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Tamil Nadu Industrial Connectivity Project Report and Recommendation of the President to the Board of Directors Project Number: 51337-001 March 2021 Proposed Loan India: Tamil Nadu Industrial Connectivity Project Distribution of this document is restricted until it has been approved by the Board of Directors. Following such approval, ADB will disclose the document to the public in accordance with ADB's Access to Information Policy. CURRENCY EQUIVALENTS (as of 11 February 2021) Currency unit – Indian rupee/s (₹) ₹1.00 = $0.01372 $1.00 = ₹72.8800 ABBREVIATIONS ADB – Asian Development Bank CDP – comprehensive development plan CKIC – Chennai–Kanyakumari Industrial Corridor COVID-19 – coronavirus disease ECEC – East Coast Economic Corridor EPC – engineering, procurement, and construction FIU – field implementation unit GESI – gender equality and social inclusion HRS – Highway Research Station IEE – initial environmental examination IPP – indigenous peoples plan km – kilometer LARR – land acquisition, resettlement, and rehabilitation PAM – project administration manual PBM – performance-based maintenance PIU – project implementation unit PPP – public–private partnership TNHD – Tamil Nadu Highways and Minor Ports Department NOTES (i) The fiscal year (FY) of the Government of India and its agencies ends on 31 March. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2021 ends on 31 March 2021. (ii) In this report, “$” refers to United States dollars. Vice-President Shixin Chen, Operations 1 Director General Kenichi Yokoyama, South Asia Department (SARD) Director Ravi Peri, Transport and Communications Division (SATC), SARD Team leader Kanzo Nakai, Principal Transport Specialist, SATC, SARD Team members Arlene Ayson, Senior Operations Assistant, SATC, SARD Sheila Anne David-Castro, Associate Project Analyst, SATC, SARD Sajid Khan, Financial Management Specialist, Portfolio, Results and Quality Control Unit, SARD Wilson Leung, Project Specialist, SATC, SARD Vergel Medina, Senior Social Development Specialist, SATC, SARD Maria Iris Millendez-Bombay, Safeguards Officer (Environment), SATC, SARD Vankina Sri Rekha, Principal Counsel, Office of the General Counsela Dinesh Shiwakoti, Senior Procurement Specialist, Procurement Division 1, Procurement, Portfolio and Financial Management Department Mihir Sorti, Senior Project Officer (Transport), India Resident Mission, SARD Nanyan Zhou, Transport Specialist, SATC, SARD Peer reviewers Oyunchimeg Erdene, Principal Transport Specialist, Transport and Communications Division, Central and West Asia Department (CWRD) Narendra Singru, Country Director, Afghanistan Resident Mission, CWRD a Outposted to the India Resident Mission. In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area. CONTENTS Page PROJECT AT A GLANCE MAP I. THE PROPOSAL 1 II. THE PROJECT 1 A. Rationale 1 B. Project Description 4 C. Value Added by ADB 5 D. Summary Cost Estimates and Financing Plan 6 E. Implementation Arrangements 8 III. DUE DILIGENCE 9 A. Technical 9 B. Economic and Financial Viability 9 C. Sustainability 9 D. Governance 10 E. Poverty, Social, and Gender 10 F. Safeguards 11 G. Summary of Risk Assessment and Risk Management Plan 13 IV. ASSURANCES 13 V. RECOMMENDATION 13 APPENDIXES 1. Design and Monitoring Framework 14 2. List of Linked Documents 17 Project Classification Information Status: Complete PROJECT AT A GLANCE 1. Basic Data Project Number: 51337-001 Project Name Tamil Nadu Industrial Connectivity Project Department/Division SARD/SATC Country India Executing Agency Highways Borrower Government of India Department-Tamil Nadu Country Economic https://www.adb.org/Documents/LinkedDocs/ Indicators ?id=51337-001-CEI Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/ ?id=51337-001-PortAtaGlance 2. Sector Subsector(s) ADB Financing ($ million) Transport Road transport (non-urban) 484.00 Total 484.00 3. Operational Priorities Climate Change Information Addressing remaining poverty and reducing inequalities GHG reductions (tons per annum) 0.000 Accelerating progress in gender equality Climate Change impact on the High Tackling climate change, building climate and disaster resilience, and Project enhancing environmental sustainability Promoting rural development and food security ADB Financing Strengthening governance and institutional capacity Adaptation ($ million) 42.50 Fostering regional cooperation and integration Mitigation ($ million) 0.00 Cofinancing Adaptation ($ million) 0.00 Mitigation ($ million) 0.00 Sustainable Development Goals Gender Equity and Mainstreaming SDG 9.4 Effective gender mainstreaming (EGM) SDG 13.a Poverty Targeting General Intervention on Poverty 4. Risk Categorization: Complex . 5. Safeguard Categorization Environment: B Involuntary Resettlement: A Indigenous Peoples: B . 6. Financing Modality and Sources Amount ($ million) ADB 484.00 Sovereign Project (Regular Loan): Ordinary capital resources 484.00 Cofinancing 0.00 None 0.00 Counterpart 420.60 Government 420.60 Total 904.60 Currency of ADB Financing: US Dollar Source: Asian Development Bank This document must only be generated in eOps. 07122020103106682753 Generated Date: 03-Mar-2021 15:29:20 PM °′E °′E INDIA TAMIL NADU INDUSTRIAL CONNECTIVITY PROJECT A N D H R A P R A D E S H Chengalpattu–Kanchipuram Road (SH-) . km Kanchipuram–Thiruthani (SH-) . km Thiruvallur Cheyyur (ECR)–Polur (SH) including ECR link . km °′N KARNATAKA Chennai °′N Vellore Kanchipuram Krishnagiri Omalur–Sankakiri–Tiruchengode–Paramathy (SH) . km Tiruvannamalai Dharmapuri Cuddalor–Madapattu Junction (SH) Virudhachalam–Ulundurpet (SH) . km Tiruchengode–Erode (SH) . km Viluppuram . km Puducherry Salem Cuddalore Thuraiyur–Perambalur (SH) . km Kumbakonam–Sirkazhi (SH) Udagamandalam . km Erode Perambalur Namakkal Mayiladuthurai–Thiruvarur (SH) Coimbatore Ariyalur . km Tiruppur TAMIL NADU Karaikkal (Puducherry) Karur Thanjavur Tiruchirappalli Thiruvarur Nagappattinam Thanjavur–Mannargudi (SH) . km Dindigul Pudukkottai Mohanur–Namakkai–Senthamangalam (SH) Kumbakonam–Mannargudi (SH) . km Theni . km Madurai Sivaganga TTRR Melur–Karakikudi (SH) R Virudhunagar TTR . km Ramanathapuram KERALA Project Road R ) TTR CR Trunk Road (E °′N °’N TTRR (ECR) Main Road Port Tirunelveli State Capital Thoothukudi District Headquarter City/Town Palayamkottai–Ambasamudram (SH-) District Boundary . km State or Union Territory Boundary Nagercoil ECR East Coast Road Tiruchendur–Palayamkottai (SH-) km . km Kilometer Kanyakumari SH State Highway N TR Trunk Road Boundaries are not necessarily authoritative. This map was produced by the cartography unit of the Asian Development Bank. 0 25 50 75 100 The boundaries, colors, denominations, and any other information shown on this map do not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, Kilometers colors, denominations, or information. °′E °′E 201027 ABV I. THE PROPOSAL 1. I submit for your approval the following report and recommendation on a proposed loan to India for the Tamil Nadu Industrial Connectivity Project. 2. The project will upgrade and maintain about 590 kilometers (km) of 16 state highways to (i) enhance transport connectivity and facilitate industrial development in line with the regional economic corridor development plan for the Chennai–Kanyakumari Industrial Corridor (CKIC), and (ii) improve the road network's sustainability through performance-based maintenance (PBM).1 The project will also include initiatives to build institutional capacity in the Tamil Nadu Highways and Minor Ports Department (TNHD), focusing on its knowledge and research function, road safety improvement, and sector planning capacity. II. THE PROJECT A. Rationale 3. State context. Tamil Nadu is the southernmost state of India, stretched along the Bay of Bengal, and borders the states of, Andhra Pradesh, Karnataka, and Kerala. With an area of 130,000 square km, it is India’s 10th largest state. The western and northwestern parts of Tamil Nadu are hilly, featuring the Western and Eastern Ghats, and are rich in vegetation. The central and eastern parts are generally fertile plains, but arid in some central and southern districts. The total population in 2016 was estimated at about 78 million. 2 Major cities such as Chennai, Coimbatore, Erode, Madurai, Salem, Tiruchirappalli, Tirunelveli, and Tiruppur are in the center of the plains or near the Eastern Ghats in the northwest. 4. Tamil Nadu has the second-largest state economy in India after Maharashtra.3 With robust economic growth averaging about 8.5% since fiscal year (FY) 2006, it recorded a steady decline in poverty from 28.9% in 2004–2005 to 11.2% in 2011–2012, translating into an average annual poverty reduction rate of 12.7%, well above the national average of 7.3% for the same period. Its poverty levels are lower than those of most other states in India. 4 While Tamil Nadu has traditionally been agrarian, agriculture now contributes less than 10% of the gross state domestic product. Instead, manufacturing and some service industries such as finance and real estate are major drivers of growth. Tamil Nadu ranks first among Indian states in the number of factories and industrial workers, and has one of India’s most diversified and modern industrial bases,
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