TA 7114-IND NATIONAL CAPITAL REGION PLANNING BOARD PROJECT Medium Term Strategic Evolution and Borrowers Assessment MAIN REPORT April 2010 Asian Development Bank Submitted To : National Capital Region Planning Board Prepared By : Sheladia Associates Inc, USA Final Report : VOLUME - I TA 7114-IND National Capital Region Planning Board Final Report Project TABLE OF CONTENTS VOLUME 1 : MAIN REPORT I. RATIONALE AND CONTEXT................................................................................................................................................1 Main Report A. Background and Context....................................................................................................................................................... 1 – 1. Institutional Framework and Objectives........................................................................................ 1 2. Planning: Performance and Prospects......................................................................................... 1 B. Financing: Performance and Prospects ................................................................................................................................ 4 1. Typology of Infrastructure and Debt Demands............................................................................. 6 Volume 1 C. Debt Demand: Long list and Short list Analysis..................................................................................................................... 8 D. Sources of Supply and Institutional Positioning..................................................................................................................... 9 1. NCRPB Medium Term Objectives - debt and grant fund ........................................................... 12 E. The Project .......................................................................................................................................................................... 14 F. Pre-Project Actions.............................................................................................................................................................. 14 G. Organization of the Report .................................................................................................................................................. 15 II. AN OVERVIEW OF THE ECONOMY AND STATE FINANCES .........................................................................................16 A. Background ......................................................................................................................................................................... 16 1. India: The Macroeconomic Situation .......................................................................................... 17 2. Rapid Urbanization ..................................................................................................................... 18 3. Urban Infrastructure.................................................................................................................... 19 4. National Capital Territory (NCT) – Delhi: Rapid Growth and Allied Problems ........................... 21 5. Economic Growth of NCT Delhi.................................................................................................. 22 6. NCT Delhi – The Problem of Migration....................................................................................... 23 7. Transport .................................................................................................................................... 25 8. Power.......................................................................................................................................... 26 9. Solid Waste Management .......................................................................................................... 26 10. Water Supply .............................................................................................................................. 27 B. The National Capital Region (NCR): Way Forward for Balanced Regional Development .................................................. 27 1. Regional Plan 2021 .................................................................................................................... 30 2. Increasing Investments in NCR .................................................................................................. 30 3. High level of Industrialization...................................................................................................... 31 C. Haryana, Rajasthan and Uttar Pradesh – An overview....................................................................................................... 32 1. State Domestic Product.............................................................................................................. 32 2. Structure of the Economies ........................................................................................................ 34 3. Investments in the NCR States .................................................................................................. 36 4. Social Infrastructure.................................................................................................................... 37 5. Physical Infrastructure ................................................................................................................ 38 D. Fiscal Management of the NCR States ............................................................................................................................... 41 1. Revenue and Capital Receipts of the NCR Region.................................................................... 42 2. FRBM Targets and Achievements.............................................................................................. 44 3. Debt Position of the NCR States ................................................................................................ 47 III. POSITIONING NCRPB AS A FINANCIAL INSTITUTION...................................................................................................54 A. Objectives............................................................................................................................................................................ 54 B. NCRPB’s Current Status: Legal Framework, Business Model and Outcomes.................................................................... 54 1. Legal Framework ........................................................................................................................ 54 2. Business Model and Project Outcomes...................................................................................... 55 3. Current Business Model: Capital and Pricing............................................................................. 56 4. Current Business Model: Security Mechanisms......................................................................... 57 5. Current Business Model and Organization:................................................................................ 58 6. NCRPB’s financing: Lending Terms and Procedures ................................................................ 58 C. Strategic Options................................................................................................................................................................. 59 1. Option 1: Normative Planning and Demand Driven Financing................................................... 59 2. Option 2: Strategic Planner and Financier of Relevance ........................................................... 59 3. Option 3 – Planning and Full Fledged Financial Institution ........................................................ 60 Sheladia Associates, Inc. USA i TA 7114-IND National Capital Region Planning Board Final Report Project 4. Financial Evaluation of Suggested Options................................................................................ 61 D. Financial Intermediation from the Regions Perspective ...................................................................................................... 66 IV. INSTITUTIONAL ASSESSMENT AND OPTIONS TO ENHANCE CAPACITIES...............................................................71 A. Background and Motivation................................................................................................................................................. 71 1. IA Institutional Categories and NCRPB’s Materiality.................................................................. 71 2. Policy Frameworks ..................................................................................................................... 72 Main Report 3. Capacity...................................................................................................................................... 73 – B. Assessment of Financial Management Systems:................................................................................................................ 74 C. e-Governance Assessment in Implementing Agencies (IAs): ............................................................................................. 87 1. An Overview and Best Practices ................................................................................................ 87 2. General Observations................................................................................................................. 90 Volume 1 D. Procurement:......................................................................................................................................................................