income Development dlamond' 2000 Populatlon. mid-year (millions) 1 015.9 1,355 2,459 Life expectancy GNI per capita (Atas method, US$) 450 460 420 GNI (Atlas method, US$ billions) 454.8 617 1,030 Average annual growth. 1994-00 Population I%) 1.8 1.9 1.9 Labor force (%) 2.3 2.4 2.4 GNI Gross per ~ rimary Most recent estimate (lateat year available, 1994-00) capita enrollment Poverty (5 of population below national pove,ty line) 35 Urban population (%of total population) 28 28 32 Lite expectancv at birth (years) 63 63 59 Infant mortality (per 1,000 live births) 71 74 77 Child malnutrition (%of children under 5) 45 47 Access to improved water 3ource Access to an Improved water source (X of population) 88 87 76 Illiteracy (X ofpopulation age 15+) 43 45 38 Gross primary enrollment (%of school-age population) 100 100 96 India - Low-income group Male 109 110 102 Female 90 90 86 - KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1980 1990 1999 2000 Economic ratios' GDP (US$ billions) 182 9 316.9 445.2 457.0 Gross domestic investmentUGDP 20.9 25.2 24.3 24.0 Exports of goods and services/GDP 6.1 7.3 12.0 14.0 Trade Gross domestic savinaslGDP 17.3 22.5 21.2 21.4 Gross national savings/GDP 18.9 22 0 23.2 23.4 Current account balance/GDP -1.9 -3.2 -1.1 -0.6 Domestic Investment Interest oavments/GDP 0.3 1.2 0.8 0.8 savies n Total debtGDP 11.3 26.4 22.0 22.0 savings Total debt service/exports 9.8 32.4 15.3 12.7 Present value of debt/GDP 15.5 Present value of debt/exports 91.2 Indebtedness 1980-90 1990-00 1999 2000 2000-04 (average annual growth) GOP 5.8 6.0 7.1 3.9 5.4- nda - Lwicmgru GDP per capita 3.5 4.1 5.2 2.0 3.8 lndia Low-income group Exports ofgioods and services 5.9 11.7 6.0 5.0 7.3

STRUCTURE of the ECONOMY 1980 1990 1999 2000 Growth of investment and GDP I%) (%of GDP) 3 Agriculture 38.6 31.3 26.2 249 Industry 24.2 27.6 26.0 26.99 s Manufacturing 16.3 17.2 152 158 Services 37.2 41.1 47.8 48.2 o-OO' < * 9 0 95 07 se 09 oo Private consumption 72.7 65.9 65.9 65.4 -15 General government consumption 10.0 11.6 12.9 13.2 GDI DP Imports of goods and services 9.7 9.9 15.1 16.6 G

1980-90 1990-00 1999 2000 Growth of exports and Imports 1%) (average annual growth) Agriculture 3.1 3.0 1.3 -0.2 40 Industrv 6.9 6.4 4.9 6.3 30 Manufacturing 7.4 7.0 4,2 6.7 20 Services 7.0 8.0 9.5 4.8 is. Private consumption 5.8 4.8 2.8 4.2 o General Govemment consumpUon 4.2 6.9 12.0 6.5 15 9 96 97 n oo Gross domestic investment 6.6 7.9 15.7 2.0 Exports OImports Imports ofgoods and services 5.9 9.5 6.0 5.0

Note: 2000 data are preliminary esUmates. * The diamonds show four kev Indicators In the cointrv (in bold) compared with Its income-group average. If data are missing, the diamond will be incompiete.

- 81 - India

PRICES and GOVERNMENT FINANCE 1980 1990 1999 2000 Inflation (%) Domestic prfcrs (X change) T Consumer Prices .. 12.8 3.4 3.8 10 Implicit GDP deflator 11.6 10.4 3.5 4.1 Government finance (%of GDP, includes current grants) o Current revenue .. .. 18.9 19.9 95 96 97 sa 9s Current budaet belanre .. . 4.4 4.2 -GDP deflator - 0 CPI Overall surplus/deflcit .. . -10.6 -10.6

TRADE 1980 1990 1999 2000 Export and Import lovols (USS mill.) (US$ millions) Total exports (tob) 8.501 18,477 37,542 44.894 75,000 Tea .. 535 1.183 1.394 6,0 Iron 970 916 1,158 Manufactures 5.105 12.996 29.714 34.511 4. 000 Total Imports (cUt 15.862 27.914 55.383 59.284 JOOO Food 1,348 557 2,417 1,432 Fuel and energy 8,669 6.028 12.611 15,850 15.000 Capital goods 2,416 5.835 8,965 8,785 o Exportprice index (I995=100) 26 51 116 122 94 95 go 97 go o Import Price index (1995=100) 27 46 150 162 *Exports * Imports Terms of trade (1995=100) 105 109 77 75

BALANCE of PAYMENTS (US$ millions) 1980 1990 1999 2000 Current account balance to GODP(%)

Exports of goods and services 11,249 23,028 53,251 63,764 0 Imports of goods and services 17.821 31.485 67.028 75.656 Resource balance -8.572 -8.457 -13,777 -11.892 Net income 325 -3.753 -3.559 -3,821 Net current transfers 2,693 2,068 12,256 12,798 I I I.-_ Current account balance -3,554 -10.142 -5.080 -2,915 Financing Items (net) 2,564 7,650 11.482 8,771 Changes in net reserves 990 2,492 4.402 -5.856 2 - memo: Reserves Includina gold (USS millions) 8.823 5.834 38,036 42,281 Conversion rate (DEC, locallUSS) 7.9 17.9 43.3 45.7

EXTERNAL DEBT and RESOURCE FLOWS 1980 1990 1999 2000 (USS millions) Composition of 2000 debt (USS mill.) Total debt outstandina and disbursed 20.895 83.717 98.158 100.367 IBRD 827 7.685 7,816 7,063 G.3,464 A 7,063 IDA 5,142 13.312 18.930 20.804 Total debt service 1,426 8.191 10.108 9,862 lBRD 137 1.087 1,389 1,421 9:20,804 IDA 50 211 469 554 Composition of net resource flows F: 40,376 Official grants 750 461 382 336 Official creditors 908 2,334 1.068 589 D: 4,541 Private creditors 789 1,606 -1.658 4.340 Foreign direct Investment .. 97 2,093 1,828 - Portfolio equity - 6 3.024 2.760 E 24,119 World Bank program Commitments 2,503 2,186 817 2,084 A-IBRD E-Bilateral Disbursements 826 1.981 1,460 1.742 B -IDA D- Other multilateral F . Private Principal repayments 86 586 1,228 1.392 C -IMF G -Short-term Net flows 739 1,395 232 350 Interest payments 101 712 830 583 Net transfers 639 683 -398 -233

Development Economics 2/5/02

- 82 - Additional Annex 11: Assessment of the Financial Capacity of MCGM and BEST INIDIA: Mumbai Urban Transport Project

1. Municipal Corporation of Greater Mumbai (MCGM)

Project Description

MCGN is responsible for implementation of a number of subcomponents in the road based transport component of the proejct. MC43M's share of the project cost is US$81.9 million (Rs. 3931.3 million), of which financing by the Bank will be 85 percent. Assuming a nominal increase in traffic related capital outlay (Maximum of last five years), the additional investment will be in the region of 30 percent of the annual capital outlay of MCGM.

Agenc Subcomponents Cost (US$) MCGM Jogeswari (Southt) ROB 9.9 MCGM Jogeswari (Northli ROB 6.9 MCGM Vikhroli ROB 5.9 MCGM Pedestrian Subways and Bridges 14.8 MCGM SATIS/Related Safety Schemes 14.8 MCGM Other Traffic Management and Safety Schemes (INR 300+150 m) 11.1 MCGM ATC 12.3 MCGM Supervision services for ROBs (3 contracts) 0.9 MCGM ATC Supervision and Design 2.2 MCGM TA for TMU of M1CGM and Training 1.1 MCGM QA/Technical Audit/Revision of DSR (3 to 4 contracts) 1.1 Police/MCGM Accident Data Recording. Analyses and Reporting System TA 0.9 Total 81.9

Financial Capacity

MCGM has improved its revenue performance in 2000/01, primarily by reducing costs and by rescheduling employee related dues to the cunrent year FY01/02. MCGM targets to reduce its overall deficit this year. This improvement in performance will result in reduction in internal borrowings to finance capital works and there is possibility of increase in funding by own resources from the year 2002103.

The assessment of MCGM's capacity is based on a medium term financial and operating plan (FOP), assuming a moderate growth in revenues (77 percent realization of current demand and at least two percent increase in arrear demand collection of property related taxes with a maximum of 45 percent); based on increases in tax rates (at least by Iwo-five percent), revenue realization improvements, and in certain cases based on past trends. This plan cansiders commitments due to the proposed project, in terms of 15 percent internal contributions, resultant O&M and debt servicing during the project period, employee related commitments and possible wage hike (maximum 25 percent), an indicative investment program for core services for the next 10 years based on investment trends, as well charges payable to institutions such as MSRDC for ongoing road activities. It needs mention that given the resource position and potential performance, the maximum invesiment possible by MCGM in relation to the Road User Charging Study (RUCS) is around 60 percent. This addition will in no way impact other priority expenditures of MCGM.

- 83 - The assessment indicates that the project will not impact MCGMs finances significantly in terms of additional investment or debt servicing. However, when viewed as part of the next 10 year investment scenario of MCGM, MCGM will have to continue with measures to reduce costs, particularly on employee related costs (subject to a maximum of 11 percent annual increase) and enhance rates of property related taxes at least twice between FY02/03 and FY08/09. MCGM will also have to examine rationalization of property tax given the risks associated with Octroi, wherein any further increase in rates will have a negative impact on the economy. There are there are sufficient indications in terms of rate of growth over FYOO/0 1. Additionally, MCGM will have to focus on generation of at least a 30-40 percent of resources intemally to finance its capital works.

MCGM, as part of the project will evolve a sectoral strategic plan aimed at management improvements and in defining upgradation needed to improve services. This will be integrated with this financial and operating plan, which MCGM will provide to Bank on an annual basis.

Key Actions: * Property tax revenue realization at 75 percent for current and 43 plus percent against arrear demand. * At least 30 percent internal contributions for capital programs * Preparation and submission of annual Financial and Operating Plan * A strategic plan for investments and management improvements in core services.

- 84 - Al, 0 _ I e

__I 19 Igi_ ir c grxcg g Si g131i Xra gX wwg ill4pivfDcEAAi N1 -Wg1

I'Mil ll Illl? 1111l lpl IM ! 2. Bombay Electricity Supply and Transport

Project Description

The overall Business Plan of BEST estimates cost of replacement/augmentation of the bus fleet at US$62.5 million (INR. 3000 million). Share of Bank in terms of investment and technical assistance support is about US25.0 million (INR. 1200 million).

Buses Cost/Bus No. Cost (Rs. Million) Double Decker Rs. 2.5million/bus) 10 25.0 Single Decker Euro II Rs. 1.5 million/bus 1905 2857.5 Single Decker Euro 11 low floor rear engine Rs. 2.8 million/bus 10 28.0 Cost of MIDI buses Rs. 1.2 million/bus 75 90.0 Total I __ 2000 3000.5

Financial Capacity

Transport operation of BEST is currently cross subsidized by the electricity operations to the extent of at least 20 percent on an average excluding capital expenditures. The impact of the project will be to support the revised Business Plan of BEST, primarily aimed at achieving operating viability (currently it recovers only about 80 percent of its operating expenditure) through cost reduction measures and appropriate private participation in operations.

Specifics of Business Plan

The Business Plan addresses two critical issues with regard to transport operations of BEST: (a) High operating costs (b) Increasing levels of subsidy.

The key components of the plan are:

(i) Revision of Bus fares in mid 2003/04 (Impact: Rs. 900 million) and mid 2005/06 (Impact Rs. 1350 million) each and future increases in relation to costs of operation.

(ii) With a view to reduce manpower costs, BEST would implement a Voluntary Retirement Scheme (VRS) which is expected to be availed by 4000 staff (about 10 percent of existing staff). The benefits accruing to BEST from the proposed VRS are presented in the section on financial assessment and are based on savings in wage costs due to the reduced manpower. The possible sources of finance towards this is from the financial institutions and through own funds.

The estimated annual break up is as follows: * 1st Year - 1500 * 2nd Year - 1000 * 3rd and 4th Year - 1500

(iii) BEST would also implement a plan of action for private sector participation through outsourcing (leasing) of buses as per the following plan (on a cumulative basis):

- 86 - Year 2002/03 2003/04 2004/05 2005/06 2006/07 No. of buses outsourced 300 600 900 1200 1200

These are proposed to be otutsourced on a "gross cost" (wet lease) basis, wherein the buses would be leased along with driver. It interms regulatory framework, the proposed leasing would require amendment of Maharashtra 'Motor Vehicles Act to provide for privately operated stage carriers, besides approval of unions.

(iv) BEST would implenient complete accounting separation, including separate balance-sheet and Profit and Loss Account with regard to the transport operations. This would form the basis for more comprehensive reform at a later stage. (v) Other activities as part of implementation of the business plan (5-year program) include:

* Institutional options study (action plan for achieving legal separation and more comprehensive private sector participation) * Systems (MIS) study

Financial Assessment and actio[I plan

It is expected that the aforesaid re form program would help achieve "operating viability" by the year 2004/05. The financial projectioris are based on a "business as usual" scenario. Further, the business plan has been suitably adapted to reflect the reform plan and is as summarized below:

in rnillion) 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Cash loss as per Consultants -1598 -1955.4 -2345.7 -2771 -3234.9 -3740.3 i) Increase in Expenditure _ 2 % increase in salary 64.92 185.35 326.85 491.64 683.39 905.37 Interest on VRS Loan 54.9 79.9 115.6 84.7 54 26 Passenger Tax 0 31.5 31.5 47.25 63 78.75 Total 119.82 296.75 473.95 623.59 800.39 1010.12 ii) Income _ __ _ revision of Bus Fare 0 900 900 1350 _ 1800 2250 Concessional. Travel facility 354.7 418.5 493.9 582.8 687.7 811.5 Increase in advertisement income 137.47 140.08 142.77 144.47 146.26 148.14 Total 492.17 1458.58 1536.67 2077.27 2633.96 3209.64 iii).Decrease in Expenditure _ Savings in Labor- outsourcing/ hiring of buses 30 120 240 360 _ 480 480 Savings on account of exgratia payrnents 323.48 349.36 377.31 407.49 440.09 475.3 Savings in staff cost due to VRS 187.5 327.5 541.2 584.5 631.3 681.8 Total 540.98 796.86 1158.51 1351.991 1551.39 1637.1 Cash Loss/ Proflt -684.67 3.29 -124.47 34.671 150.06 96.32

- 87 - Additional Annex 12: Environmental Assessment INDIA: Mumbai Urban Transport Project

ANALYSIS OF ALTERNATIVES

In response to the emerging transport crisis, Mumbai Metropolitan Regional Development Authority (MMRDA) was mandated to prepare a transport sector development plan. The Comprehensive Transport Strategy (CTS) prepared in 1994, provides a strategic framework for the transport sector of MMR. The CTS Study examined three strategic alternatives to meet the projected travel demand in MMR in an effective and financially and environmentally sustainable manner. These alternatives were then compared with the base case -- "do minimum" altemative:

* Public Transport (PT): Emphasis on investment in Public Transport - particularly railways.

* Public Transport and Demand Management in the Island City (PT+DM): Priority for investment in public transport, particularly railways, with demand management measures such as cordon pricing and parking control in the Island City.

* Road Investment (RI): Emphasis on road projects, which would cater to and encourage private vehicle trips.

In addition to considering their effectiveness in meeting the transport sector needs and requirements, these strategic altematives were evaluated with reference to their comparative impact on air pollution, noise, ecology, social impact (in tenrs of number of displaced households) and traffic efficiency. This evaluation indicated that PT+DM is the optimal alternative given the context of a transport project in a densely populated area and with large unmet demand in the public transport sector.

The CTS clearly established the guiding principles that are still valid for transport sector today, namely that the investment priority must be accorded to public transport, (particularly the suburban railway), road investment should concentrate on improving east-west road links in the suburbs along with the Road Over Rail Bridges (ROB) that replace the existing level crossings on the railways. In the Island City where congestion is likely to be acute and there is inadequate space for expanding the road network, demand management measures need to be adopted.

The scope for considering alternative alignments for individual road sub projects proposed in the project is limited. The roads have to follow the right of way reserved in the city master plan since in the areas not so reserved building construction has taken place. Nevertheless, where possible altemative alignments and designs of ROBs have been adopted which significantly reduce the social impact.

PROJECT COMPONENTS

On the basis of the framework developed under the CTS the project components have been identified and budgeted as described before in section C and Annex 2. Each component has related provisions for environmental protection and improvement, institutional capacity building and training.

Some of the civil works of railways that are not financed by the World Bank began in 2000. Similarly R&R activities for optimization of railways that required clearance of safety zone also began in 2000. The rest of the project is proposed to be implemented over a six-year period 2002 to 2008.

- 88 - APPLICABLE LEGAL REQUIREMENTS

GoI/GoM Legislation related to Environment:

There are various Acts, Rules and Notifications applicable for different environmental components such as Air Pollution, Water Pollution, Noise Pollution, Coastal Areas, Hazardous Materials Handling and Transport, Forest and Wildlife, etc. In addition, regulatory provisions by way of environmental clearance also exist The applicable regulations to this project are listed below.

Environmental (Protection) Act, 1986

This is an umbrella act for envixonmental protection. Various rules and notifications are issued from time to time under the provisions of this Act. Environmental Protection Rules (2000) specify standards for ambient air quality whereas Noise Pollution (ReRulation and Control) Rules. 2000 provide for the ambient noise standards in public places. The Environmental Impact Assessment Notification. 1994 (as amended in May 1994) makes environmental clearance mandatory for 29 categories of developmental projects listed in Schedule I of the notification. Railways are not listed in schedule 1 and hence do not need environmental clearance. For other components under MUTP, MoEF has confirmed that enviromnental clearance is not required.

Coastal Regulation Zone Notification 1991

The notification provides for determining certain areas between the Low Tide Line (LTL) and High Tide Line (HTL) and adjacent land ward area as the Coastal Regulation Zone and its classification into CRZ I (ecologically sensitive), CRZ II (where development has already occurred) and CRZ III the residual area (largely rural in character). The notification also prescribes prohibited activities in CRZ and activities that can be taken up with the approval of MoEF Reclamation being a prohibited activity cannot be undertaken in CRZ I. This restricts use of such lands for R&R.

Protection of Trees in Urban Areas

GoM legislation requires every local authority to constitute a tree authority. No tree can be felled without the pernission of this authority. Trees in the right of way of roads can be removed with the permission of this authority which may prescribe transplanting or compensatory plantation.

APPLICABLE WORLD BANK POLICIES

Environmental Assessment (OP 4.01)

In the context of the Bank's Operational Policy (OP) 4.01 on Environmental Assessment, MUTP has been classified as category "A" project, largely on the basis of the large number of people requiring resettlement and rehabilitation. Because of the large-scale resettlement and the triggering of more than one safeguard policy the project is also classified as "S1" in terms of safeguard issues. A consolidated EA including SEA and sub project specific EAs and EMPs have been prepared in compliance with the World Bank policy.

Cultural Property (OP 4.11)

Mumbai with its history of nearly three hundred years is rich in cultural property particularly in the form of

- 89 - built heritage. GoM in 1995 with the involvement of NGOs listed over 600 buildings and precincts as of heritage significance. No development permiission can be granted of the listed buildings or within the precincts without the consent of a Heritage Committee. None of the MUTP sub-projects, except the pedestrian subways, directly or indirectly affect heritage buildings. The design consultants have been advised to take cognizance of this fact. During the execution of works, if a "chance find " of archaeological significance occurs, the contract requires the contractor to immediately inform the employer and stop further work. Employer will in turn inform the state Archaeology Department for further investigation.

In addition to the listed buildings however, there are smaller common cultural properties like shrines, small temples or mosques within the project-affected areas. Thus this policy applies to the project. These properties have been identified during the BSES, and their rehabilitation plans have been worked out following public consultation. The sub-project specific EMPs provide the detailed rehabilitation plans.

Natural Habitats (OP 4.04)

Mumbai's notable natural habitat is limited to the 103 sq.km. National Park which is located in the northern part of the peninsula between the two rail corridors and the coastal wetlands in the eastern and western suburbs. The National Park is protected under the Indian Forest Act whereas the coastal wetlands are protected by the Coastal Regulation Zone (CRZ) Notification of 19 February 1991. Two of the subprojects pass through small areas in the designated coastal regulation zone - a section of 4.5 km. of a Railway line that (total length 26 km.), and a section of about 110 m of a 10.3 km road cross areas having degraded mangroves. Even though the impacts on natural habitat are small, the policy applies, and is being complied with.

An effort to provide immediate temporary transit accommodation for squatters, in response to a court order with stringent implementation schedule, resulted in an inadvertent breach of the coastal zone regulations at two of transit accommodation sites. GoM has undertaken to move all squatters currently housed in transit accommodation to their permanent accommodation within a period of not more than three years. Environmental audit of these transit camps has also been carried out to determine how the land under CRZ can be restored to its original status after the dismantling of transit houses.

Involuntary Resettlement (OD 4.30)

MUTP will require resettlement of about 19000 households (77000 persons). The World Bank Policy on Involuntary Resettlement is therefore applicable to the project. In compliance with to this policy an R & R Policy has been prepared and adopted by GoM for MUTP. RAP and first year sub-project specific RIPs including CEMPs have been prepared. The project is therefore in compliance with the policy.

Indigenous Peoples (OD 4.20)

About one percent of the PAHs belong to the Scheduled Tribes. A field based review was undertaken to determnine if these PAHs were subject to application of this Policy since they might have originally belonged to tribal communities in the distant past. As of now they are integrated with the city life and do not have their traditional habitat or follow traditional ways of life. It was deternined by the review that the social impact of the project on such people is similar to that on other PAHs and thus the policy does not apply. No separate Indigenous Peoples Development Plan (IPDP) has therefore been prepared.

ENVIRONMENTAL IMPACTS

- 90 - Environmental Assessment Process

The Environmental Assessment (EA) process commenced in 1994 with the drafting of the ToR for a Sectoral Environmental Assessment Report. The EA process included the preparation of Sector-level Environmental Assessment (SLEA), Programmatic level Environmental Assessment (PLEA) and Micro-level Environmental Asscssment (MLEA). SLEA was a strategic document, PLEAs were prepared for small generic sub-projects lile flyovers, ROBs and RUBs, while MLEAs were prepared for larger sub-projects like road widening amd extension. The study resulted in several outputs including a synthesized final report in 1998.

Since 1998 the following development have taken place, which necessitated a fresh look at the environmental assessments: i) the design of the proposed project has undergone changes - certain sub-components were dropped and a few have been added; ii) the traffic and enviromnental baseline in Mumbai has undergone significant changes; and iii) the project has been put under a higher level of scrutiny by NGOs and civil society.

As a result, the following approach was adopted: (a) updating of all PLEAs and MLEAs and preparation of MLEAs for all sub-componenis added after 1998; (b) preparation of fresh EMPs for all sub-components earlier covered by PLEA; (c) EMPs for all sub-components to be implemented in the first year of the project to be made available before project appraisal; (d) the preparation of a Consolidated EA that takes into account the changed baseline since 1998 and presents a comprehensive overview of all environmental aspects of the project in one document; and (e) public consultations following the disclosure of the draft Consolidated EA report, findings ,Df which were incorporated in the final Consolidated EA reporL

Significant Environmental Issue; and Impacts

The significant issues and impacts highlighted as a result of the Environmental Assessment process are discussed in Section E5 of the main text.

ENVIRONMENTAL MANAGEMENT PLANS (EMPs)

EMPs for mitigating the adverse environmental impacts are formulated at the sector level and also for the sub-projects. At the sectoral level, a variety of policy, legal and administrative measures will be used to manage and mitigate adverse environmental impacts. The formulation and implementation of some of the measures, depend upon a variety of parameters such as promulgation of rules and standards particularly by Gol/GoM, techno-economic feasibility of the suggested measures, public pressure, directives of Supreme Court and High Court, etc.

EMP Implementation and Monitoring at Sectoral Level

The EMP at the sectoral level is the basis for identifying the Air Quality Management aspects related to the transport sector. These include supporting government efforts to improve the air quality management in Mumbai; strengthening the development of strategies to reduce vehicular emissions; and environmental capacity building of other relevant agencies. Most of the policy measures recommended in the sectoral level EMP are those that are in the state govenmuents purview, and do not require sanction from the central government. The institutional strengthening recommended depends on government's ability and willingness of the different implementing agencies. Overall reduction in transport sectors contribution to air pollution will depend on political will, and pursuing a strategy of discouraging motorization in the island city.

- 91 - The success of EMPs depends upon close monitoring. Because of multiplicity of agencies coordinated monitoring and reporting is proposed to enable timely corrective actions Sectoral level monitoring plan is prepared for monitoring of environmental quality such as for monitoring ambient air quality and noise level and conditions at resettlement sites. The monitoring plan includes the responsibility and frequency of monitoring. The monitoring plan has three components - monitoring the implementation of mitigation measures, monitoring the environmental quality, and monitoring traffic parameters.

Environmental quality particularly with respect to air pollution and noise levels, will have to be monitored on continuous basis, as these environmental components are likely to be affected most by the transportation strategy. Environmental quality monitoring shall be carried out with the objective of assessing the change in environmental quality due to the transportation strategy, so that the strategy can be updated in response to the monitored results. Since the environmental quality of Greater Mumbai is also affected by factors other than transportation activities, environmental monitoring program for the transportation strategy shall be integrated with the regional environmental monitoring program.

The MUTP project is expected to bring about a substantial improvement in traffic movement in MMR and Greater Mumbai. Various traffic parameters such as volume, speed etc. for roads and passenger trips for railway will be monitored to track changes in traffic movement. As a part of MUTP, a Traffic Management Unit (TMU) is being established in MCGM. The TMU will undertake periodic studies to monitor the traffic movements and impact of proposed measures in MUTP.

EMP Implementation and Monitoring at the Subprojects level

The EMPs at the sub-component level for rail and road investments provide a description of appropriate practices that should be adopted during the design and construction of different sub-components, and specific mitigation measures to be implemented during operations. Their main feature is the delieanation of pre-construction, construction, and operational impacts and the assignment of roles and responsibilities for implementing the appropriate environmental management measures at each stage. Hence, the EMP recommendations to be incorporated in the bidding documents of different civil work and monitoring arrangements during construction have been outlined; for the operation stage, the EMPs focus on mitigation of air and noise impacts with a particular focus on sensitive receptors.

As compared to the EMPs for rail and road investments, the CEMPs for R&R sites have a greater focus on the operation stage as compared to the construction stage since most of the construction of permanent housing is as per government housing norms. In cases where construction is yet to take place, the CEMPs have specified appropriate construction practices and the need to incorporate recommendations in the bidding documents for the contractors. The development of environmental mitigation measures during the operational phase has been undertaken in a consultative manner with the Project Affected Households (PAH) since in a number of cases the PAHs are already residing either in transit or permanent sites. The primary focus on the CEMPs is on alleviating environmental health impacts of the PAHs. The institutional mechanism for CEMP implementation envisages a role of an Environmental Management Committee (EMCs) comprised of the PAHs, and initial assistance from the NGO working with them.

Mitigation measures against adverse impacts during construction are being integrated into construction contract with Project Management Consultant (PMC) being responsible for monitoring and reporting to Project Implementing Agency (PIA). Environmental monitoring plans are developed for specific sub-projects, involving monitoring sites, monitoring parameters, time and frequency of monitoring and the reporting of monitored data. The objectives of the monitoring plan are:

- 92 - * To record the impact of MUTP on urban enviromnental quality during the construction and operation phases;

* To evaluate the effectiveness of the mitigation measures during the construction and operation phases;

* To satisfy the legal and community obligations;

* To respond to the unanticipated environmental issues at an early stage and to verify the accuracy of environmental impact prediction;

* At the project level, the vital parameters or performance indicators that will be monitored during construction and/or operation stages of the project include:

- Ambient air quality - S02, PM IO, CO, NOx - Noise levels near sensitive locations - Re-plantation success/ survival rates - raffic volume and characteristics

In order to facilitate smooth impltementation of EMPs, the PIA shall include specific obligations in respect of EMP implementation in all tender and contract documents. The bidding and contract docurments shall include the following information:

* EMP requirements and obligations o Environmental Monitoring Requirements o Reporting requirements * Indicative EMP cost estimates

Cost estimates have been prepared for EMPs related to the following tasks:

* Compensatory and Road/Track Side Plantation * Pollution control (dust, water pollution etc.) * Noise level reduction * Road safety * Environmental Monitorinly

Most of the above activities will be covered by the works contract except post-implementation rnonitoring. The total cost of EMP implementation including monitoring is estimated to be Rs. 240 million (US$5 million). As against this therefore Rts. 108 million (Us$2.24 million) are separately shown including the institutional strengthening requirement of Rs. 48 million (US$1 million), and the remaining is covered by the works contracts.

INSTITUTIONAL SET UP, COORDINATION AND STRENGTHENING

The PIA will get the EMP implemented through the Project Management Consultant (PMC) by incorporating the EMP requirements in the contractual agreement along with the provision of penalties to be levied if the contractor fails to comply with the conditions. The contractor shall submit a report on compliance with the environmental mitigation measures (Environmental Compliance Reports, EC(Rs) before start of construction activities and periodically thereafter to the PTA. The PLAs will then submit the

- 93 - ECRs to the JPD (Env), which after review and monitoring will be submitted to IMP through the Project Director, MUTP for confirmation of the implementation of the environmental mitigation measures. The Project Director will accordingly submit the report to the World Bank, IMP, PCC, and HLSC.

Apart from ensuring compliance with the EMPs formulated for MUTP, there is need to strengthen the institutions to enable them to effectively integrate the environmental considerations in sectoral policy formulations as well as design and implementation individual projects. The present capacity of the institutions is limited in this regard and is proposed to be strengthened by inducting additional manpower, outsourcing expertise and training of available manpower. The total cost for the training programs and institutional strengthening is estimated to be Rs. 48 million (US$1 million) which have been provided under the IDA credit.

- 94 - Summary of public consultation

DATE VENUE TARGET AUDIENCE MEANS OF RECORDS COMMUNICATION MAINTAINED

Sectoral EA ______June 2, 1997 Yashwantrao Chavu Representatives ofthe government Letters of Invitations along with List of participants, Centre departrnents, local authorities, project Executive Summary of EA report Minutes of the Mecting Nariman Point implementation agencies, academia and the consultants in the transport and enviromnent field. _ UpdatedEA Novemnber 20, 2000 Conference Itoom Environmnental experts, Consutants, Letters of Invitations along with List of participants, MMRDA Academia, representatives of govemment Executive Summary of EA report. Minutes of the Meeting departmnents, NGOs and of project implementing agencies and the World _ Bank . Decehber 13, 2000 Office of Divisional Project Affected Households (PAHs), Public Notices in leading English List of participants, Engineer, Mankhurd NGOs and Marathi newspapers, Minutes of the Meeting, Drafl Updated EA report, Executive Photographs, Summary kept at PICs, Pamphlets, Non-technical Summary of EA report in English and Marath were distributed to PAHs through ______NGOs well in advance. December 14,2000 Yashwantrao Chavar General public, Civil Society, NGOs, Same as above List of participants, Centre oumalists Minutes of the Meeting, ______Photographs, ConsolidatedEA = X November 23, 2001 Mumbai Marathi General public and civil society, NGOs, Public Notices in English, Marathi List of participants, Patrakar Sangh, CST Representatives of the government and Hindi in leading newspapers, Minutes of the Meeting, Mumbai departments, local authorities, project Draft Consolidated EA report, Photographs, e-mail messages, implementation agencies, World Bank, Executive Summary in English letters written communications academia and the consultants in the and kept at PlCs in advance. received .nsport and environment field, Pamphlets in English, Hindi and MUTP approach was endorsed ouwnalists Marathi distributed amongst the but early implementation was general public and in the project emphasized affected areas through environmental and social NGOs. Public Notice and Executive Summary kept on MMRDA's web site well in advance. November 24, 2001 Goregaonkar English Pr-oject Affected Households (PAHs), Same as above List of participants, School, Goregaon (West) NGOs, Representatives of the project Minutes of the Meeting, Mumbai implementation agencies, World Bank, Photographs, ournalists, etc. Need for Commuter friendly ______platforms was emphasized November 30, 2001 Maharashtra Chamber General public, civil society, NGOs, Same as above. The hard and soft List of participants, of Commerce and Representatives of the government (CD) copies of the enire Minutes of the Meeting, Industries, Kalaghoda, departments, local authorites, project Consolidated EA report in English Photographs, Mumbai implementation agencies, World Bank, and the copies of Executive Need to provide attention to academia and the consultants in the Swmmary in English and Marathi pedestrian facility and safety transport and environment field, were distributed to general public was emphasized Jouralists, and NGOs on demand. _

- 95 - Additional Annex 13: Resettlement and Indigenous Peoples INDIA: Mumbai Urban Transport Project

Introduction

1. This annex describes the details of land acquisition and resettlement involved in this project It also includes the details of entitlements, involvement of NGOs, public consultations and information disclosure, composition of Independent Monitoring Panel (IMP), setting up Public Information centers, implementation arrangements, costs, income restoration mechanism and monitoring and evaluation arrangements. The process adopted in determining the applicability of OD 4.20 on Indigenous peoples is also described a the end of this annex.

Magnitude of Land Acquisition and Resettlement

2. The project involves large scale resettlement of about 19, 200 households (see details below) and the program is being implemented Metropolitan Region Development Authority (MMRDA) on behalf of all investment implementing agencies. MMRDA is supported in the implementation by local NGOs, Society for Promotion of Area Resources Centers (SPARC), National slum Dwellers Federation (NSDF) and the Slum Rehabilitation Society (SRS). The private land acquisition for the project is only about 59 hectares including 30 hectares of for Virar Car shed. The sub-project wise details are shown below.

No Sub-project No. of Households Private land to Affected be acquired (in ha) Roads and Traffic 1 ROB at Jogeshwari -South 901 20.11 2 ROB at Jogeshwari - North 514 3.06 3 ROB at Vikroli 173 Nil 4 Jogeshwari-Vikroli Link Road 890 Nil 5 Santacruz-Chembur Link Road 2171 1.10 6 Station Area Traffic Improvement Schemes 100* Nil Sub-total 4,749 24.27 Rail Component 8 5th Line between Mahim and Borivali 515 Nil 9 5th and 6th Lines between Kurla and Thane 2131 0.74 10 Borivali-Bhayendar-Virar additional pair of 501 34.06

lin es______1I Optimization of Suburbanization 11,332 Nil Sub-Total 14,479 34.80 Total 19,228 59.07

* provisional figures

3. Most of the affected persons are slum dwellers and squatters living in poor and unhealthy housing conditions and lack basic amenities. As a result of project intervention, the affected persons are expected to receive higher standards of altemative houses with improved basic amenities. To those who loose livelihood opportunities, alternative economic rehabilitation measures are designed to improve their income

- 96 - eaming capacities and thus improve their overall living standards. A potentially adverse social impact could have arisen from the need ;to resettle-relocate large numbers of people affected by rail and road infrastructure works - generally squatters on public land from lower income groups. It has been this inability to resettle-relocate low income groups that has deferred meaningful transport development in Mumbai for many years. Recognizing this issue, the MUTP incorporates policies as well as institutional frameworks to ensure equitable wesettlement and relocation of affected persons. Through this process, potential adverse social impact may in fact be turned into a positive social impact

Public Interest Litigation

4. A public Interest Litigation (I'lL) petition was filed in August, 1998 on the functioning of the railways and safety of the passenger was jeopardized on account of the existing squatter hutments close to the railway tracks which has an adverse impact on the safe and efficient functioning of the local railways in Mumbai. The petitioner had prayed for the order of the removal of encroachers along the railway tracks for smooth running of the local trains. The matter has been discussed in the Bombay High Court oni several occasions and the court had asked the government to provide a time bound plan for removing the encroachers along the safety zone of the railways tracks with or without resettlement. Accordingly, GoM had proposed two options to shift the squatters either to the already constructed tenements or to the transit houses with a view to shift them tc' the pemanent houses within a three year time frame. Subsequently, Mumbai Metropolitan Development Authority (the implementing agency for R&R competent of the project) purchased about 4,000 already constructed houses from Maharashtra Housing and Area Development Authority and constructed about 6,000 transit houses. This has helped MMRDA to shift all squatter families along the safety zone to either the permanent houses or transit houses. The court in his final hearing in June 2001 had concluded that all encroachers have been shifted out of the safety zone except few religious structures which will be shifted later and which require careful handling with out affecting the sentiments of the local people. Based on this information, the court concluded that the Indian Railways and GoM had complied with the court orders. Accordingly, the court has disposed of the petition.

Need for initial Implementation prior project approval

5. The initial implementation of Resettlement component was commenced prior to the consideration of the project by the Bank's Executive Directors for approval of the loan. This was to respond to the High Court's order as described above. As a result of this initial implementation 3,935 households (20 percent) have relocated in 48 buildings in four different locations. In addition 107 were also offered altenative shops to enable them to reestablish their petty shops. Another 6,125 (32 percent) who were shifted to the transit housing will eventually be shifted to permanent houses with in three years. So far Rs. 689.10 million (US$14.5 million) has been spent for purchase of ready made tenements, construction of transit houses and implementation support provided by the NGOs. The relocation of people along the safety zone (10 meters on either side of the rail b acks) has significantly contributed to the improvement to safety, quality on the rail systems and mininiized the opportunities for future encroachments. These improvements will have a positive impact on the six million population who uses the suburban brains in Mumbai for various purposes. Further, the Task leam commissioned a rapid impact assessment through independent consultants to assess the experience and results of initial implementation in terms of benefits, adverse impacts and difficulties experienced by the affected people. The findings of this study indicate that all eligible affected persons were provided with alternative houses and shops and none of the allottees have rented out the houses indicating the initial success of resettlement. Some of the positive aspects and benefits of initial resettlement indicated by the affected people include:

- 97 - > Improvement in the physical living conditions and better access to basic amenities; > Formation of cooperative societies for management of housing societies; > Security of permanent housing and relief from the harassment of police and criminals because of illegal encroachment in the previous place; > Elimination of accident risk due squatting along the railway tracks and free from noise pollution from running trains.

6. The study also suggested certain improvement for the remaining resettlement, which include:

> Early registration of cooperative societies and transfer of lump-sum amounts towards maintenance of buildings; > Improvement in maintenance of basic services and amenities in the transit housing; > Avoidance of shifting people to transit housing; and > developing transparent criteria for allotment of houses.

7. In addition to the rapid assessment, the client also initiated the process for commissioning the full length impact assessment of resettlement implementation to date. The findings of the rapid study together with the findings of the full length study will be used to undertake any remedial measures that may be required to address any outstanding issues or difficulties experienced by the people in the resettlement process. The findings will also provide valuable inputs for the remaining implementation of resettlement

R&R policy and Entitlements

8. The Government of Maharashtra (GoM) had appointed a task force in 1995 under the Chairmanship of a former Chief Secretary to the State of Maharashtra consisting members from the government, private sector, NGOs and civil society to prepare a policy framework for resettlement and rehabilitation of persons affected by the project. Based on the recommendations of the committee, GoM had issued a Government Resolution (GR) adopting the policy in March, 1997 which was later amended to incorporate certain changes suggested by the Bank to bring the policy in line with the Bank's OD 4.30 on involuntary resettlement. The modified version was reviewed and endorsed by the Bank in February, 2000. Subsequently, the GoM has brought out a Government Resolution (Prakalapa 1700/CR 31/Slum 2, dated December 12, 2000) signifying the adoption of the revised policy for the project. The Policy provides entitlements to relocate the affected persons in the multi-storied apartments with all basic amenities. The key entitlements to the affected persons include an apartment of 225 Sq. ft with all basic amenities free of cost, cash supplement or floor space equivalent to self occupied area (maximum of 70 sq. mt) for affected owners, lessees and tenants, allowances for increased travel distance to work places and loss of livelihood opportunities. Joint titles in the names of both husband and wife for houses allotted under this project will also help in establishing gender equality. Another feature of the approach of resettlement under this project is the adoption of a two stage resettlement where in the affected persons would be first shifted to the temporary accommodation and subsequently to permanent housing mainly to respond to the tight time schedule set by the High court to relocate those residing on the safety zone of the railway tracks. The Bank endorsed this approach, provided the permanent site is available before people are shifted, to prevent temporary accommodation from becoming pernanent. This will allow the implementing agencies to start the civil works without waiting to complete the construction of houses on permanent site, while also enabling affected persons to immediately get better access to basic amenities such as water taps, electricity connections, toilets, common community spaces, etc. 9. Because of difficulties experienced so far in administering the payment of cash allowances to compensate for increased travel distance to work places and loss of permanent source of livelihood, the

- 98 - client and NGO are proposing to convert these amounts (@ Rs. 1000 per household) into revolving community fund which will be used for offering credits to the needy PAPs in increasing the income sources. This will be done on "No objection basis" from the respective cooperative housing societies.

Implementation Arrangements

10. A separate Project Management Unit (PMU) was created in MMRDA to oversee the implementation of R&R component. The PMU is headed by a senior level Government officer in the rank of Secretary and is assisted by five joint Project Directors responsible for Housing and procurement, Finance, Social Development/Land Acquisition and Environment and Extemal Relations. In addition two project Managers, one each for transport monitoring and resettlement will also be part of PMU. The PMU staff who will be working in partnership with NGOs will be supplemented by consultants to provide support for the preparation of housing lay outs and designs and supervision of construction activities of housing.

Land Acquisition

11. The acquisition of private land is limited to a small area of 59 hectares for civil works. In addition 47 hectares will be required for resettlement sites. In order to avoid acquisition of private lands using eminent domain, the GoM will use Transfer of Development Rights (TDR) to acquire lands required for both civil works and resettlement to the extent possible to enable the land owners retain the development rights over their lands. The TDR concept was introduced in Mumbai in 1991 as an additional method to acquire lands required for infrastructure development. The TDR involve a negotiated arrangement under which a private land owner transfers land for a public purpose to the government in exchange for development rights elsewhere on one-to-one basis (TDRs will be reckoned at the Floor space Index (FSI) of 1). These TDRs are salable in the rnarket and can be used in areas specified in Development Control Regulations. In addition to the TDR given for land, TDR equivalent to the floor space constructed for slum dwellers and handed over free of cost can also be granted. Such floor space is restricted to FSI of 2.5 and consequently TDR available for constructed dwellings units is also restricted to 2.5.

Resettlement Action Plan

12 MMRDA has prepared a RAP summarizing the overall magnitude of land acquisition and other adverse impacts associated with the project. This RAP contains the details on policy provisions and legal framework, magnitude of land acquisition and displacement, findings of socioeconomic surveys and baseline characteristics, organizational responsibilities, the process adopted under two stage resettlement, generic time table for construction of transit and permanent housing, and consolidated costs and budgets. The RAP also identified criteria for judging the completion of R&R under each of the project components and process monitoring indicators for physical and financial progress. The RAP also describes the environmental management Plan. Following this, MMRDA with the assistance of the NGOs will prepare Implementation Plans for each of the project components. These will include component specific details particularly on the construction of houses and their designs, payment of compensation and allowances, specific time schedules, costs, etc. The draft was discussed with various stakeholders and the final version reflects the suggestions and views of implanting agencies, NGOs, PAPs and other stakeholders. The Resettlement Implementation Plans (RIPs) were also prepared for four sub-proejcts to be implemented during the first year of the project and the time table has been drawn for the preparation of the rest of the RIPs.

99 - Income Restoration Mechanisms NGOs involvement

13. SPARC is preparing the communities for operation and maintenance of the buildings. The PAPs are also being organized and empowered in negotiating with the government and local authorities on getting permission for various civic requirements in their localities. SPARC is looking alternative ways of involving the PAPs in generating employmnent opportunities through meeting the daily needs of the residents such as providing vegetables, distribution milk and selling other essential items. The communities are also trained to have basic understanding of construction techniques to deal with quality of construction. The PAPs are involved with the construction of transit housing through various committees such as purchase, labor, finance and municipal. The members of these committees are responsible for various activities related to purchase of materials, construction supervision, obtaining municipal permission and managing the finances. Some PAPs also work as wage laborers in the construction of transit housing.

14. The borrower and partner NGOs have a strong participatory process in place which has already resettled about 4,000 families to permanent and another 6,000 to the transit housing. There is a good track record of successful community mobilization and follow-up at interim and final housing sites through participation of NGOs and the slum dwellers themselves. Because of High Court intervention and railway safety policy, the need to implement R&R in a time bound manner is very urgent, and actions already taken have been imnplemented under agreed procedures in the expectation of retroactive financing from the Bank.

Public consultations and Information Disclosure

15. Involvement of PAPs and other stakeholders at every stage of the project is one of the key feature of the project. Consultations with PAPs are an on going process in this project. To begin with the R&R policy preparation, a committee consisting of members from government, private sector, NGOs and civil society was formed. The NGOs and NSDF were closely associated with carrying out baseline surveys and preparation of implementation plans. MMRDA has also established a Public Information Center (PIC) at MMRDA and field centers have also been opened in the areas of resettlement sites. All documents such as RAP, baseline surveys, list of affected persons, Resettlement policy, brochure of slated features of the project, Environmental Management Plans etc. are placed in the PIC for the benefit of affected persons and general public. The executive summary of the RAP and Consolidated EA is also available in a local language. MMRDA also put up the executive summary of the RAP and Consolidated EA on their web site. The RAP was also released to the Bank's info shop.

Independent Monitoring Panel

16. An Independent Monitoring Panel (IMP) was established through a Government Resolution (No. MUTP-1020/1416/CR-2218/UD-10, dated November 28, 2000) at the start of the project made up of eminent citizens from Mumbai in the fields of law, administration, journalism and the environment. The main responsibility of IMP would be to ensure that the Bank's policies of social and environmental safeguard policies are safeguarded, monitor the implementation progress of resettlement and environmental management programs. The IMP would operate and interact at the level of steering committee and will be funded from the budget of PMU.

- 100- 17. Loss of income and livelihood opportunities is not a major issue in this project since the affected persons will be relocated within a close proximity of the existing locations, thus enabling them to retain the site related opportunities. All ihose loosing petty shops and business units will be offered alternative shops to enable them to re-establish their shops. Further, NGOs will assist the PAPs to set up community development fund linked with community saving program to access credits for starting the income generating opportunities. Those who loose livelihood opportunities will be offered lump sum compensation equivalent to one year income as a rehabilitation assistance. In addition suitable training programs will be offered for upgrading their skill s and information about available opportunities for employment will be provided.

Monitoring and Evaluation Arrangements

18. The objective of monitoring is to provide management with an effective tool for assessing the progress, identifying the potential difficulties and constrains and provides an early warning for necessary alterations. The PMU and NGO will prepare quarterly progress report on physical and financial aspects of implementation. These reports will be reviewed by the Project Coordination Committee and IMP on quarterly basis to make prompt decision to overcome the difficulties and provide guidance for the timely implementation of the plan. The physical and financial indicators to be monitored were identified and described in the RAP. In order lo assess the impact of resettlement program, an independent agency will undertake impact evaluation to assess the outcome of resettlement implementation in terms of changes or improvements in housing conditions, access to basic amenities, changes in income and other socioeconomic characteristics, organizational capacity, etc.

Costs and Budget

19. The resettlement component under the project would include construction of transit and permanent housing, land acquisition costs and payment of cash compensation for lost assets, allowances (increased travel, loss of livelihood and shifting), technical assistance (consultancies, training, incremental staff costs, preparation for subsequent project, etc.). It is estimated that including contingencies the resettlement cost amounts to approximately Rs. 4,678 million or US $97 million which is about 10 percent of the total cost of the project.The IDA credit of US $79 million will be available for implementing the resettlement component.

Applicability of OD 4.20 Indigenous People

20. In order to determine the requirement of preparation of Indigenous Peoples Development Plan (IPDP), the task teatm has prepared a separate guidance note describing whether the affected tibal population possess the indigenous characteristics or not as described in the Bank's OD 4.20. Based on the note, the task team concludes that the proportion of tribal people affected by the project is very small number (1.5 percent) and they do not live as groups and are not segregated by their ethnicity and no group based impacts are expected due to project activities. The note confirms that the tribals in Mumbai do not exhibit any of the characteristics as defined in OD 4.20 and they are primarily concerned with resettlement and secured titles to the houses ralher than impacts to their culture and group based activities. The socioeconomic characteristics of the affected tribal in terms of languages spoken, areas of house, income levels and literacy levels for affected tribal people compare favorably with the rest of the population reflecting that the tribal people are fully integrated with urban way of life in Mumbai..

21. The guidance note was discussed in a review meeting by the SASES safeguard compliance team, QACU and legal. Based on the re-view meeting, it was concluded that treating tribal population separately

- 101 - from non-tribal population is undesirable. A separate IPDP could not be implemented apart from the RAPs already planned, without segregating people along ethnic lines. The tribal people affected by the project have none of the characteristics which suggest they are indigenous people under OD 4.20. Therefore, it was concluded that OD 4.20 does not apply to the project.

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IN Report No.: 24004 Type: PAD