Technical Assistance Report

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

Project Number: 38260 October 2005

Technical Assistance India: Preparing the North Eastern Region Urban Development (Phase II) Project (Cofinanced by the Government of the United Kingdom and the Cooperation Fund for the Water Sector)

CURRENCY EQUIVALENTS (as of 18 October 2005)

Currency Unit – rupee/s (Re/Rs) Re1.00 = $0.022

$1.00 = Rs44.87

ABBREVIATIONS

ADB – Asian Development Bank EIA – environmental impact assessment HCR – head count ratio HIV/AIDS – human immunodeficiency virus/acquired immune deficiency

syndrome IEE – initial environmental examination MoDNER – Ministry of Development of North Eastern Region NE – North Eastern NGO – nongovernment organization O&M – operation and maintenance SCS – special category state in the Indian Union TA – technical assistance UDD – Urban Development Department ULB – urban local body

TECHNICAL ASSISTANCE CLASSIFICATION

Targeting Classification – General intervention Sector – Multisector (transportation and communication, water supply

and sanitation, and waste management) Subsectors – Water supply and sanitation, waste management, roads and

highways Theme – Sustainable economic growth and inclusive social development Subtheme – Developing urban areas

NOTE

(i) The fiscal year of the Government ends on 31 March.

(ii) In this report, “$” refers to US dollars. Vice President L. Jin, Operations 1 Director General K. Senga, Director General, South Asia Department Director H. Kim, Director, Social Sectors Division, South Asia Department Team leader J. Kongoasa, Financial Specialist, South Asia Department

I. INTRODUCTION

1. The Asian Development Bank (ADB) Country Strategy and Program (CSP) Update (2005–2007): India, approved by ADB's Board of Directors on 28 September 2004, included support for preparing the North Eastern Region Urban Development (Phase II) Project. The Government of India requested ADB for project preparatory technical assistance (TA)1 to extend the coverage of the earlier initiative of the recently approved project preparatory TA for the North Eastern Region Urban Development Project in 2004.2 The Government and ADB agreed that project preparatory TA will be provided for the North Eastern Region Urban Development (Phase II) Project in 2005. The ensuing loan is scheduled in 2008. The ADB Mission visited the North Eastern (NE) Region states3 and Delhi during 29 November–8 December 2004 to undertake fact-finding for the TA. The Mission had discussions with central, state, and local government officials as well as elected representatives, and reached an understanding on the objectives, scope, cost, and implementation arrangements of the TA. The TA design and monitoring framework is in Appendix 1.

II. ISSUES

2. The NE Region, comprising the eight states of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura, is one of the least developed regions in India. As 98% of its borders lie with other Asian countries, namely, Bhutan and The People’s Republic of China in the north, Myanmar in the east, Bangladesh in the south and west, and Nepal in the west, the region provides strategically important links to countries of both the South Asia Association for Regional Cooperation (SAARC) and the Association of Southeast Asian Nations (ASEAN). The NE Region is connected to West Bengal and other parts of India through the narrow Siligury Corridor. The region has wide variations in physical features, ranging from the plains of Brahmaputra in Assam to the highly dissected mountains of eastern Himalayas in Arunachal Pradesh. The region experiences heavy rainfall from April to September and is located in a sensitive earthquake zone. The Brahmaputra River cuts through Assam with annual menacing floods, brought about by intermittent rains and overflowing rivers in Brahmaputra Valley, the northern part of Assam, and the Barak Plain, the southern part of Assam, causing serious erosion, loss of lives and livestock, heavy damage to infrastructure and property and health hazards. More than 200 people died in 2004. The Assam earthquakes of 1897 and 1950 are among the 10 biggest earthquakes in the world’s recorded history, and the 1950 earthquake is one of the most disastrous earthquakes in history; it created heavy landslides that blocked the course of many hill streams. Scheduled tribes (tribal communities) are predominant in the hill states and constitute about two thirds of the population of the region. As per the Census of India 2001, the region accounts for 8.0% of India’s area, but has less than 4.4% of its population. 3. Of the population of 39 million, 15% or 5.9 million population live in 239 urban centers; the national average is 28% urban. Urbanization over the last two decades has been rapid, with compounded annual growth rates of 4.0% during the 1980s and 2.9% during the 1990s. The urban population increased from 2.9 million in 1981 to 5.9 million in 2001 and varies among the states, ranging from 11.1% in Sikkim to 49.5% in Mizoram.4 Except in Assam and Nagaland, 1 The TA first appeared in ADB Business Opportunities (internet edition) on 7 December 2004. 2 ADB. 2004. Technical Assistance to India for the North Eastern Region Urban Development Project. Manila (for

$1,000,000, approved on 8 June 2004). 3 A visit to Guwahati and Dibrugarh was undertaken in November 2004, and a previous visit to Itanagar was

undertaken during the project preparatory TA Fact-Finding Mission of TA 4348-IND (footnote 2) in February 2004, while a field visit to Imphal will be undertaken during TA implementation in 2006.

4 The average population density of the NE Region—149 persons per square kilometer—varies from 13 in Arunachal Pradesh to 340 in Assam, compared with the national average of 324.

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the state capitals5 are the largest urban centers with faster urban growth primarily due to migration from infrastructure-deficient rural areas in search of better economic opportunities. 4. The NE Region has recorded improvements in social indicators over the last decade as per the Census of India 2001. While the literacy rates in five states are higher than the national average of 65%, Assam’s literacy rate is slightly lower at 64%. Infant mortality in Assam—71 per 1,000 live births—is higher than the national average of 68 per 1,000 live births; infant mortality in other NE Region states is lower than the national average. However, life expectancy at birth—56 years—is lower than the national average of 61.6 5. Levels of development are low and transport connectivity is very poor due to rough terrain and international borders. Law and order problems and ethnic unrest have deterred potential investments from outside the region. Throughout the region, basic infrastructure facilities and services are minimal. Inadequate funding for new infrastructure development and limited capacities of urban local bodies (ULBs) have contributed to poor urban and environmental conditions. Reflecting the development challenges, the eight NE Region states are among India’s special category states (SCSs).7 To transform the Northeast, in May 2004 the Ministry of Development of North Eastern Region (MoDNER) was established to replace the Department of Development of North Eastern Region, an institution established in 2001 as part of the Prime Minister’s agenda for the NE Region. Despite the availability of new central Government-sponsored funding schemes, such as Non-Lapsable Central Pool of Resources and mandatory allocation of 10% of budgetary allocations of various central ministries to the NE Region, fund use has been low. 6. The cumulative effect of physiography, poor connectivity, dispersed settlement pattern, low investments, as well as ethnic unrest, has resulted in significant urban poverty. Nearly 32% of the population of the region is below the poverty line,8 which is higher than the national average of 26.1%. The proportion of the poor below the poverty line in the urban centers varies between 8% in Itanagar to 31% in Guwahati, compared with the national average of 23.6%. Using the millennium development goal (MDG) criterion of $1 per capita per day, the incidence of urban poverty in the urban centers is high, ranging from 44% in Itanagar to 78% in Guwahati and Agartala. In addition, increased migration of the rural poor to the urban areas has resulted in uncontrolled expansion of urban slums, especially in state capitals. Inadequate drinking water, lack of sanitary facilities, and poor health exacerbate the harsh living conditions of slum dwellers. 7. Devolution of responsibilities under the 74th Amendment to the Constitution has not yet been mainstreamed in the NE Region states. Progress in implementing the reforms is constrained by the limited capacities of the states to form urban policies and oversee ULB operations. There are only two fully functioning ULBs in Agartala and Guwahati, two partially functioning ULBs in Kohima and Imphal, and two ULBs without a council in Gangtok and Shillong. Very significant indigenous tribal populations in five project cities—comprising Aizwal, Imphal, Itanagar, Kohima, and Shillong—give rise to different institutional arrangements and 5 Higher growth occurs in Dimapur, the commercial center and where the only airport in Nagaland is located. As per

the Census of India 2001, Dispur, the state capital of Assam, is part of Guwahati Municipal Corporation (ward numbers 54 and 55). Population figures are 189,327 for Agartala, 229,714 for Aizwal, 29,162 for Gangtok , 808,021 for Guwahati, 223,691 for Imphal, 34,970 for Itanagar, 78,584 for Kohima, and 132,876 for Shillong.

6 The data on life expectancy at birth in Assam–56 years– is the only available data in the NE region states. 7 There are 11 SCSs in India, which enjoy special budgetary provisions; 30% of central assistance for states plan is

earmarked for the SCSs. Further, SCSs receive 90% plan assistance as grant, and 10% as loan, compared with 30/70 for the larger states.

8 ADB. 2003. North Eastern Region Urban Sector Profile Project: Final Report. Manila.

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The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

legal systems. In Guwahati and Dibrugarh, urban development authorities have been given responsibility for both land development and development control. Such agencies often crowd out the private sector. The local bodies continue to be a weak tier and fully depend on state governments for leadership. Institutional reform and capacity building are therefore needed to support the implementation of the provisions of the 74th Amendment to the Constitution in strengthening the functions and responsibilities of ULBs. 8. Lessons learned from the North Eastern Region Urban Development (Phase I) Project are as follows: (i) separate strategies will be developed for the cities of each state due to unique policies, urban institutional frameworks, cultures, and urban histories; (ii) more resources and time are required—due to lack of basic information from which feasibility studies are normally prepared—to help the states communicate the project design, policies, and institutional issues to the public; and (iii) appropriate travel provision is needed because traveling from one city to another within the region is difficult. Lessons learned from this and other urban projects in India will be incorporated in the project design during TA implementation.

III. THE TECHNICAL ASSISTANCE

A. Impact and Outcome

9. The TA will prepare an investment project to help achieve the goal of sustainable urban development and poverty reduction in the NE Region by upgrading urban infrastructure in four project cities (Dibrugarh, Guwahati, Imphal, and Itanagar). The output will be a project feasibility study for each city. The main consolidated report will be complemented by four city reports. There will be separate technical reports on the key social and environmental safeguard issues (e.g., resettlement, need-based indigenous people’s development plan, gender and development, environmental assessments, labor, socioeconomic surveys, etc.) and institutional and capacity building. Each city report will cover, among others, (i) the city’s economic development strategy, (ii) infrastructure investment program, (iii) urban management improvement program, and (iv) urban poverty reduction program. B. Methodology and Key Activities

10. A participatory approach with extensive stakeholder analysis will be pursued throughout TA implementation to elicit the views of a broad range of stakeholders early and incorporate them into the project design. Workshops for stakeholders will be convened in the course of the TA. The key TA activities comprise (i) establishment of the main TA office, (ii) extensive surveys for the engineering and socioeconomic profile, and (iii) detailed feasibility studies. 11. To prepare a feasibility study for each city, the TA will further expand the findings and recommendations of the North Eastern Region Urban Sector Profile Project (footnote 8). The TA will (i) assess the minimum infrastructure requirement for the project cities to be eligible for financing; (ii) review past support to the urban sector and lessons learned; (iii) prepare base maps to be used in infrastructure system planning; (iv) map and inventory the existing water supply, sanitation, transportation, and solid waste management systems; (v) conduct a socioeconomic survey, poverty mapping, service demand survey, and willingness-to-pay surveys; (vi) review data collected from the socioeconomic survey, engineering field surveys and mapping, and secondary source for the project cities to assess the capacity to charge and prepare alternative supply and demand management options and means of service delivery; (vii) establish baseline data and identify indicators for monitoring and evaluation; (viii) assess urban poverty in project cities; (ix) prepare long-range conceptual plans for water supply,

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sewerage, and solid waste management; (x) initiate a city development strategy-based package; (xi) based on items (ix) and (x), prepare an indicative integrated and prioritized package of urban services and infrastructure investments covering water supply, urban roads, transport, sewerage, drainage, and solid waste management and slum upgrading for the project cities; (xii) determine the feasibility of the prioritized investment program based on technical, economic, financial, social, environmental, and institutional considerations as the selection criteria established in the initial stage of the TA; (xiii) prepare an urban poverty reduction program; (xiv) prepare an urban management reform program; (xv) establish an action plan to enhance municipal operations; (xvi) establish an action plan to enhance financial management; (xvii) develop an institutional development and capacity-building program; (xviii) prepare a gender action plan; (xix) prepare a need-based development plan for indigenous people; (xx) prepare a labor plan; (xxi) prepare an environmental assessment report; (xxii) develop a land acquisition and resettlement plan; (xxiii) establish project implementation arrangements; and (xxiv) estimate the levels of input for the various consultancies required to plan, survey, design, supervise construction, and monitor quality control for the physical project, as well as for the various social action and capacity-building programs; and prepare detailed terms of reference for the same. C. Cost and Financing

12. The total cost of the TA is estimated at $1.2 million equivalent, comprising foreign exchange of $417,000 and local currency equivalent of $783,000. The $337,000 foreign exchange cost and $463,000 local currency equivalent will be financed on a grant basis by the Government of the United Kingdom. The $80,000 foreign exchange cost and $80,000 local currency equivalent will be financed on a grant basis by the Cooperation Fund for the Water Sector. Both grants will be administered by ADB. The Government of India and the state governments will contribute the remaining local currency of $240,000 equivalent for counterpart staff support, office accommodation, facilities for meetings and workshops, and other administrative expenses. The Government of India will also provide all information required for the TA activities. The detailed cost estimates and financing plan are in Appendix 2. The Government has been advised that approval of the TA does not commit ADB to finance any ensuing project. D. Implementation Arrangements

13. MoDNER of the Government of India will be the Executing Agency of the TA and will be responsible for overall coordination with ADB. It will also provide full administrative and technical support to the consultants and will coordinate with all state governments and line agencies in all TA activities. State governments and the project cities will provide adequate office space for the consultants, with required support to carry out the task. 14. Before fielding the consultants, the Government will establish a TA steering committee, chaired by the joint secretary of MoDNER, and consisting of the joint secretary of the Urban Development Department (UDD), Ministry of Urban Development & Poverty Alleviation; representatives of the Planning Commission and Department of Economic Affairs (DEA) of the Ministry of Finance; secretaries of UDD and Public Health and Engineering Department of all concerned states; representatives of the participating cities; and the director of MoDNER as member secretary. Before the TA consultants are fielded, a national-level project director will be appointed by MoDNER and a full-time state-level project director by each participating state government. MoDNER will arrange three review meetings—at inception, interim stage, and before the end of the study—for consultants to discuss progress.

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The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

15. The TA will be implemented over 8 months from March to November 2006. The consulting services will total 97 person-months—13 international and 84 domestic. An international firm in association with a domestic firm will be selected and engaged, using the quality- and cost-based selection method with full technical proposal, in accordance with ADB’s Guidelines on the Use of Consultants (January 2005) and other arrangements satisfactory to ADB for engaging domestic consultants. The international consultants (with person-months in parentheses) will be an urban development specialist as team leader (7), a municipal finance specialist/financial analyst (3), and a water institutions specialist (3). The domestic consultants are a deputy team leader with expertise in water supply and drainage engineering (7); urban governance and institutional development specialist (4); water supply and sewerage engineer (5); solid waste engineer (3); flood control and drainage engineer (7); environmental specialist (6); financial analyst/financial management specialist (4); transport, environmental, and public sector economists (8); municipal engineers and sector specialists (8); urban transport engineer (7); social development and gender development specialist (5); indigenous people’s specialist (3); resettlement and land acquisition specialist (4); legal specialist (3); biodiversity specialist (3); and public consultation and poverty assessment specialist (7). The outline terms of reference of the consultants are in Appendix 3. International and domestic experts will be supported by up to 45 person-months of services from technical/support staff and 75 person-months from counterpart professional staff. The project cities will provide one counterpart person to work with the consultants during TA implementation. The team leader will recruit and engage subprofessional staff as required. The initial poverty and social analysis report is in Appendix 4. 16. The TA will provide office equipment such as computers and others that the consultants will purchase in accordance with ADB's Guidelines for Procurement (November 2004), and will hand over to MoDNER on completion of the TA. The TA will provide funds for workshops, working group studies, and surveys (socioeconomic, benchmarking, technical, etc.) to be conducted by the consultants in accordance with arrangements acceptable to ADB. 17. The consultants' reports will include (i) an inception report, within 1.5 months of TA commencement; (ii) an interim report, within 4 months of TA commencement; (iii) a draft final report, within 7 months; and (iv) a final report, 3 weeks after receipt from the Government and ADB of comments on the draft final report. During implementation, the consultants will organize three main workshops to discuss the findings of the inception, interim, and draft final reports, and additional workshops in each project city. The interim workshop will include a program for gender and development, and indigenous people and development, to discuss the gender and need-based action plans for the project. The consultants will also organize participatory meetings in all selected cities throughout TA implementation, to disseminate information on the project and incorporate the feedback from local stakeholders in the project design. All reports will highlight the participatory development activities undertaken during the period.

IV. THE PRESIDENT'S DECISION

18. The President, acting under the authority delegated by the Board, has approved ADB administering (i) technical assistance not exceeding the equivalent of $800,000 to the Government of India to be financed on a grant basis by the Government of the United Kingdom for preparing the North Eastern Region Urban Development (Phase II) Project, and (ii) technical assistance not exceeding the equivalent of $160,000 to the Government of India to be financed on a grant basis by the Cooperation Fund for the Water Sector for preparing the North Eastern Region Urban Development (Phase II) Project, and hereby reports this action to the Board.

6 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets

Data Sources/

Reporting Mechanisms

Assumptions and Risks

Impact Assumptions Sustainable urban development in the North Eastern (NE) Region by enhancing level of investments, improving levels of services, making urban governance effective, and reducing poverty

Increased investments in the urban economy Improved urban services to the poor Regular elections to urban local bodies (ULBs) Enhanced services coverage and levels Effective complaint redressal system Formulation of policies for urban development and poverty reduction

Periodic assessment through an agency assigned by Government of India, state governments, and Asian Development Bank (ADB) using defined benchmarks and evaluation system Government statistics and reports, reports of bilateral and other external agencies Loan progress reports Project completion report (PCR)

Project design is implemented effectively. Government and ADB sign loan agreement. Risk Enforcement of the provisions of the 74th Amendment to the Constitution in strengthening the functions and responsibilities of ULBs is weak.

Outcome Assumption Project design and feasibility studies agreed upon by the Government and ADB

Memorandum of understanding signed by the Government and ADB during loan fact-finding and/or appraisal missions scheduled for mid-2007

Memorandum of understanding

The Government and local governments and all other stakeholders remain committed. Risk The state governments decide to seek alternative funding.

Outputs Assumptions 1. Project feasibility studies for the 4 project cities. The main consolidated report will be complemented by 4 city reports 2. Technical assessments in the form of gender action plan, need-based indigenous people’s plan, environmental assessment report, and resettlement and land acquisition report completed 3. Urban policy and institutional reform agenda established 4. Capacity-building program developed 5. Project implementation assistance agreed to

An inception report 1.5 months after commencing services (May 2006) An interim report at the end of month 4 (July 2006) A draft final report at the end of month 7 (October 2006); a final report 3 weeks after receipt of comments (November 2006)

Technical assistance (TA) consultants’ reports, ADB TA review missions, and tripartite review meeting

Awareness of ADB requirements and project processes for delivery of quality outputs exist. Consultants are fielded without delay. State governments continue to provide adequate support. Risks Field surveys in project cities are delayed. Comments from participating governments and ADB on inception, interim, and draft final reports are received in a timely manner.

Appendix 1 7

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

Design Summary

Performance Targets

Data Sources/

Reporting Mechanisms

Assumptions and Risks

Activities with Milestones 1.1. Establish main project management office in Guwahati (by April 2006) 1.2. Discuss with state departments and finalize counterpart staff (by April 2006) 1.3. Compile past and ongoing studies and revise work program (by April 2006) 1.4. Hold inception workshop (by May 2006) 2.1. Review NE Region urban sector profile recommendations (by June 2006) 2.2. Project urban growth patterns (by June 2006) 2.3. Review regional economic development (by June 2006) 2.4. Review fiscal scenario and support to urban sector (by June 2006) 2.5. Review urban governance and institutional framework (by June 2006) 2.6. Review legal framework (by June 2006) 2.7. Review socioeconomic situation in 4 project cities (by June 2006) 2.8. Review urban poverty situation in 4 project cities (by June 2006) 2.9. Review urban services situation in 4 project cities (by June 2006) 2.10. Review urban finance situation in 4 project cities (by June 2006) 2.11. Review environmental policies/framework (by June 2006) 2.12. Review biodiversity situation in 4 project cities (by June 2006) 2.13. Review flood control management in the region (by June 2006) 3.1. Review projects/identified packages (by June 2006) 3.2. Prepare slum upgrading/small area upgrading schemes (by June 2006) 3.3. Prepare landslip protection program (by June 2006) 3.4. Prepare long-range conceptual plans for urban infrastructure (by June 2006) 3.5. Initiate city development strategy-based package (by June 2006) 3.6. Finalize project components (by July 2006) 4.1. Finalize levels of consultation, identify stakeholders, prepare consultation tools,

and strategy for disclosure of information (by July 2006) 4.2. Prepare approach paper for feasibility studies (by July 2006) 4.3. Finalize database, surveys, and work group studies (by July 2006) 4.4. Hold interim workshop (by August 2006) 5.1. Prepare feasibility studies for urban infrastructure projects (by October 2006) 5.2. Prepare cost estimates (by October 2006) 5.3. Carry out economic analysis (by October 2006) 5.4. Carry out financial analysis (by October 2006) 6.1. Conduct environmental baseline surveys for finalized urban infrastructure

projects (by August 2006) 6.2. Prepare initial environment examination/environmental impact assessment and

environmental management plans (by October 2006) 7.1. Prepare social impact assessments (by September 2006) 8.1. Prepare biodiversity assessment (by September 2006) 9.1. Assess existing institutions engaged in urban management and urban services

delivery (by May 2006) 9.2. Assess discretionary and obligatory functions of ULBs (by May 2006) 9.3. Assess existing arrangements between ULBs and other line agencies (by May

2006) 9.4. Prepare institutional development action plan for water and sanitation agencies

(by July 2006) 9.5. Examine status of amendment to 74th Constitutional Amendment Act (by May

2006) 9.6. Examine status of formation of ULBs in project cities (by May 2006) 9.7. Assess the existing capacity of ULBs and identify issues (by June 2006) 9.8. Assess level of governance in ULBs and identify issues (by June 2006) 9.9. Suggest capacity-building programs for ULBs (by August 2006) 9.10. Suggest institutional changes at state and local levels (by August 2006) 10.1. Assess financial performance of ULBs (by June 2006) 10.2. Identify and suggest feasible cost-recovery approaches (by September 2006) 10.3. Prepare financial operating plans (by October 2006) 11.1. Develop implementation arrangements (by September 2006) 11.2. Develop design and monitoring framework (by September 2006) 12.1 Hold final workshop (by November 2006)

Inputs: International consultants: 13 person-months Domestic consultants: 84 person-months ADB: $960,000 Government: $240,000

8 Appendix 2

COST ESTIMATES AND FINANCING PLAN ($’000)

Item Foreign

Exchange Local

Currency Total Cost

A. Government of the United Kingdom and Cooperation Fund for the Water Sector Financing a 1. Consultants a. Remuneration and Per Diem i. International Consultants 251.0 0.0 251.0 ii. Domestic Consultants 0.0 328.0 328.0 b. Travel i. International Travel 26.0 0.0 26.0 ii. Domestic Travel 0.0 51.0 51.0 2. Office Equipment b 19.0 0.0 19.0 3. Studies and Surveys c 0.0 101.0 101.0 4. Workshops 0.0 13.0 13.0 5. Miscellaneous Administration Costs 0.0 16.0 16.0 6. Communications 0.0 7.0 7.0 7. Report Preparation 0.0 2.0 2.0 8. Contract Negotiations 8.0 0.0 8.0 9. Contingencies 113.0 25.0 138.0 Subtotal (A) 417.0 543.0 960.0 B. Government Financing 1. Office Accommodation and Utilities 0.0 30.0 30.0 2. Counterpart Staff Remuneration 0.0 130.0 130.0 3. Data Gathering 0.0 42.0 42.0 4. Workshop Venues 0.0 8.0 8.0 5. Other Logistical Support 0.0 30.0 30.0 Subtotal (B) 0.0 240.0 240.0 Total 417.0 783.0 1,200.0 Note: With the application of quality- and cost-based selection, items A.2, A.3, A.4, and A.5 are considered “provisional sums” and these allocated amounts have to be included in the financial proposal without change. a Financed on a grant basis by the Government of the United Kingdom ($800,000) and by the Cooperation Fund for

the Water Sector ($160,000). Both grants will be administered by ADB. b Office equipment (3 desktop computers, uninterrupted power supply, software, 2 laser printers, 1 inkjet color

printer, 1 scanner, 1 photocopier, 1 facsimile machine, 3 cellular telephones, and air conditioners) will be purchased by the consultant in accordance with ADB’s Guidelines for Procurement (November 2004). The equipment will be handed over to the Ministry of Development of North Eastern Region on completion of the technical assistance.

c Includes socioeconomic survey, engineering surveys and mapping, and subprofessional technical staff administration cost.

Source: Asian Development Bank estimates.

Appendix 3 9

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

OUTLINE TERMS OF REFERENCE FOR CONSULTANTS A. International Consultants

1. International consultants will supply 13 person-months of consulting services.

1. Urban Development Specialist–Team Leader (7 person-months)

2. The specialist’s major role will be to compile the project feasibility studies for the project cities. The main consolidated report will be complemented by the city reports. There will be separate technical reports on the key social and environmental safeguard issues and institutional and capacity building. The urban development specialist will coordinate with other specialists of the technical assistance (TA) team in preparing project feasibility reports for individual project cities in North Eastern Region.

2. Municipal Finance Specialist/Financial Analyst (3 person-months)

3. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) review and assess the financial performance of the selected agencies/municipalities/urban local bodies (ULBs) by examining budgets and financial statements; (ii) prepare financial projections for operations 10 years after project completion based on projected user charges developed in the study; (iii) compute relevant financial indicators of each project city to assess its financial viability; (iv) prepare project cost estimates using COSTAB or a similar software; (v) assess the financial sustainability of the proposed executing agencies; and (vi) prepare relevant sections of the report. In conducting financial analyses, refer to the Asian Development Bank’s (ADB) Framework for the Economic and Financial Appraisal of Urban Development Sector Projects (1999), and Guidelines for the Financial Governance and Management of Investment Projects (2001).

3. Water Institutions Specialist (3 person-months)

4. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) review and assess institutional development of the water supply and sewerage sectors in close coordination with the water supply and sewerage engineer and the urban governance and institutional development specialist; (ii) initiate further dialogue with stakeholders and identify the policies and frameworks necessary to create the proposed institutions in each city; (iii) prepare short-term and long-term time-bound action plans to begin the establishment of sustainable water supply and sewerage institutions, and (iv) prepare relevant sections of the report. B. Domestic Consultants

5. The domestic consultants will supply about 84 person-months of consulting services.

1. Deputy Team Leader with Expertise in Water Supply and Drainage Engineering (7 person-months)

6. The deputy team leader will assist the team leader in coordinating with other specialists and preparing the project feasibility studies for the project cities. The main consolidated report will be complemented by the city reports. There will be separate technical reports on the key social and environmental safeguard issues and institutional and capacity building.

10 Appendix 3

2. Urban Governance and Institutional Development Specialist (4 person-months)

7. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) promote good urban governance in municipal operations; (ii) review the government's policy for decentralization and assess existing arrangements between ULBs and state governments for fiscal, technical, managerial, social, and other aspects; (iii) strengthen all ULBs to carry out functions as envisaged under the 74th Constitutional Amendment Act; (iv) prepare a project city institutional development and capacity-building strategy; (v) develop a comprehensive 5-year program to cover all project cities; (vi) arrange for workshops and suggest capacity-building initiatives; and (vii) prepare relevant sections of the report.

3. Water Supply and Sewerage Engineer (5 person-months)

8. The tasks of the engineer will include, but will not necessarily be restricted to, the following: (i) review potential areas for investments in the water supply and sewerage sector; (ii) assess the existing status of the water supply; (iii) coordinate necessary engineering surveys for designing water supply networks and head works; (iv) estimate existing and future populations and water demand; (v) based on the design criteria, contribute to the economic analysis by working with the economists, as needed, on various options of sources and distribution and the most suitable option, and prepare preliminary cost estimates; (vi) examine water supply augmentation proposals; and (vii) prepare relevant sections of the report.

4. Solid Waste Engineer (3 person-months)

9. The tasks will include, but will not necessarily be restricted to, the following: (i) review potential investments in solid waste management; (ii) analyze existing facilities and managerial arrangements for handling solid waste, and suggest improvements; (iii) examine the technical, financial, and managerial aspects of operation and maintenance (O&M); (iv) prepare preliminary cost estimates including lands required for the project works; (v) contribute to the economic analysis by working with the economists, as needed; and (vi) prepare relevant sections of the report.

5. Flood Control and Drainage Engineer (7 person-months)

10. The tasks will include, but will not necessarily be restricted to, the following: (i) review potential areas for investments in drainage; (ii) examine existing storm water drainage systems; (iii) suggest an appropriate city-level drainage system and propose augmentation of priority systems; (iv) address the problem of siltation of drains and maintenance issues; (v) on the basis of the design criteria, analyze various drainage systems options and recommend the most suitable one; (vi) evolve strategies for managing floods in the cities, with a focus on the flood-prone areas; (vii) suggest capacity-building measures, including enforcement mechanisms, for the ULBs, line agencies on preparedness, planning, mitigation of and response to floods; (viii) examine technical, financial, and managerial aspects of O&M; (ix) contribute to the economic analysis by working with the economists, as needed; and (x) prepare relevant sections of the report.

6. Environmental Specialist (6 person-months)

11. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) prepare an initial environmental examination (lEE) or environmental impact assessment (EIA) for each city, and a summary lEE or EIA for the whole project in accordance with Environment Policy of the Asian Development Bank (November 2002) and relevant

Appendix 3 11

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

guidelines, and rules and requirements in India; (ii) analyze the environmental management capacity of relevant organizations, identify training needs, and recommend institution and training enhancements; (iii) address the impacts on urban social infrastructure services; (iv) formulate environmental management plans; and (v) prepare relevant sections of the report. The specialists will work closely with the engineers, and urban governance and institutional development specialist to develop mitigating measures and institutional arrangements. The specialists and biodiversity specialists will work with the economists who will contribute to economic analysis in the EIA, if the project is categorized as “A.”

7. Financial Analyst/Financial Management Specialist (4 person-months)

12. The tasks of the financial analyst will include, but will not necessarily be restricted to, the following: (i) review and assess the financial performance of the selected agencies/municipalities/ULBs by examining budgets and financial statements; (ii) prepare financial projections for operations 10 years after project completion; (iii) compute relevant financial indicators of each project city to assess its financial viability; (iv) prepare project cost estimates using COSTAB or a similar software; (v) assess the financial sustainability of the proposed executing agencies; (vi) provide economists with projections of funds required for financial sustainability, to be used in setting user charges; (vii) examine feasible cost-recovery approaches to ensure full O&M and sustainability of the initial investments; (viii) study and recommend mechanisms for initial contributions from the beneficiaries as well as the local and central governments; and (ix) prepare relevant sections of the report. The tasks will be undertaken in accordance with ADB's Guidelines for the Financial Governance and Management of Investment Projects (2001) and Framework for the Economic and Financial Appraisal of Urban Development Sector Projects (1999).

8. Transport, Environmental, and Public Sector Economists (8 person-months)

13. The economists will review the potential for and constraints on regional economic development, including but not limited to the following—(i) the recently proposed government initiatives focusing on the North Eastern Region, and the project cities; (ii) the economic base of the project cities—and discuss regional development strategies. The review of regional development will aim to identify and evaluate the goals for regional development and key policy changes and identify key infrastructure investments in the context of the goals for regional development. Based on their prioritized investments, the economists will conduct an economic analysis of each potential subcomponent of the project, following ADB's Guidelines for the Economic Analysis of Projects; Economic Analysis in 2002: A Retrospective; the Key Areas of Economic Analysis of Projects: An Overview; Technical Notes Economic Issues in the Design and Analysis of a Wastewater Treatment Project; Setting User Charges for Public Services: Policies and Practice at the Asian Development Bank; and Beyond Cost Recovery: Setting User Charges for Financial, Economic, and Social Goals. The economists will contribute to the economic analysis in the EIA report, if the project is categorized as “A.” The economists will prepare the relevant sections of the report.

9. Municipal Engineers and Sector Specialists (8 person-months)

14. The tasks of the municipal engineers and sector specialists will include, but will not necessarily be restricted to, the following: (i) review the sewerage and sanitation arrangements, and analyze options for sewage collection and disposal; (ii) assess current quantities of sewage generated and estimate future quantities; (iii) coordinate engineering surveys for designing a wastewater network; (iv) carry out technical and financial analyses of available systems and propose viable options; (v) contribute to the economic analysis by working with the economists,

12 Appendix 3

as needed, on options for collection and disposal and the most suitable option, and prepare preliminary cost estimates; and (vi) prepare relevant sections of the report.

10. Urban Transport Engineer (7 person-months)

15. The tasks will include, but not will necessarily be restricted to, the following: (i) examine potential investments in urban roads and transport; (ii) estimate existing and future demand; (iii) examine the operation efficiency of the urban road network, suggest measures to reduce congestion and improve road safety; (iv) examine the choice of concrete versus bitumen roads; (v) address the issues of street hawking; (vi) integrate the proposals for sewerage, drainage, and others with road network proposal; (vii) suggest a periodic maintenance program; (viii) develop preliminary alignment plans for new roads, widening options for existing roads based on design criteria suitable for applicable codes and standards; (ix) estimate preliminary cost estimates including land acquisition; (x) contribute to the economic analysis by working with the economists, as needed; and (xi) prepare relevant sections of the report.

11. Social Development and Gender Development Specialist (5 person-months)

16. The tasks of the social development and gender development specialist will include, but will not necessarily be restricted to, the following: (i) following ADB's guidelines in the Handbook on Poverty and Social Analysis, make field visits to selected project sites; together with the indigenous people’s specialist, conduct a socioeconomic survey, interviews, focus group discussions with the target population of the projects and relevant key stakeholders including nongovernment organizations (NGOs); prepare a socioeconomic profile; do poverty mapping and analysis; analyze access to basic facilities, health and sanitation condition; do a gender profile and analysis, labor profile and analysis; (ii) assess the socioeconomic benefits of the project and its possible negative impact on gender; (iii) collect gender-disaggregated data, prepare the gender profile of the target population of the selected project area, and identify constraints and opportunities for women’s participation in project planning and implementation, and training requirements; (iv) recommend poverty reduction strategies for the municipal plan; (v) prepare a stakeholder analysis framework; (vi) prepare an overall framework for participation of people, community-based groups (including indigenous people), and NGO; (vi) prepare a gender action plan; (vii) prepare a labor plan; and (viii) prepare relevant sections of the report.

12. Indigenous People's Specialist (3 person-months)

17. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) following ADB's The Bank’s Policy on Indigenous Peoples (April 1998), make field visits to selected project sites; together with the social development and gender development specialist conduct a socioeconomic survey, interviews, focus group discussions with the target population of the project and relevant key stakeholders including NGOs; prepare indigenous people’s profile and analysis; (ii) assess the socioeconomic benefits of the project and its possible negative impact on indigenous people; (iii) prepare an overall framework for indigenous people's participation; (iv) apply the indigenous people's checklist, and prepare a development framework and need-based plans; and (v) prepare relevant sections of the report.

13. Resettlement and Land Acquisition Specialist (4 person-months)

18. The key tasks of the specialist include the following: (i) at an early stage of TA implementation, apply ADB's resettlement checklists to identify resettlement issues and ascertain the nature and degree of the project's impacts on affected households and people. If the expected resettlement impacts are significant, prepare appropriate resettlement plans based on the identified subproject design in each town, in accordance with ADB's Involuntary

Appendix 3 13

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

Resettlement (August 1995). Prepare a resettlement framework for the entire sector project. Disclose the resettlement information to the affected households and people as early as possible. In addition, the executing agencies must disclose draft resettlement planning documents through posting on ADB's resettlement website (http://www.adb.org/Resettlement/plans.asp) prior to ADB's management review meeting for the ensuing loan project; (ii) identify the relocation sites in case of resettlement, and prepare a land acquisition plan if needed; (iii) review the existing legal framework for land acquisition and suggest an institutional mechanism for implementable land acquisition; and (iv) prepare relevant sections of the report.

14. Legal Specialist (3 person-months)

19. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) review the related acts governing the operation of municipal governments, and recommend modifications and measures to promote the implementation of decentralized urban service delivery; (ii) take inventory on the status of the existing legal system, indicating the absence of legislation, as applicable, and identify the necessary steps and estimated time required to complete the legal requirements; (iii) examine existing institutional arrangements in the light of the 74th Constitutional Amendment Act; (iv) specify other institutional changes at state and local levels that are needed to ensure sustainability of the investments; (v) in the absence of proper enabling pieces of legislation, propose the alternative scheme of legal arrangements (including any transitional arrangements) to enable proper executing agencies to implement the project; and (vi) prepare relevant sections of the report. The legal specialist needs to work closely with the urban governance and institutional development specialist.

15. Biodiversity Specialist (3 person-months)

20. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) establish a biodiversity baseline and identify biodiversity issues, need; (ii) assess the nature and significance of impacts; (iii) address biodiversity impacts; and (vi) prepare relevant sections of the report. The specialist needs to work closely with the environmental specialists.

16. Public Consultation and Poverty Assessment Specialist (7 person-months)

21. The tasks of the specialist will include, but will not necessarily be restricted to, the following: (i) review existing poverty estimates, examine urban poverty initiatives, and develop an investment program; (ii) assist in designing socioeconomic surveys and investigating poverty situations; (iii) conduct stakeholders’ consultation to collect information on various dimensions of poverty; (iv) conduct a brief assessment of the HIV/AIDS1 situation in the project area; (v) if HIV/AIDS is recognized as a significant social issue, identify possible HIV/AIDS specialists/NGOs that can perform a more comprehensive analysis and can design an HIV/AIDS intervention for the project, and write the appropriate terms of reference; (vi) carry out poverty mapping; (vii) identify and estimate the people below the urban poverty line, using income criteria and non-income-based criteria/indicators as suggested in ADB’s Handbook on Poverty and Social Analysis, 2001; (viii) conduct analysis of the performance and impacts of the poverty schemes; (ix) identify poverty issues and suggest appropriate expansion programs for improving the skills base of the poor, and facilitate preparation of poverty reduction action plans; (x) produce an affordability plan for the poor and vulnerable groups; and (xi) prepare relevant sections of the report.

1 HIV/AIDS = human immunodeficiency virus/acquired immune deficiency syndrome.

14 Appendix 4

INITIAL POVERTY AND SOCIAL ANALYSIS A. Linkages to the Country Poverty Analysis

Is the sector identified as a national priority in country poverty analysis?

Yes

No

Is the sector identified as a national priority in country poverty partnership agreement?

Yes

No

Contribution of the sector or subsector to reduce poverty in India: Assessment of the prevailing situation in India, the North Eastern (NE) Region, and the project cities has revealed poor urban infrastructure and environmental conditions. Urban and environmental conditions in the region have been poor due to lack of adequate investments and weak capacities of urban local bodies. The project will improve urban infrastructure and environmental conditions and related social welfare status in the region by addressing deficiencies in basic infrastructure facilities and services to urban residents in one of the least developed regions in India. Direct benefits will be sustained improvements in water supply, roads and urban transport, storm water drains, sewerage, sanitation, and solid waste management in the project cities in the NE Region. The poverty impact of the project will be assessed from the project preparatory technical assistance (TA) baseline socioeconomic survey in terms of benefits and costs, which apply to different groups of the population in the project cities.

B. Poverty Analysis Targeting Classification: General intervention

What type of poverty analysis is needed?

The poverty estimates in India are done using the head count ratio (HCR) method every 5 years. Though the poverty trends in the country have been controversial, officially, these estimates are used for funding poverty reduction programs (both rural and urban) at the state level. Following the HCR method, poverty level estimates in the country reveal a general decline over the years. Estimates of the Planning Commission of the Government of India indicate nearly 17% reduction in urban poverty levels in 17 years (40.8% in 1983 to 23.6%, or a population of about 67 million in 2000). Similarly, the NE Region has achieved remarkable progress in poverty reduction (21.7% in 1983 to 7.5% in 2000). The national average of the population below the poverty line (1999/2000) is 26.1%, or a population of 268 million, while the proportion of the poor below poverty line in the project cities varies between 8% in Itanagar to 31% in Guwahati. The population of the project cities vary from 0.808 million in Guwahati to only 0.029 million in Gangtok. However, poverty estimates for each of the NE Region states is constrained by lack of data. In the absence of such estimates, the poverty ratios of Assam have been used for the rest of the NE states. To bridge the data gap, poverty assessment was carried out using several indicators. The assessments clearly indicate that the dimensions of poverty in the region differ from those in the rest of the country. Poverty is linked to incomes and food security. In the NE Region, poverty is inextricably related to access to services and lack of employment opportunities. Employment opportunities lack diversification, as a substantial portion of the population held service jobs in most states in the region. Hence, poverty level among the NE states shows a distinct diversity. High literacy rates in urban areas have not translated into a high level of skills formation in the region, reducing further the scope for occupational diversification. Therefore, the urban poverty reduction strategy in the NE Region has to focus on providing infrastructure and creating income-generating economic opportunities. A multipronged approach is needed to reduce urban poverty. The approach will include providing urban basic services and infrastructure, creating employment in diversified sectors, developing entrepreneurial skills, establishing facilities for higher credit, and encouraging urban microenterprises. The proposed project will address the majority of the above issues in the urban sector. No generalized formula can be applied for estimating urban poverty levels in all states in the region, as intraregional disparities exist. Further, given the marked differences in the socioeconomic and cultural scenario, the estimation of poverty levels in the NE states requires a comprehensive approach. The approach must bring out the specific socioeconomic characteristics and cultural practices that will impact on poverty reduction. The urban poverty analysis must address key issues of various income groups, social groups, and women. Cross-sectoral assessments are required to establish interrelationships so that cause-and-effect mechanisms can be understood. An example would be the linkage between urban infrastructure and urban environment, and hence the quality of life. Thus, technical assistance will be required to assess poverty-related data for each of the eight project cities. A detailed socioeconomic survey must be conducted in each project city. Urban poverty analysis in the region needs a multipronged and participatory approach to address the various dimensions of poverty, socioeconomic surveys must be accompanied by focus group discussions involving key stakeholder representatives of the society, which will

Appendix 4 15

The views expressed herein are those of the consultant and do not necessarily represent those of ADB’s members, Board of Directors, Management, or staff, and may be preliminary in nature.

facilitate preparation of municipal action plans for poverty reduction. Further, a critical review will be made of various poverty reduction programs implemented by the state governments and other partners in development. The results of the discussions will be input to the database analysis, thereby making poverty assessment a qualitative and practical output. The discussions will form the first stage of a process of participatory implementation of urban projects. .

C. Participation Process

Is there a stakeholder analysis? Yes No To address the various dimensions of poverty, socioeconomic surveys will be accompanied by focus group discussions, involving key stakeholder representatives of the society. Is there a participation strategy? Yes No Due to distinct sociocultural characteristics and strategic location (about 98% of the land is bounded by neighboring countries), all the NE Region states are among India’s special category states (SCSs) of the Government of India. The region has predominant indigenous/tribal populations. A planned participatory approach is needed for information gathering. The participatory mechanism will be a two-way process involving on one side information collection and on the other side information dissemination. The TA will use participatory exercises at different levels, viz., community, urban local bodies, line agencies involved in providing urban services. At the community level, discussions using participatory tools like rapid assessment will be used in gathering community information and effective decision making to arrive at key strategies. At the level of local bodies and line agencies, workshops and seminars focusing on capacity building will be conducted. Discussion of strategies with the stakeholders who are implementers of the projects will give implementable and practical strategies. Participatory meetings with varied groups like nongovernment organizations (NGOs)/community-based organizations (CBOs) will ensure understanding of the key social concerns. Gender workshops and meetings with tribal groups will further ensure that the concerns of the minority and the vulnerable sections of the society are effectively addressed. D. Gender Development

Strategy to maximize impacts on women:

Gender assessments are very important in this project. Women are the key stakeholders, as improvement in urban services will directly benefit them. Because of the ethnocultural characteristics of the population in the region, women play an important role in society and are very active in matters of societal concern. Gender analysis will be conducted to identify the strategies for addressing gender issues. A gender workshop will be conducted to involve the female members of urban local bodies, and woman community leaders and other agencies to discuss the proposed project and how to address gender issues in it. The TA will identify measures to ensure participation of women in pre-design and postdesign stages.

Has an output been prepared? Yes No A gender action plan and strategy will be developed during TA implementation. E. Social Safeguards and other Social Risks Item

Significant/

Not Significant/ None

Strategy to Address Issues

Plan Required

Resettlement

Significant

Not significant

None

The proposed urban sector project will necessitate land acquisition to improve and develop urban infrastructure assets. Displaced assets, and loss of income, livelihood, and other resources are also anticipated. At this stage, the magnitude of impacts cannot be determined. In the NE Region, land acquisition is a concern as the people are Schedule VI cast or tribal areas. The TA will therefore address the legal constraints of land acquisition and work out options. Land acquisition and displacement will be minimized to the extent possible. In-depth social analysis

Full

Short

None

16 Appendix 4

of displaced groups and their land management practices will be brought out so that rehabilitation and compensation mechanisms can be developed, with scope for monitoring and evaluation.

Affordability

Significant

Not significant

None

Improvement of urban infrastructure can only be done subject to affordability to the population. If the poor cannot afford the services, then the poverty reduction strategy will not be successful. To ascertain affordability and willingness to pay for the services, surveys will be carried out. Also, urban local bodies and urban line agencies will have to enter into a realm of effective financial management and institutional reform. The focus will be on integrating the poor into the infrastructure projects.

Yes

No

Labor

Significant

Not significant

None

No retrenchment of labor is anticipated. Currently a positive impact is visualized, as infrastructure improvement will increase the generation of economic activities and, hence, employment.

Yes

No

Indigenous Peoples

Significant

Not significant

None

The majority population in this region belongs to the indigenous people category. The region is characterized by the presence of a large number of tribes, and some areas are designated tribal areas. Indigenous people's development framework and need-based plans, such as indigenous people’s development plan and community action plan that bring out the key characteristics of the indigenous groups, will be prepared to assess the impact on these groups. Consultations and meetings with tribal groups to address their concerns and ensure their participation are required.

Yes

No

Other Risks and/or Vulnerabilities

Significant

Not significant

None

The weak institutional capability of the urban local body may delay project implementation. To avoid delays, stakeholder workshops and capacity building will be carried out from the beginning of TA implementation.

Yes

No