Report and Recommendation of the President to the Board of Directors Project Number: 42486-018 September 2020 Proposed Loan for Additional Financing India: Madhya Pradesh Urban Services Improvement 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 14 August 2020) Currency unit – Indian rupee/s (₹) ₹1.00 = $0.013 $1.00 = ₹74.86 ABBREVIATIONS ADB – Asian Development Bank BCC – behavior change communication COVID-19 – coronavirus disease DBO – design–build–operate GOMP – Government of Madhya Pradesh GESI – gender equality and social inclusion GRC – grievance redress committee IEE – initial environmental examination MPUDC – Madhya Pradesh Urban Development Company Limited NRW – nonrevenue water O&M – operation and maintenance PAM – project administration manual PMU – project management unit SDG – Sustainable Development Goal UDHD – Urban Development and Housing Department ULB – urban local body NOTES (i) The fiscal year (FY) of the Government of India and its agencies ends on 31 March. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2020 ends on 31 March 2020. (ii) In this report, “$” refers to United States dollars. Vice-President Shixin Chen, Operations 1 Director General Kenichi Yokoyama, South Asia Department (SARD) Director Norio Saito, Urban Development and Water Division (SAUW), SARD Team leaders Laxmi Sharma, Urban Development Specialist, SAUW, SARD Vivek Vishal, Senior Project Officer, India Resident Mission, SARD Team members Mikael Andersson, Financial Management Specialist, Portfolio, Results and Quality Control Unit, Office of the Director General, SARD Saswati Belliappa, Safeguards Specialist, SAUW, SARD Dharmesh Mahendra Dawda, Procurement Specialist, Procurement, Portfolio and Financial Management Department Donna Marie Melo, Operations Assistant, SAUW, SARD Douglas Alan Perkins, Principal Counsel, Office of the General Counsel Santosh Pokharel, Urban Economist, SAUW, SARD Krizelda Marie Songco, Project Analyst, SAUW, SARD Alexandra Vogl, Senior Planning and Policy Specialist, Strategy, Policy, and Partnerships Department Peer reviewer Kiyoshi Nakamitsu, Principal Urban Development Specialist, Urban Development and Water Division, Central and West Asia Department 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. Impacts and Outcome 4 C. Outputs 4 D. Investment and Financing Plans 5 E. Implementation Arrangements 7 III. DUE DILIGENCE 7 A. Technical 7 B. Economic and Financial 8 C. Sustainability 9 D. Governance 9 E. Poverty and Social 10 F. Safeguards 10 G. Risks and Mitigating Measures 11 IV. ASSURANCES AND CONDITIONS 12 V. RECOMMENDATION 12 APPENDIXES 1. Revised Design and Monitoring Framework 13 2. List of Linked Documents 18 Project Classification Information Status: Complete PROJECT AT A GLANCE 1. Basic Data Project Number: 42486-018 Project Name Madhya Pradesh Urban Services Department/Division SARD/SAUW Improvement Project - Additional Financing Country India Executing Agency Urban Development and Borrower Government of India Housing Department Country Economic https://www.adb.org/Documents/LinkedDocs/ Indicators ?id=42486-018-CEI Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/ ?id=42486-018-PortAtaGlance 2. Sector Subsector(s) ADB Financing ($ million) Water and other urban Urban policy, institutional and capacity development 10.00 infrastructure and services Urban sanitation 60.00 Urban water supply 200.00 Total 270.00 3. Operational Priorities Climate Change Information Addressing remaining poverty and reducing inequalities GHG reductions (tons per annum) 2,892 Accelerating progress in gender equality Climate Change impact on the High Tackling climate change, building climate and disaster resilience, and Project enhancing environmental sustainability Making cities more livable ADB Financing Strengthening governance and institutional capacity Adaptation ($ million) 23.60 Mitigation ($ million) 10.10 Cofinancing Adaptation ($ million) 0.00 Mitigation ($ million) 0.00 Sustainable Development Goals Gender Equity and Mainstreaming SDG 5.5 Effective gender mainstreaming (EGM) SDG 6.1, 6.2 SDG 11.a Poverty Targeting SDG 13.a General Intervention on Poverty 4. Risk Categorization: Complex 5. Safeguard Categorization Environment: B Involuntary Resettlement: B Indigenous Peoples: B 6. Financing Modality and Sources Amount ($ million) ADB 270.00 Sovereign Project (Regular Loan): Ordinary capital resources 270.00 Cofinancing 0.00 None 0.00 Counterpart 115.70 Government 115.70 Total 385.70 Currency of ADB Financing: US Dollar Source: Asian Development Bank This document must only be generated in eOps. 03062020080043343819 Generated Date: 28-Aug-2020 19:27:53 PM INDIA MADHYA PRADESH Madhya Pradesh Urban Services Improvement Project URBAN SERVICES IMPROVEMENT - Water Supply ( towns), Sewerage ( towns ) Madhya Pradesh Urban Services Improvement Project (additional financing) INVESTMENT PROJECT Phuphkalan Gormi (additional financing) - Water Supply ( towns), Sewerage ( towns ) Bhind Morena State Capital Mehgaon Joura Akoda District Headquarters Gohad Mihona Jhundpura Kailaras North–South Corridor Gwalior Lahar Alampur East–West Corridor Vijaypur Bilaua National Highway Antari Daboh CHAMBAL Pichhore Project Implementation Unit Boundary UTTAR Sheopur Bairad Datia PRADESH District Boundary GWALIOR State or Union Territory Boundary Badoda Karera Shivpuri Boundaries are not necessarily authoritative. Jeron RAJASTHAN Harpalpur Pichhore Kalsa Barigarh Gadimalhara Chandla Badarwas Lidhora khas Kari Maharajpur Chhatarpur Jatara Rajnagar (C) Ajaigarh Isagarh Khargapur Satai Birsinghpur Tikamgarh Khajuraho (C) Kothi Sarwaniya Maharaj CHHATARPUR Panna Mangawan Nayagaon Shadora Badagaon Jaitwara Athana Guna Ashok Nagar Bada Malhera Satna Mauganj Kukdeshwar Kotar Rewa Neemach Raghogarh Devendranagar REWA Ghuwara Bijawar Aron Sidhi Maihar (C) Amarpatan Buxwaha Pawai Rampur Naikin Singrauli Mandsaur Rajgarh Hatta New Ramnagar Khand Nagri Vijay Raghavgarh Susner Sagar Shahpur Patera Pachore Damoh Agar Rahatgarh Katni Barhi Makronia Boda SAGAR Chandia Kymore Dhamnod Nagda Kurawar Vidisha Makdon Sanchi (C) M A D H Y A Majholi Umaria Ratlam Shajapur CHHATTISGARH UJJAIN P R A D E S H Tendukheda Sihora Bhopal Katangi Polaykalan Pankhedi Sehore Shahdol Ujjain Raisen Panagar Petlawad Patan Goutampura Jawar Jabalpur Pasan GUJARAT Dewas Anuppur Meghnagar Kothari Saikheda (C) Narsinghpur Depalpur Bhedaghat Barela Niwas Dindori Jaithari Hatpiplya BHOPAL Jhabua Betma Indore Salichauka Dhar Bankhedi Chichali Bagli Bhavra Khategaon Hoshangabad JABALPUR SHAHDOL Sohagpur Mandla INDORE Mandav Karahi Kantaphod Loharda Alirajpur Panlya Khurd Nemawar Dhamnod (C) Bamhanibanjar Badwaha Harda Sarni Sanawad Anjad CHHINDWARA Kasrawad Amla Seoni Badwani Chhanera Chhindwara Baihar Rajpur Betul N Khandwa Khargone Betul-Bazar Malajkhand Pansemal Chand Balaghat KHARGAON HOSHANGABAD 0 50 100 Nepanagar Burhanpur Kilometers (km) Shahpur This map was produced by the cartography unit of the Asian Development Bank. First Proof: 23 April 2020 MAHARASHTRA The boundaries, colors, denominations, and any other information shown on Cleared for BD circulation: 02 July 2020 this map do not imply, on the part of the Asian Development Bank, any judgment onP the legalR statusO of anyO territoryF, or any endorsement ON or acceptanceLY of such boundaries, colors, denominations, or information. I. THE PROPOSAL 1. I submit for your approval the following report and recommendation on a proposed loan to India for the additional financing of the Madhya Pradesh Urban Services Improvement Project. 2. The current project1 will improve urban service delivery in Madhya Pradesh. The additional financing (the project) will scale up the scope of the current project, which is performing well, by supporting (i) an additional 64 urban local bodies (ULBs) in Madhya Pradesh to expand coverage of improved water supply services; (ii) integrated storm water and sewage management in six additional ULBs; (iii) pilot of integrated urban development approach in two ULBs; and (iv) institutional strengthening and capacity building of Urban Development and Housing Department (UDHD), Madhya Pradesh Urban Development Company Limited (MPUDC), and project ULBs for ensuring sustainable urban services. II. THE PROJECT A. Rationale 3. Sector and institutional context. With a total population of 72.6 million, Madhya Pradesh is the fifth most populated state and the eighth most urbanized state in India. The total urban population of 20.1 million (28% of the total population) resides in 378 ULBs in Madhya Pradesh.2 Urbanization is expected to increase to 35% by 2026, which would exacerbate the already deficient urban infrastructure and poor basic services. The Government of Madhya Pradesh (GOMP) sought the support of the Asian Development Bank (ADB) to improve water supply services in 128 ULBs in Madhya Pradesh which were not supported by any other program and had limited financial resources and technical capability (footnote