ADB will help the Government of India develop and improve the country’s cities through a US$2 million technical assistance grant.

The grant will support the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a national fund created to encourage sustainable urban development in the country, which is expected to invest about $11 billion equivalent in developing infrastructure in 63 of the largest cities in India, over the next seven years.

With more than 285 million people, or more than one quarter of the population, living in cities in India, the country has the world’s second largest urban population. Given current trends in population growth and migration, India’s urban population is estimated to reach 575 million by 2030.

India’s cities, however, are characterized by widespread poverty, poor urban infrastructure, and environmental degradation. Less than 60% of houses in the cities have sanitation facilities, and less than half have tap water on their premises. About 40 million people are also estimated to live in slums.

“Poor urban development and management is not only undermining India’s ability to deliver a decent quality of life to its citizens, it is also constraining potential local and national economic growth,” says Nayana Mawilmada, an ADB Urban Development Specialist. “The need for strong focus and accelerated investment in urban development is clear.”

The project will help ensure the effective management and disbursement of JNNURM funds by providing consulting support through a project cell within the JNNURM project directorate at the Ministry of Urban Development (MUD); the government agency spearheading the initiative.

The project will also help the MUD refine the guidelines and processes for project preparation, appraisal, and evaluation. At the same time, it will help city and state governments meet MUD’s requirements for accessing JNNURM funds. Systems and procedures to monitor the progress of projects and activities will also be established.

The Government will contribute $500,000 in the form of counterpart staff and office facilities, to meet the project’s total cost of $2.5 million. MUD is the executing agency for the project, which will be carried out over the next three years.

ADB will provide up to US$300 million to help meet investment needs to strengthen and expand the power sector in Uttaranchal, India.

The amount will be in the form of an innovative new seven-year financing facility, from which individual loans will be taken out for specific projects under the government of Uttaranchal’s comprehensive power sector roadmap.

Uttaranchal, one of India’s poorest states, has underdeveloped hydropower potential, estimated at 20,000 megawatts. Harnessing this capacity will meet the state’s needs for clean and efficient energy and allow it to export power to surrounding states, generating funds to support investment in rural areas and other productive sectors.

To realize its potential, the state’s energy sector requires about $12 billion over the next 12 years. About $5 billion would be needed over the next six years to fund projects to increase power generation and improve transmission and distribution, as well as for policy reform and efforts to improve financial management.

“While ADB’s support represents a relatively small share of the total funding needs, ADB’s presence as a partner brings down the total cost of funds and helps attract other long-term financiers to the sector,” says Dan Millison, an ADB Senior Energy Specialist.

ADB will finance part of the investment program from 2006 to 2012, covering the construction of small hydropower plants, expansion of the transmission system, and support to enable government agencies to carry out the program’s activities cost-effectively.

The investments to be supported by ADB will increase power supplies significantly, with enough surplus to supply power to 12 million residential customers. “The resulting expansion will improve electricity service and reliability, ultimately benefiting the customers,” Millison adds.

ADB’s financing will come from its ordinary capital resources, with currency and interest rate charges to be determined at the time individual loans are taken out. The Uttaranchal Energy Department will serve as the program’s executing agency.

ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 64 members – 46 from the region.  In 2005, it approved loans and technical assistance, totalling $5.8 billion and $198.8 million, respectively.