Document of

The World BankeIE el

FOR OFFICIAL USE ONLY

Report No. 5565-IN

STAFF APPRAISAL REPORT

TNDIA

GUJARAT URBAN DEVELOPMENT PROJECT

November 26, 1985

Urban and Water Supply DivisionSouth Asia Projects Department FILE COPY

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

Currency Unit Rupees (Rs)1 Rs = US$0.08lUS$ = Rs 12

Rs 1 lakh Rs 100,000Rs 1 crore = Rs 10,000,000

MEASURES AND EQUIVALENTS

m - meter (39.37 inches or 3.28 ft)sq.m (m2) - square meter (10.76 square feet)cu.m (m3) - cubic meter (35.31 cubic feet)km - kilometer (0.62 miles)

sq km - square kilometer (0.386 square miles)1 - liter (0.22 Imperial gallons or 0.264 US gallons)lpcd - liters per capita per daymld - million liters per day (0.220 million Imperial

gallons per day or 0.264 million US gallons per day)

ABBREVIATIONS AND ACRONYMS

AUDA - Ahmedabad Urban Development AuthorityBPMC - Bombay Provincial Municipal Corporations ActCPHEEO - Central Public Health Engineering and Environmental OrganizationGHB - Gujarat Housing Board

CIDC - Gujarat Industrial Development CorporationGMFB - Cujarat Municipal Finance BoardCOG - Government of Gujarat

cOI - Government of IndiaGSCB - Gujarat Slum Clearance BoardGWSSB - Gujarat Water Supply and Sewerage BoardHDFq - Housing Development Finance CorporationHUDCO - Housing and Urban Development Corpuration, Ltd.IDSMT - Integrated Development of Small and Medium TownsMFAMC - Municipal Finance Analysis and Monitoring CellMOWH - Ministry of Works and HousingNBO - National Building OrganizationTCPO - Town and Country Planning OrganizationTP - Town Planning

TPVD - Town Planning and Valuation DepartmentUNICEF - United Nations International Childrens Education FundUSPMC - Urban Strategy and Project Management Cell

AMC - Ahmedabad Municipal CorporationJMC - Jamnagar Municipal CorporationRMC - Rajkot Municipal CorporationSMC - Surat Municipal CorporationVMC - Vadodara Municipal Corporation

EWS - Economically Weaker SectionsHIC - High Income GroupsMIG - Middle Income Groups

LIG - Low Income Groups

FISCAL YEAR

April 1 - March 31

FOR OFFICIAL USE ONLY

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

Table of Contents

Page No.

MANAGEMENT SUMMARY ......................................... i-ii

I. BACKGROUND ........ ................ 1.................... A. Introduction ...................................... 1B. India - National Urban Trends and Management ...... 1

C. Urban Trends in Gujarat ........................... 2

D. Bank Group Role and Strategy ...................... 5

II. THE PROJECT ........................................... 6A. Project Objectives ................................ 6

B. Rationale for Bank Assistance ..................... 6C. Project Description ............................... 7D. Project Costs ..................................... 18E. Financing Plan .................................... 20F. Procurement ....................................... 22C. Disbursement ...................................... 24H. Accounts and Audits ............................... 24I. Supervision ....................................... 27

III. PROJECT MANAGEMENT ................. .. ................. 27A. Project Management Structure ...................... 27B. Implementation Responsibilities ................... 28C. Project Agencies .................................. 28

IV. PRICING, AFFORDABILITY AND RESOURCE MOBILIZATION ...... 32A. Pricing and Cost Recovery ......................... 32B. Affordability ................. 33C. Resource Mobilization ............................. 34

V. BENEFITS AND RISKS .................................... 34

VI. AGREEMENTS REACHED AND RECOMMENDATIONS .,,,..... ... 38

This report is based on the findings of an appraisal mission which visited

Gujarat in November 1984. The mission comprised Messrs. James Wright,Alain Bertaud, Donald Colston and Christopher Banes.

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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LIST OF ANNEXES

1. Operational Action Plan2. Total Project Cost3. Detailed Costs of Solid Waste Management Schemes4. Detailed Costs of Urban Infrastructure Schemes5. List of Documents in the Project File6. Financial Projections of Local Governments7. Gujarat Housing Board - Financial Projections through 1990/918. Details of Economic Analysis9. Project Population Below Poverty Threshold10. Details of Technical Assistance11. Flow of Funds

MAPS

1. IBRD A17536 Urban Population by District, Gujarat State 1981-20012. IBRD 18745 Chodasar Town Planning Scheme3. IBRD 18746 Jetpur-Manubhai Nagar Slum Upgrading Scheme4. IBRD 18747 East Ahmedabad Development Area

MANAGEMENT SUMMARY

The proposed project would be the second Bank Group financed urbandevelopment project in India to support improvements in a number of cities inone state. The project would demonstrate more efficient strategies for land,infrastructure and shelter development in Gujarat and for the provision ofmunicipal services. It would support new cost recovery and resource mobi-lization measures and it would strengthen key state and local agencies inthe urban sector.

ii. The total project cost would be Rs 156.6 crores (US$ 130.5 million)with a credit of US$ 62 million. The project would support investments infive cities and three medium towns in Gujarat. In addition, it would supportpriority investments in the rapidly expanding area east of Ahmedabad.

iii. Area development schemes (14,500 residential and small business plotsin seven sites) would use more appropriate design standards and moreefficient layouts than in previous low cost shelter projects in Gujarat.Differential land pricing would also be introduced to reflect varying servicelevels and accessibility standards. The resulting lower unit prices for lowcost plots would enable full cost recovery within the limits of affor-dability. Annual interest charges of 12% would be made compared to 4%presently charged in similar projects. About 65% of area development plotswould be affordable to the poverty group (with incomes below the 40th percen-tile). Public agencies would focus on land development with most houseconstruction privately undertaken.

iv. Investments in Town Planning Schemes (land readjustment and provisionof infrastructure in 5 sites) would be based on more efficient designs forinfrastructure than in past such projects. Full cost recovery would beintroduced by changing the basis for calculating betterment fees to includecost escalation, charging for off-site infrastructure, acquiring commercialland for leasing by local government and increasing interest rates on unpaidbetterment fee balances from 6% to about 12%.

v. Slum upgrading (245 hectares of slums in 5 cities) would replaceprevious slum clearance programs. Tenure would be provided to beneficiariesand the cost of land and development would be recovered with 12% interest.

vi. Improvements in solid waste management in 5 cities would includeimproved methods of collecting, transferring and disposing of solid waste,and improvements in city-wide management systems. Investments in stormdrainage in Surat and Vadodara and in secondary sewerage in Ahmedabad wouldprovide priority linkages in these systems consistent with long-term develop-ment plans and cost effective standards. Investments in the East Ahmedabadtrunk sewer and water supply and sewerage systems would address serious

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existing deficits, particularly the need to dispose properly of industrialeffluents. Recovery of costs for these investments through user charges willbe facilitated by the strong industrial base in the area. The AhmedabadMunicipal Corporation is being extended to include this area.

vii. The project includes a major effort in institutional strengthening,including assistance to improve financial management of project agencies suchas the Gujarat Housing Board. A program to enhance municipal management andresource mobilization is also being stressed which would contribute toindirect cost recovery for municipal service and infrastructure components.The capacity of the Gujarat Municipal Finance Board (GMFB) is beingstrengthened to provide technical assistance and training to local govern-ments. A program (to be monitored by GMFB) has been agreed to enhancerevenues in local governments including changes in taxation measures andtargets for improving collections.

I. BACKGROUND

A. Introduction

1.01 This report outlines the proposed project which was appraised inNovember 1984. In parallel with project preparation, a sector memorandum wasprepared to review sector issues and opportunities, to propose policy adjust-ments and to outline an action program which the proposed project willsupport: INDIA - Gujarat Urban Sector Memorandum, Report No. 4729-IN,February 23, 1984.

B. India - National Urban Trends and Management

1.02 In recent years, India's urban population has expanded rapidly.Between 1971 and 1981 it grew from 107 million (20.2% of total population) to156 million (23.7%), an annual growth rate of about 3.9%. According to the1981 Census, about 60% of the urban population lived in 216 cities of over100,000 people. An additional 12% lived in towns with populations between50,000 and 100,000. As economic development continues, and with stagnatingdemand for rural labor, urban growth might be expected to accelerate further.However, even if the present growth rate is maintained, half of India'spopulation growth during the next two decades will be in cities. The growthof cities of all sizes is leading to serious deficiencies in urban services.There are also acute problems of urban poverty, as approximately 40% of urbanhouseholds have monthly incomes below the absolute urban poverty threshold(about Rs 700 in 1984).

1.03 The supply of urban land, infrastructure and shelter has expandedslowly to meet the growing demand. This is due to a number of serious con-straints in both public and private sector development which include a lackof access to land, unaffordable planning and building regulations, inadequateprovision of trunk infrastructure by local governments, rent controls whichlimit returns on investment and the lack of an adequate system for housingfinance. The provision of municipal infrastructure (roads, storm drainage,water supply, sewerage, etc.) and of municipal services (solid waste manage-ment, maintenance, etc.) is often limited. This is due to complex planningand implementation arrangements which involve a large number of agencies andexpensive construction standards. More importantly, municipal budgets areseriously constrained by low tariff revenues and limits on municipal taxa-tion, particularly the property tax.l/

1/ Important constraints in the urban sector were identified in a recentCountry Economic Memorandum: Situation and Prospects of the IndianEconomy - A Medium Term Perspective. Report No. 4962-IN, April 16, 1984.Volume II, Chapter 10.

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1.04 The central government provides some policy guidance to the stategovernments through the Ministry of Works and Housing (MOWH) and there havebeen some centrally supported urban development programs under the Fifth andSixth Five Year Plans. The most important direct GOI involvement in theurban sector has been through the Housing and Urban Development Corporation(HUDCO), a semi-autonomous GOI corporation which comes under the policyguidance of MOWH. HUDCO provides a large amount of financing to state andlocal agencies (Rs 221 crores (US$184 million) sanctioned in 1982/83), about80% of which is for urban housing and plot development.

1.05 The formulation and implementation of most urban development programsremain the primary responsibility of state and local governments. It is atthe state level where laws governing urban planning and administration areenacted and where most urban development budgets are controlled. Thus, whileurban policies and programs may be advocated from the central level, largedifferences persist between states in the approach to urban development.

C. Urban Trends in Gujarat

1.06 Cujarat is one of the most industrialized states in India (secondarysector accounted for 27% of output in 1980/81 compared to 22% for All-India).Consequently, Gujarat has the fourth highest per capita income in India. Itis also the third most urbanized state (31% of its 34 million people incities compared to 24% for All-India). The urban population is increasing atabout 3.5% per year; about 45% of total population growth is in cities.Almost 60% of the state's urban population is in a corridor region stretchingsouth from Ahmedabad towards Bombay which contains the three largest cities,Ahmedabad (population 2,212,000), Vadodara (Baroda) (744,000) and Surat(913,000). However, there is also a relatively balanced network of sevenmedium cities in the eastern Saurastra region with populations between100,000 and 500,000. It is likely that cities of all sizes will continue togrow, with the state's urban population roughly doubling from 10.6 million in1981 to about 21 million in 2001 and over 50% of this growth taking place inthe corridor region.

1.07 Land and Housing Development. The Urban Sector Memorandum preparedfor Gujarat summarizes present urban development strategies and institutionalarrangements and outlines a proposed strategy for managing urban growth.Public agencies (Gujarat Housing Board, Gujarat Slum Clearance Board,municipal corporations, development authorities) acquire and develop land andproduce about 6,000 housing units per year, which is only about 10% of theunits required for the 60,000 new households added each year to the urbanpopulation. Most of these are completed units which require heavy subsidies(e.g. land and overheads not fully costed and interest rates of only 4%-6%).In real terms, somewhat less than 50% of costs is typically recovered. Sincethe subsidy elements come from various sources, it is difficult to fullyquantify them for the state public housing program. They are, however,instrumental in the large deficits run by agencies such as the Gujarat Hous-ing Board (see Annex 7). The cooperative and private formal sectors produceabout three times the amount of housing produced by public agencies, but mostneeds (about 60%) are met by informal development and the growth of slumareas (7.7% annual growth of Ahmedabad slum population compared to 3.7% of

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total population). The lack of access to developable land is the mostserious constraint to development by both the public and private sectors.

1.08 A fundamental shift is required in the strategy for land and shelterdevelopment with public sector agencies concentrating on the provision ofdeveloped land, especially for low income groups and small businesses. Landdevelopment schemes could be designed much more efficiently with up to 50%more saleable land and differential pricing which could reduce plot pricesfor low income households by up to 50% (and eliminate the need for subsidies)without reductions in environmental quality. Most house construction wouldbe undertaken by individuals and the private sector. Where land is avail-able, large amounts of housing have been financed by the Gujarat CooperativeHousing Finance Society (GHFCS - about 6,000 units per year) and the HousingDevelopment Finance Corporation (HDFC) which has recently begun operations inGujarat, and directly from private savings.

1.09 Increased provision of land, infrastructure and shelter would requirethe relaxation of constraints which inhibit private investment such as rentcontrol. The impact of rent control on the housing market is less in Gujaratthan in metropolitan cities such as Bombay. Enforcement occurs only whentenants take the initiative to file with rent control authorities. InAhmedabad, of 500,000 rental units only 800 cases are pending with rentcontrol authorities. In most cases actual rents rise higher than controlledrents would. Furthermore, the effects of rent control on the property taxhave been somewhat mitigated by partially delinking property valuation fromcontrolled rents (see para 1.13). Nevertheless, rent control remains aconstraint. Its effects need to be better understood, and means of relaxingits most negative aspects and to phase it out should be considered.

1.10 Town Planning (TP) Schemes have been used in the past in Gujarat todevelop land without acquiring it from private landowners, mainly for privatesector housing (59 schemes during the last 10 years involving over 10,000hectares in 20 cities). Urbanizing areas are declared 'Town PlanningSchemes' whereby local governments may acquire land required for communitypurposes (e.g. roads and open space) and readjust private plots to fit thenew layout. Basic infrastructure is provided, and landowners are charged abetterment fee which is reduced by a reimbursement for land taken by govern-ment. The schemes have typically been subsidized by local government from50% to 90% of cost depending on the level of infrastructure provided. Thisis due to a number of deficiencies. First, cost recovery is inadequatebecause the formula used to calculate betterment fees does not allow for costescalation during scheme processing and implementation. The betterment taxcan be up to one-half of the increment in value but no more than projectcost. However, both the increment in value and the cost estimate are basedon price levels at the beginning of scheme processing. In addition, noallowance is made for off-site infrastructure, a below market interest rateis used and only limited amounts of land are recovered for lease by localauthorities. A further subsidy element involving double counting in landreimbursement was eliminated during project preparation. Second, manyimprovements would be possible in the design of road networks and infrastruc-ture, especially to enhance the value of commercial areas which could beacquired and leased to recover some costs. Finally, there are long delays inprocessing and implementing TP schemes. A three-stage process, involving a

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Draft Scheme, a Preliminary Scheme and a Final Scheme, often takes 5 to 10years. Means of reducing this period without limiting rights of publicappeal need to be considered. In spite of these problems, TP schemes do playan important role in land development by developing large amounts ofprivately owned land through public/private sector collaboration, withoutrequiring costly and time consuming land acquisition. With some modifica-tions they could be much more effective.

1.11 Municipal Services. The most immediate problem facing municipalgovernments is the need to extend services of all types into slums. Thehighly subsidized clearance and redevelopment programs being undertaken bythe Gujarat Slum Clearance Board (GSCB) cannot possibly meet the scale of theproblem (about 6000 units constructed since 1975 compared to growth of slumsin Ahmedabad alone of 4000 households per year). Most local governments havebegun to recognize that the improvement of existing slums and normalizationof tenure is the only feasible approach. Limited improvements have beenundertaken but with no tenure granted and no cost recovery. Local govern-ments lack a long-term program for confronting the problem at the requiredscale. Improved management of solid waste (administration in city govern-ments, work team organization, collection methods, transfer points, disposal,etc.) is also needed. There are serious storm drainage problems, especiallyin Surat where many natural drainage channels have been blocked by haphazarddevelopment and improperly disposed solid waste. The problems of municipalservices in all cities are closely linked to financial constraints at thelocal level.

1.12 Water Supply and Sewerage. The Gujarat Water Supply and SewerageProject (Credit 1280-IN of November 1982) is financing augmentations to watersupply in five cities, and sewerage systems and treatment facilities inAhmedabad and four other cities. The project also includes rural watersupply and low-cost sanitation components. With the exception of theAhmedabad Municipal Corporation (AMC), all works are being implemented bythe Gujarat Water Supply and Sewerage Board (GWSSB). The project includesimprovements in organization, financial management, operations and main-tenance in the sector. An important feature is to improve cost recovery,and some progress is being made. Revenues on water supply and sewerageaccounts were to have doubled between 1981/82 and 1983/84. While tariffshave been doubled in all towns, actual collections are lagging behind thetarget. The AMC has increased collections by 65% and will approach theagreed target as outstanding litigations on property valuations are resolvedin early 1986. Project towns have agreed to cover the cost of operation andmaintenance from water and sewerage revenues by 1988 and depreciation by1993.

1.13 Urban Finance. Local governments are supported largely by octroirevenues which account for two-thirds of tax collections and over half oftotal recurrent revenues. Since octroi is not a long-term solution to therevenue needs of local government, the best prospect for improved revenueslies in more effective use of the property tax, which presently accounts foronly 15% to 20% of recurrent revenues. Part of the problem lies in inade-quate valuation and collection performance which could be improved in theshort term. However, the valuation system, which is based on annual rentalvalue and is constrained by rent control, is a more fundamental problem.

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During project preparation the State Government has amended the MunicipalCorporations Act so that 'standard' (controlled) rent will not be used forproperty valuation where actual rent is higher. This is an important firststep, but further action is needed to either delink property taxation fromthe constrained valuation base or to phase out rent control. The GujaratMunicipal Finance Board (GMFB) has a large mandate for assisting with localgovernment finance, but it has played a limited role to date. It could playa more effective role in analyzing the options for municipal finance andproviding technical assistance and training to local governments.

1.14 Financial management improvements would also be required in publicdevelopment agencies such as the Gujarat Housing Board (GHB). Conversionfrom a cash to an accrual basis accounting system and improved project costaccounting would help to improve project pricing and reduce deficits.

D. Bank Group Role and Strategy

1.15 The Bank Group's lending for urban development in India during thelast decade focused first on India's largest cities where projects in Cal-cutta, Madras and Bombay have financed packages of urban services (sites andservices, slum upgrading, water supply, sanitation, and transport). Thisfocus began to widen to medium cities in 1981 with the approval of a projectfor Kanpur in Uttar Pradesh and in 1983 with a state-wide project for MadhyaPradesh which is providing area development, slum upgrading, improvedmunicipal services and institutional improvements in ten cities. The MadhyaPradesh project involves HUDCO as a central-level financial and policy inter-mediary. Projects in water supply and sanitation have followed a state-widepattern (in Uttar Pradesh, Punjab, Maharashtra, Rajasthan, Gujarat and TamilNadu) as part of a broad program of infrastructure and institutional develop-ment, with the exception of two projects in Bombay.

1.16 Urban and water supply projects have sought not only to improvedirectly the level of urban services and shelter in India but also to addresssome of the underlying problems in the sector. The principal objective hasbeen to improve the efficiency and effectiveness of resource utilization andto improve resource mobilization. Such improvements have included:(i) fundamental design changes in land development by public agencies (e.g.,plot costs per household reduced by 75%); (ii) the gradual shift of housingconstruction and finance from the public to the private sector; (iii) a shiftof emphasis from slum clearance to upgrading with the provision of tenure toencourage private investment; (iv) improved management of municipal solidwaste and maintenance operations; and (v) lower cost technology in sanita-tion. More effective resource mobilization has included: (i) improved costrecovery (e.g., interest rates increased from 4-5% to 12% in land developmentand shelter projects and substantial bus fare and water tariff increases;(ii) the introduction of direct cost recovery in slum upgrading projects; and(iii) programs to enhance general municipal revenues (e.g., through improvedproperty tax valuation and collections). Critical to achieving these objec-tives has been the strengthening of institutions on the national, state andlocal levels.

1.17 PCRs have indicated that urban and water supply projects have metmost of their objectives in terms of physical implementation and resource

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utilization. Achievements in cost recovery and resource mobilization havebeen less satisfactory. This problem is being addressed in two ways. First,reviews of financial management issues in water supply and sanitation and inmunicipal services are being undertaken so that the specific actions (e.g.tax and tariff measures, collection targets, cost reduction measures)required to achieve objectives can be better identified. Second, detailedaction plans of measures to be included in projects for meeting financialmanagement targets are being agreed to and used for monitoring progressduring supervision.

II. THE PROJECT

A. Project Objectives

2.01 The most immediate objective of the project would be to reduce theserious deficits in urban shelter, infrastructure and services. More impor-tantly, fundamental improvements would be sought in the management andfinancing of urban growth. This would include improvements in resourceutilization (e.g., significant reductions in the cost of publicly providedland, infrastructure and shelter and more efficient land use in TP schemes)and improvements in resource mobilization (e.g., increased interest rates inarea development from 4%-5% to 12%, introduction of full cost recovery in TPschemes and efforts to improve local taxation). To support these objectives,the project 4ould strive to strengthen administration, planning and financialmanagement in local governments and state-level agencies in the urban sector.

B. Rationale for Bank Assistance

2.02 Many of the objectives described for this project are similar tothose in Bank-assisted urban projects in other states. Others, especiallythe emphasis in improving land development through Town Planning schemes,would be new in this project. With a high degree of state autonomy in set-ting urban policies, new development strategies undertaken in one state arenot necessarily followed in others. To achieve a significant impact at thenational level, it would be necessary to undertake a number of projectsdirectly in the more urbanized states. Many of the types of objectives whichwould be supported have recently been advocated in a series of studies spon-sored by the Planning Commission for the preparation of the Seventh Plan.However, there is limited financial support for such new directions availablefrom the central level, and the states lack the experience and initiative toundertake reforms on their own. Thus, given the very limited involvement byother multilateral and by bilateral agencies in the urban sector, Bank assis-tance continues to play an important catalytic role in achieving policyreform in the urban sector in India.

Project Location

2.03 Project-supported investments would be focused in the larger citiesof Gujarat where urban problems and the need for new development strategiesare greatest: Ahmedabad, Surat, Vadodara, Rajkot and Jamnagar. Over thelonger-term, the new strategies used and the institutions developed in these

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cities should contribute to development of other cities in the state. Threemedium sized municipalities have also been selected for small components,Jetpur, Palanpur and Ankleshwar, in order to strengthen the capacity ofstate-level agencies to assist the development of medium cities. Thesecities represent different regions and have had higher than average popula-tion growth (average of 4.1% per year during 1971-81 compared to 3.5% for allcities of Gujarat). One additional area of concern would receive particularattention, the area to the east of the Ahmedabad Municipal Corporation whichis urbanizing very rapidly with a low income population (7.8% annual popula-tion growth compared to 3.7% in entire Ahmedabad Urban Agglomeration).Industrial growth has been rapid (8.5% increase in industrial units per year)and service deficits are acute, particularly the lack of proper drainage forindustrial effluents. The Ahmedabad Urban Development Authority (AUDA) hasprepared an investment and urban management strategy for this area and hasalso prepared a first phase investment program to be supported under theproposed project.

Table II.1: 1981 POPULATION AND GROWTH RATES IN PROJECT CITIES

1981 Population Average Annual(in thousands) Growth Rate (71-81)

(x)A. MUNICIPAL CORPORATIONS

Ahmedabad Total: 2,515 3.7Within corporation limits 2,124 2.8East Ahmedabad 365 7.8Other areas within Ahmedabad

urban agglomeration 26 1.7Surat 913 6.3Vadodara 744 4.8Rajkot 444 4.0Jamnagar 317 3.4

B. MEDIUM TOWNS

Jetpur 63 4.2Palanpur 61 3.8Ankleshwar 41 4.6

Total for Project Cities 5,098 4.3

Gujarat Urban Population 10,554 3.5India Urban Population 156,200 3.9

C. Project Description

2.04 The project would be implemented from January 1, 1986 to December 31,1990 and would include the components described in Table II.2. In additionto the physical investments listed below, there are a number of interrelatedproject activities to be undertaken by participating agencies to accelerateproject implementation and to improve the operating efficiency and financialviability of sector agencies. Although these actions are discussed in

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GUJfRfiT URBAN PROJECT. TABLE II.2 PROJECT DESCRIPTION.

Rs. US$(crores) (million)

A.Area Development. 13.93 11.61About 14,380 serviced residential and smallbusiness plots with shelter loans and communityfacilites in 7 sites, totaling about 100 hectaresin S cities benefiting about 72,000 persons

B.Town Planning Schemes. 15.32 12.77Land readjustment, with land reservation forcommunity facilities and provision of infrastructurein six schemes, in three rapidly growing citiesin 574 hectares which, when fully densified, wouldprovide residential and small business space fora population of about 300,000

C.Slum upgrading. 12.61 10.51Upgrading of about 245 hectares ofslums containing about 273,000 persons, includingthe provision of tenure, improved infrastructure,home improvement loans, and community facilities.

D.Solid Waste Management. 15.38 12.82Provision of equipment for the collection anddisposal of solid waste in five cities.

E.Urban Infrastructure. 57.72 48.10Provision of storm drainage (3 cities), a trunk sewer(1 city), secondary sewerage (2 cities),and water supply (1 city).

F.Institution strengthening/ Consulting Services. 2.93 2.44

TOTAL BASE COST (including physical contingencies, 117.90 98.25design, supervision and management)

PRICE CONTINGENCIES 38.72 32.27

TOTAL PROJECT COSTS 156.61 130.51IUS$= 12.00 Rs.)

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various places of the SAR, because of their importance they have been groupedinto an Operational Action Plan (see Annex 1). The items in this Plan werediscussed and agreed with COG at appraisal. Assurance was given at nego-tiations that the Urban Strategy and Project Management Cell (USPMC) wouldsubmit quarterly reports to monitor progress on project implementation and onactions contained in the Operational Action Plan to be adhered to by GOG andthe state and local agencies under the project; the Operational Action Planwould be reviewed and updated annually by GOG and it would be satisfactory toIDA.

2.05 The project includes initiatives to address some of the state'sfundamental policy issues. There would be a major effort to strengthenmunicipal finances (see paras 3.09-3.12). The issue of rent control (seepara 1.09) is also being addressed. In the context of the Bombay UrbanDevelopment Project, GOI has provided its statement of intent in the ApproachPaper to the Seventh Five Year Plan as an indication of its commitment tomove ahead on this issue. The proposed amendment to the Delhi Rent ControlAct, which could guide other states seeking to pass similar legislation, andthe Government of Maharashtra's own attempts to seek rent control reform arewelcome signs of movement in this direction. COG and GOI have been informedthat similar initiatives would be expected to be actively pursued in thecontext of this project. The effects of rent control are also being assessedunder the project in the Ahmedabad Housing Strategy Study (see para 2.38).

2.06 (a) Area Development. (Base cost 1/: US$11.61 million; Rs 13.93crores). About 100 hectares would be developed in seven sites to provideabout 14,000 serviced residential plots and about 3 hectares for commercialand small business plots. These include one each in Ahmedabad, Vadodara,Ankleshwar, Palanpur and Ghodasar (E. Ahmedabad) and two in Surat. All sitesare located close to employment locations and adjacent to developed residen-tial areas. Land for all the sites has already.been acquired except for 4 ofthe 44 hectares in Vadodara and the sites in Ahmedabad and Ghodasar. TheAhmedabad site is being acquired by AMC in a revised TP scheme. The Ghodasarsite would be acquired as part of a new TP scheme.

2.07 Emphasis is being placed on design characteristics which would makeabout 65% of the plots affordable to low income (EWS and LIG) householdsearning Rs 650 per month or less. Layout designs are appropriate for theneeds of the various income groups to be accommodated. An average of about65% of each site would be marketable compared to 40% typical in existingprojects in Gujarat. An average density of about 700 persons per hectarewould be achieved in the new communities. Plot sizes would vary from about 25m2 for EWS households to 300 m2 for HIG households. Table II.3 and FigureII.1 give the distribution of area development schemes by city and incomegroup. Since some of the proposed standards are not consistent with existingplanning and building regulations, assurance was given at negotiations thatthe proposed area development sub-projects would receive necessary COG andlocal planning, engineering and building approval as appraised.

1/ Base cost here includes taxes, physical contingencies, design, supervi-sion and management, but not price contingencies.

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GUJARAT URBAN PROJECT - TABLE II.3 AREA DEVELOPMENT PLOT DISTRIBUTION

Number of plots by income strata (Rs/month/household)

TOWN TOTAL (=350 351-600 601-1500 1501-Z500 +Z500------------------------------------------------------------- __---------

VADODARA 4302 977 1818 3Z6 1104 76X 100.00% ZZ.71% 4Z.27% 7.58% Z5.67% 1.77%

SURAT 3108 1106 Z002 0 0 0100.00% 35.59% 64.41% 0.00%

AHMEDABAD 3006 0 1520 1486 0 0100.00% 0.00% 50.55% 49.45%

EAST AHM. 1100 495 330 275 0 0100.00% 45.00% 30.00% Z5.00%

ANKLESWAR 893 78Z Z98 Z62 51 0100.00% 31.58% 33.37% 29.34% 5.71%

PALAMPUR 1966 966 1000 0 0 0100.00% 49.15% 50.85% 0.00% 0.00%

total 14375 38Z6 6968 2350 1155 76100.00% 26.62% 48.47% 16.34% 8.04% 0.53%

( 75% -)below poverty threshold

Recent household income information is not available. It i5 estimatedconservatively that the absolute urban poverty threshold is betweenRs 600 and Rs 700 per household per month in 6ujarat, which means thathousholds classified by 601 as Economically Weaker Section (EWS) andLower Income Groups (LIG) with income below Rs 600 per month fallbeneath the poverty level. In Gujarat this includes at least 40% to 45%of the urban population.

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2.08 The sites in Vadodara, Ankleshwar, Palanpur and Chodasar would haveindependent water supply, and sites in Surat and Ahmedabad would be connectedto the city water supply systems. Sites would be connected to existing waterborne sanitation systems. Electricity networks and street lighting wouldalso be provided. Community facilities such as primary schools, markets andhealth centers would be provided.

2.09 Some core housing would be provided on EWS plots costing Rs 2,200with optional building loans averaging Rs 2,500 per household. The coreswould consist of a toilet with a water connection. Optional shelter loansaveraging Rs 3,500 per household would also be available to LIG households toassist self-help construction. Shelter loans provided in the project arebased on assumed rates of uptake of 50% for EWS and 25% for LIG.

2.10 Procedures for the selection of beneficiaries would ensure that theEWS and LIG plots would be allocated to the designated target income groups.HIG and MIG plots would be allocated at market prices. Beneficiaries wouldbe given secure tenure on long-term renewable leases. Assurance was given atnegotiations that beneficiary selection criteria and leasing procedures inarea development would be acceptable to IDA. This would include thesimplification of plot allocation and lease procedures and the reduction ofrestrictions on on-plot construction to accommodate the needs of low incomehouseholds.

2.11 (b) Town Planning (TP) Schemes. (Base cost: US$12.77 million;Rs 15.32 crores). Six TP schemes would be undertaken in three cities (3 inEast Ahmedabad, 2 in Surat and 1 in Ankleshwar). This would include landre-adjustment and the provision of infrastructure on about 570 hectares.When fully densified, the sites would accommodate a population of about300,000. Table II.4 summarizes the proposed investments in TP schemes.

Table II.4: TOWN PLANNING SCHEMES, COSTS, AREAS, PROJECTED POPULATIONS

Area Cost ProjectedTown Name of Scheme (ha) (Rs Lakhs) Population

East Ahmedabad Ghodasar 101.63 285.26 52,375Nikol 129.00 394.17 64,500Khokra Mehemedabad 130.00 397.22 65,000

Surat Fulpadra 78.62 171.66 40,150Kapadra 88.00 160.76 49,820

Ankleswar 46.97 123.10 26,000

Total 574.22 1,532.17 297,845

2.12 TP schemes are potentially useful means of developing land throughpublic/private sector collaboration without the need for costly public landacquisition, but as presently undertaken the schemes have several limitations(see para 1.10). The most important of these is the inadequate cost recovery

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which has imposed a large financial burden on local governments. Under theproposed project, cost recovery would be enhanced. GOG has amended the TownPlanning Act through an ordinance to accomplish the following, and assurancewas given by GOG at negotiations that these measures would be used for carry-ing out Town Planning Schemes:

(a) the definition of project cost would allow for estimates of costincreases during implementation;

(b) the interest rate would be tied to a market bank rate;

(c) local governments would be permitted to acquire and lease land in TPschemes for business and mixed residential purposes; and

(d) cost estimates would include an allowance for off-site infrastruc-ture.

2.13 TP schemes for the project have been planned using improved designcriteria to eliminate past inefficiencies. Service networks have beenincluded, and their design is based on full topographical surveys. TPinfrastructure has been planned to coordinate with city infrastructure,particularly trunk infrastructure serving the sites. Designs have been madeto enhance the value of certain locations which could be acquired and sold orleased for small businesses.

2.14 Improvements would be incorporated in the processing and implementa-tion of TP Schemes (see para 1.10). The time required for scheme implementa-tion would be reduced by GOG administrative order to about 4 years (1 yr. forDraft Scheme, 15 months for Preliminary Scheme, and 21 months for FinalScheme). This includes reductions in hearing and review periods which can beaccomplished within existing legislation. Infrastructure construction couldbegin after Preliminary Scheme (about 27 months from declaration of DraftScheme). Much of the Draft Scheme period should be completed for the schemesbefore the project period begins, since planning work commenced in early1984. The State Government has agreed that the normal assistance by the TownPlanning and Valuation Department in the preparation and processing of theseschemes will be increased. To ensure project completion targets, TPVD willassign experienced staff on a priority basis. Town Planning Officers whonormally assist only during the Preliminary Scheme period, would be assignedto assist in all phases including during the final stage with implementation.An accelerated processing schedule for TP schemes has been agreed to andincluded as part of the Operational Action Plan (see Annex 1).

2.15 Additional measures would be assessed during project implementationto create a more efficient system for processing and implementing TP schemesover the longer-term. GOG is considering a number of measures for reducingthe processing and implementation period such as reducing the average size ofTP schemes. Reductions in this period will reduce the potential for costoverrun problems. TPVD is preparing a program for the training of townplanning officers and for acquiring additional equipment for TP schemepreparation (e.g., survey equipment, aerial photographs, equipment for aerialphotography interpretation) to facilitate scheme preparation. By June 30,1986, COG will prepare proposals for improvements and a timetable for putting

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them into effect will be discussed with the Bank (see Section B of ActionPlan).

2.16 (c) Slum Upgrading. (Base cost: US$10.51 million; Rs 12.61 crores).About 250 hectares of slums with about 275,000 inhabitants would be upgradedin five cities and in the area east of Ahmedabad, as summarized in TableII.5. All slums proposed for improvement except in Ahmedabad are on publiclyowned land. About 50% of the slums to be covered in Ahmedabad are onprivately owned land (25% of all slums to be covered). These are beingacquired through the modification of existing TP schemes.

Table II.5: SLUM UPGRADING, COSTS, AREAS, NUMBER OF BENEFICIARIES

Area Cost ProjectedTown Name of Scheme (ha) (Rs Lakhs) Population

Ahmedabad 100.00 605.06 154,430

East Ahmedabad 44.00 132.43 40,125

Surat Kamelo Tikaro 2.17 15.17 2,365Limbayat 10.10 48.30 11,075Mann Darwaja 8.33 49.10 10,500

Vadodara 5.50 33.62 5,740

Jamnagar Shankar Teckri 22.46 127.36 23,695Jaibimvas 3.85 28.17 2,780Dhararnagar 24.77 146.67 13,870

Jetpur Bangladesh 6.50 15.94 1,790Manubai Nagar 17.20 59.22 7,010

Total 244.88 1,261.14 273,380

2.17 In all cities, tenure would be granted to beneficiaries and, sincecosts would be fully recovered, the standards of improvements have beendetermined in accordance with the communities' needs and abilities to pay.Layouts take regard of existing land use patterns and community preferences.Where space is available, additional new plots would be created to accom-modate displaced and new residents. Displacement and relocation would beminimal, involving no more than 5% of households in any city's slum program.

2.18 In Ahmedabad, the focus of the program would be to provide tenureto slum dwellers registered in a 1976 city-wide slum census. Tenure would beprovided with cost recovery upon voluntary request by occupants to AMC. Waterand sewerage connections would also be provided to residents (about 80% ofslum houses are within access of the city's sewerage system; virtually allhave access to the water system). Households participating in the programwould be eligible for home improvement loans to be provided by commercialbanks (outside of project). In neighborhoods where more than 50% of housespay for land tenure, community improvements such as improved roads, drainage,

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street lighting and community facilities would be provided and residentswould be charged a betterment tax.

2.19 In Vadodara, Surat, Jamnagar and Jetpur specific slum areas would beprovided with water, roads, footpaths, drainage, sanitation, street lightingand landscaping. Optional home improvement loans would also be included inthe project. Tenure would be granted on a 50 year renewable basis. Improve-ments in Vadodara would cover 18 settlements. Three large slum areas wouldbe improved in Surat, and three slum areas would be covered in Jamnagaraccounting for 80% of the city's slum population.

2.20 An additional six slum areas would be improved in the area east ofAhmedabad using the same principles as slum improvements in Vadodara, Suratand Jamnagar. The slum areas would link to trunk and secondary infrastruc-ture also being provided in the project (see paras 2.30-2.33).

2.21 (d) Solid Waste Management (Base Cost: US$12.82 million;Rs 15.38 crores). Improvements to solid waste operations would be carriedout in five cities: Ahmedabad, Vadodara, Surat, Rajkot and Jamnagar. Thecosts are summarized by city in Table II.6. The solid waste managementimprovements would provide communal storage bins and a regular collectionservice to all areas of the cities. Existing methods would generally befollowed but with improved labor productivity. The "refuse sweeper" systemis common in all of the cities. The brooms, baskets or bins, shovels andwheelbarrows used by the sweepers would be improved to make work easier, morehygienic and more productive.

Table II.6: SOLID WASTE COMPONENT(Rs Lakhs)

Cost Per Civil Equip- Physic. Designcity Land Works Vehicles ment Cont. & Super Tax

Ahmedabad 547.14 0.00 49.80 262.22 145.80 4.98 23.13 61.21Surat 375.71 3.00 48.59 203.46 60.23 4.86 16.01 39.56Vadodara 263.56 0.00 11.50 148.40 60.18 1.15 11.06 31.27Rajkot 218.65 0.00 33.00 116.30 34.17 3.29 9.33 22.56Jamnagar 133.05 0.00 35.30 55.96 20.93 3.54 5.79 11.53

TOTAL 1,538.11 3.00 178.19 786.34 321.31 17.82 65.32 166.13

2.22 Community bins would be increased in number and introduced in the twocities, Rajkot and Jamnagar, where no street storage containers are presentlyprovided. Bins would be designed to permit easy filling and emptying tovehicles and to limit animal scavenging. Fleets would be augmented withvehicles more appropriate for their purpose. Auto-rickshaws adapted forcarrying garbage and able to enter narrow streets would be provided togetherwith larger tipping trucks. The "roll on-roll off" or "arm roll" vehicleand container system designed for solid waste operations and currently beingtried in Ahmedabad and Vadodara with some success would become the majorstorage and collection mode in Ahmedabad, Vadodara and Surat in areas wheremaneuvering space is available. Where distances to available disposal sitesare greater in Surat, Rajkot and Jamnagar and where smaller vehicles would be

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used for the central areas, simple transfer stations would be constructed forsmaller vehicles to tip loads to larger bulk carriers for transportation todisposal sites.

2.23 Although Vadodara has a compost plant which accepts part of thecity's garbage load, the most feasible mode of disposal in all cities is byland-filling. However, there is little control at landfill sites. Sanitarylandfill practices would be introduced, including paved access roads,drainage and other civil works would be carried out at tip sites, andbulldozers and mechanical loaders would be provided to permit spreading andcovering of garbage.

2.24 A lack of facilities and spare parts and a general absence ofpreventive maintenance and vehicle servicing is common. Therefore existingworkshop and garaging facilities would be improved and in some cases newindependent "solid waste vehicle" workshops provided to cope with theaugmented fleets. Major maintenance works would, however, continue to becarried out by private garages where this practice already exists.

2.25 The private informal sector would continue to reduce the amount ofgarbage collected by the Corporations. Private contractors would continue tobe involved in digging compost from disposal sites and marketing it as wellas assisting in vehicle maintenance. Private contractors are unlikely tobecome involved in collection on a large scale in the foreseeable future.They tend to be small, relatively unsophisticated and hesitant to use theirall purpose trucks for garbage. Surat has experimented with private contrac-tors, but there was erratic service which was difficult to supervise. Therewas also alledged exploitation of labor by the contractors which led to theGovernment of Gujarat prohibiting the use of private contractors under theContract Labor (Registration and Abolition Act 1970). However, many of thehigher income housing society areas engage private contractors directly forcollection and disposal of garbage and this would continue. For example,in Jamnagar about 30% of the more compostable garbage is informally collectedby the private sector in bullock carts and sold as compost.

2.26 In addition to improvements in collection, storage, transportation,disposal and maintenance, the organizational structure of the sector would bestrengthened. In all cities either independent departments, where these donot exist, or at least independent sub-departments under the Health Depart-ments are being established and properly staffed. The departments would alsoestablish small "monitoring cells" which would monitor labor efficiency,equipment and vehicles, periodically modify practices as necessary and planfor the future.

2.27 (e) Urban Infrastructure (Base Cost: US$48.10 million,Rs 57.72 crores). This would consist of priority augmentations in thesewerage network in Ahmedabad, priority improvements in storm drainage toalleviate seasonal flooding in Vadodara and Surat, and priority investmentsin water supply, wastewater collection and treatment in the East Ahmedabadarea. Details of the components are summarized in Table II.7.

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Table II.7: CITY INFRASTRUCTURE(Rs Lakhs)

Trunk Sewerageincluding Secondary Water Storm

Total Cost Treatment Sewerage Supply Drainage

Ahmedabad 686.28 686.28East Ahmedabad 4,523.03 2,058.57 962.47 1,501.99Surat 401.12 401.12Vadodara 161.73 161.73

Total 5,772.16 2,058.57 1,648.75 1,501.99 562.85

2.28 (i) Ahmedabad Sewerage. In Ahmedabad, rapid population growth hasled to overloading of the existing sewerage network and key pumping stations,particularly in the eastern part of the city which contains numerous slumareas. The sewerage needs of Ahmedabad have been recognized for some timeand the Gujarat Water Supply and Sewerage Project (Credit 1280-IN) is provid-ing new trunk sewers and treatment facilities. To ensure these works arefully utilized as early as possible, to reduce the overloading of existingsewers, and to provide linkages to slum areas proposed for improvement underthe project, sewerage networks in Gomatipur, Shahibag, Girdharnagar and theeastern peripheral area would be augmented together with pumping stations atGomatipur, Chamanpura and Girdhanagar. These are considered to be thehighest priority linkages required in the city and form part of the long termsewerage plan for the city prepared by the Ahmedabad Municipal Corporationand its consultants.

2.29 (ii) Storm Drainage in Vadodara, Surat and Jamnagar. In Vadodara andSurat, rapid city growth, illegal encroachments on natural drainage channelsand inadequate storm drainage in TP schemes have led to serious floodingduring monsoon periods. To alleviate the most serious flooding, prioritystorm drainage works would be provided. Current drainage designs, practicesand costs have been reviewed and works provided under the project (U-ditches,pipes and, where absolutely necessary, culverts) would meet hydraulic, struc-tural and environmental objectives, but at unit costs less than thosepresently achieved. The works would relieve the worst hit areas, and theywould constitute the priority phase of longer term drainage plans beingprepared in both cities. In Vadodara, 3200 metres of 1200mm x 1200mm boxculvert; 34400 metres of open trapezoidal channel; and, 420 metres of 600mmdiameter concrete pipe drain would be provided. In Surat, 4950 metres ofsingle and double box culvert from 1800mm x 1200mm to 2400mm x 2400mm in sizeand 9000 metres of concrete pipes ranging in size from 1200mm diameter to1800mm diameter would be provided. In addition, equipment to improvedrainage maintenance, such as high pressure jetting machines and winch andbucket machines is being provided. Technical assistance would be provided tothe Surat Municipal Corporation to advise engineering staff in the prepara-tion of final engineering details and bid documents, and in drainage con-struction practices and drainage maintenance. In addition, the JamnagarMunicipal Corporation would be provided assistance for the preparation of along-term drainage plan.

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2.30 (iii) East Ahmedabad. The first phase of a coordinated developmentstrategy for the East Ahmedabad area would be carried out to begin to addresssevere pollution and environmental problems. A trunk sewer and treatmentplant would be provided to accommodate industrial wastewater and domesticsewerage from about 70 sq.km of the East Ahmedabad area. This proposal wasarrived at after considering various alternatives for dealing with thepresent indiscriminate discharge of large amounts of industrial and domesticwastewater in the area. The alternatives included zonal systems with theurbanized areas having individual sewerage networks and treatment facilities;separate domestic and industrial wastewater arrangements; utilization of anexpanded AMC peripheral sewer; use of an improved storm drainage system; useof different pipe materials to achieve cost savings; and use of the mainirrigation canal (Kharicut) for discharge as an alternative to the SabarmatiRiver.

2.31 The solution decided upon was that judged to be the most technically,economically and environmentally sound alternative. The trunk sewer rangingfrom a 900mm diameter pipe to an 1800mm x 1800mm box culvert some 18 km.long would stretch from Naroda in the north to Narol in the South and dealwith estimated average flows to the year 2001 of about 180 MLD of whichabout 90 MLD would be industrial wastewater. The sewer would generallyfollow the alignment of the National Highway 8 and would be constructedwithin the roadside reserves. A final pumping station would be provideddischarging to a treatment plant where sewage would be treated and the finaleffluent discharged to the Sabarmati River at standards acceptable to theGujarat Air and Water Pollution Control Board (GAWPCB). The treatment plantwould be constructed adjacent to the AMC treatment facility to be constructedunder the Gujarat Water Supply and Sewerage Project (Credit 1280-IN) on landowned by AMC.

2.32 In addition to building the trunk sewer, a first step would be madein addressing the domestic water supply and wastewater problems of three ofthe more densely populated settlements. Water supply would be augmented inthe settlements of Naroda, Saijpurbogha and Odhav by the provision of furthertubewells (existing supplies in the region are from groundwater sources andwould remain so for the foreseeable future), and by extensions to the supplynetworks. A design standard of 140 lpcd to cover domestic requirements atyear 1991 has been adopted. Sewerage would also be provided in these threesettlements which would ensure that both the existing and increased amountsof wastewater would be collected and connected to the new trunk sewer.

2.33 Responsibility for implementation of the trunk sewer and treatmentplant would rest with AMC which is extending its boundaries to includeproject areas in East Ahmedabad. The Ahmedabad Urban Development Authority(AUDA), using consultants, has prepared the preliminary proposals for watersupply and secondary sewerage. Implementation and maintenance of thesecomponents will also be the responsibility of AMC, and AMC will ultimatelytake over all assets created in the area for operation and maintenance.

2.34 (f) Institutional Strengthening/Consultancy Services. (Base cost:US$2.44 million; Rs 2.93 crores). This component would include consultantassistance, equipment and start-up costs in support of the followingactivities and agencies (see Annex 10):

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2.35 The Gujarat Housing Board (GHB). Consultants have begun work on areview of financial management and accounting systems with the purpose ofdesigning improved systems. Implementation of the recommended systems is nowbeing undertaken (see paras 3.07-3.08). Training and equipment would beprovided to improve the technical capacity of GHB.

2.36 The Gujarat Municipal Finance Board (GMFB). The GMFB would beprovided assistance to enable it to assume a much more important role inmunicipal finance and management. A Municipal Finance Analysis and Monitor-ing Cell (MFAMC) would be established to monitor improvements in municipalfinance under the project. In addition, the project would finance the designand implementation of a training program for municipal employees which wouldbe administered by GMFB (see paras 3.13-3.15).

2.37 The Town Planning and Valuation Department (TPVD). Training would befinanced for TPVD staff to increase the capacity for the design and process-ing of TP schemes. Related equipment (e.g. aerial photographs, photographinterpretation equipment, survey equipment) would also be provided.

2.38 Ahmedabad Municipal Corporation (AMC). Consultant assistance wouldbe provided to AMC for the design of a slum improvement program for the city,to prepare a low cost area development scheme, to undertake a solid wastemanagement study, to convert its accounting systems onto an accrual basis.In addition, assistance would be provided to undertake a long-term housingstrategy for the city. The study would examine overall market trends and thepresent supply responses. This would include an examination of the effectsof rent control on housing supply. The results of the Ahmedabad HousingStrategy Study would be reviewed by GOG, AMC, and IDA by September 30, 1986,together with a timetable for implementing appropriate agreed recommendations(see Section F of Action Plan).

2.39 Ahmedabad Urban Development Authority (AUDA). Consultant assistancewould be provided to strengthen AUDA.

2.40 Other Municipal Corporations. Vadodara (VMC) would be providedconsultant assistance to prepare investments in slum upgrading. Consultantassistance would be provided to Jamnagar Municipal Corporation (JMC) toprepare a comprehensive drainage plan for the city. Surat Municipal Corpora-tion (SMC) would be provided consultant assistance to advise on engineeringdesign, implementation and maintenance of investments in storm drainage(see para 2.29).

2.41 In addition to the above, assistance is being provided in detailedplanning and engineering for East Ahmedabad shelter components, three of thesolid waste management components, and the AMC water and sewerage componentswithin the present city and in the East Ahmedabad area.

D. Project Costs

2.42 The total cost of the project, including contingencies, is estimatedat US$130.51 million (Rs 156.61 crores), of which US$15.73 million(Rs 18.88 crores) or about 12% represents foreign exchange costs. Summary

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cost estimates are given in Table II.8, broken down to indicate foreign andlocal expenditure and duties and taxes.

2.43 Base cost estimates are in March 1985 prices. Physical contingencieshave been estimated at 10% for civil works with detailed engineering designand 15% for civil works with preliminary engineering design. Price contin-gencies have been estimated at 8.5% for fiscal years 1985/86 to 1988/89 and6% for fiscal years 1989/90 to 1992/93 for both local and foreign costs.

2.44 Layout plans and cost estimates are available for six of seven sitesconstituting about 90% of area development. Detailed engineering design isnow being prepared. Planning for the seventh site in Ghodasar will be under-taken as it is acquired as part of a TP scheme in East Ahmedabad. For TPschemes, plans and cost estimates have been prepared for four of the sixsites. Planning is proceeding on the remaining two sites, Nikol and KhohraMemedabad in East Ahmedabad. Detailed engineering will be undertaken duringthe initial processing of the TP schemes (see para 2.14). Slum upgradingplans and cost estimates have been prepared for all the slum areas inJamnagar, Surat and Jetpur and detailed engineering is now being undertaken.For East Ahmedabad and Vadodara, plans and cost estimates have been preparedfor representative slums in the first year's program, and costs were extrapo-lated for the rest. Planning is now underway for the remainder. ForAhmedabad slums, preliminary design and cost estimates were prepared for 12slums in the first year's program containing almost 1,000 households. Thesecosts were used to extrapolate the total cost for slum upgrading householdsover the five year project period. Planning work will be undertaken eachyear for the subsequent year's program.

2.45 Solid waste management proposals are based on detailed cost estimatesfrom feasibility studies for all cities except Ahmedabad where preliminaryestimates were used based on an interim feasibility report. Recent quota-tions from suppliers and current market prices in India have been used inbase cost estimates for materials, vehicles and equipment. Detailedengineering and tender document preparation is now being undertaken.Ahmedabad sewerage proposals are based on detailed plans and cost estimatesby consultants. Storm drainage proposals in Vadodara and Surat are based onplans and cost estimates for 100% of works. East Ahmedabad trunk sewer,water and sewerage proposals are also based on plans and cost estimates forthe entire proposal, and detailed engineering is now being undertaken.

E. Financing Plan

2.46 The proposed IDA credit of US$54 million would finance about 50% ofproject costs net of taxes and duties. The credit would cover 100% of theestimated foreign exchange costs and 43% of local costs. The credit would bemade available to GOI which would pass it on to GOG on its standard terms andconditions as part of the central government assistance to the state. GOGwould make all project funds available to implementing agencies on terms andconditions indicated in Table II.9. The terms and conditions conform tocurrent practices. The project amount of Rs 156.6 crores is fully includedin the Plan. The Plan amounts include the agencies' contributions which theywould be authorized to borrow from market sources (through bonds and bankloans) by GOG. The Flow of Funds is indicated in Annex 11.

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GUJARAT URBAN PROJECT-TABLE II.9: FINANCING PLAN. (Rs lakhs)

13-NovImplementing Direct Loans From Total of

Agency 606 1/ from Agencies Cost whichExpenditure GOG 2/ 3/ IDA

Area GHB & Local 119.00 lZ50.Z1 470.95 1840.16 517.42

Development Government

Town Planning RUDA & Local 25.75 19Z10Z 142.51 2089.28 704.79Schemes Government

Slum AUDA & Local 15.00 1ZZ.37 511.97 1649.35 559.16Upgrading Government

Urban GWSSB, GIDC, AUDA 6264.13 1479.06 7743.19 4152.72Infrastructure & Local Government

Solid Local Government 1301.83 650.91 1952.74 11ZZ.07WasteManagement

Institution 386.77 386.77 383.85Strengthening

TOTAL Rs.Lakhs 546.52 11859.55 3Z55.41 15661.48 7440.00

US$ millions 130.51 62.00Total Project cost minus Taxes " " 124.03

1/ Includes 606 direct expenditures on schools and community facilitiesand grants for institutional strngthening to project agencies.

Z2/ All agencies to receive about 2/3 of project cost as loans from 606 at 8.75%for 20 years with 4 years' grace period, except AUDA and the smallmunicipalities which have limited ability to raise their own resources andwould receive 100% of project cost as loans from GO6.

3/ Agencies' own resources ( Rs Lakhs Z04 in land and Rs Lakhs 292 indownpayments) plus market borrowing authorised within the SeventhPlan (Rs Lakhs 2759 )

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F. Procurement

2.47 All contracts for equipment and materials would be awarded underinternational competitive bidding procedures with exception of the following:

- Contracts valued under US$150,000 and contracts for supply of fragilewater supply or sewer pipes of stoneware, asbestos cement or concretefabrication which are difficult to transport and which are readilyavailable locally, would be awarded on the basis of local competitivebidding procedures acceptable to IDA. Irrespective of the pipematerials and quantities specified at appraisal, for pipes ofdiameters 400 mm and above bids will be invited from a range ofmaterials that include asbestos cement, cast iron, ductile iron,steel and pre-stressed concrete.

In evaluating bids for equipment and materials, domestic manufacturers wouldbe given a preferential margin of 15% of the c.i.f. of competing importers,or the existing rate of customs duty, whichever is lower. For civil works, a7-1/2% preferential margin would be given. Contracts for equipment totallingUS$4.4 million would be awarded on the basis of competitive bidding adver-tised locally. This involves materials and items such as handcarts, wheel-barrows, hand tools and pipes with a large number of local supplies whichwould not attract the interest of foreign suppliers. It also includes equip-ment for which locally available spare parts and maintenance would be impor-tant. Additional equipment totalling about US$0.8 million involving smallamounts (under US$50,000) would be fabricated by corporation workshops orprocured through normal commercial channels after obtaining quotations fromat least three suppliers (see Table II.10).

2.48 Contracts for about US$73.5 million would be awarded for civil works.The major contracts would be in connection with the trunk conveyance, treat-ment and waste water disposal facility in East Ahmedabad (US$13.7 million).It is expected that these contracts will be large enough to attract theinterest of international bidders. These contracts and other contracts ofvalue more than US$5 million would be awarded on the basis of ICB. A sum ofabout US$59.8 million would be spent on the remaining civil works in theproject. This would include civil works in area development covering sevensites in six cities spread throughout the state. Contracts for slum upgrad-ing would be small, spread over numerous slum areas in five cities throughoutthe state and phased over a five year period, contracts for TP schemes wouldbe in six sites in three cities. The largest of these civil works would bearea development in the CHB site at Gorwa (US$3.4 million). Given thenumerous and relatively small contracts to be carried out in 8 towns and thesimple, labor intensive technology, it is not expected that these civil workscontracts would attract the interest of foreign bidders. They would, there-fore, be awarded on the basis of local competitive bidding.

2.49 Local bidding procedures have been reviewed and several areas havebeen identified for improvement to make them acceptable to the Bank. Thepractice of slicing bids in a manner not in accordance with the clear intentof the bid documents and negotiating after bid opening would be eliminated.Bid documents for large civil works contracts with completion times likely to

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GUJARAT URBAN PROJECT. TABLE 11.10: PROCUREMENT. (US$ million)

123-Nov Procurement methodTrotai IDA

Area Development ICB LCB N.O. Cost

Civil Works 9.59 9.59 3.73Building Loans t.50 LSO5 0.58Land 2.53 2.53iDesign & Supervision 1.01 1,01Duties and Taxes 0.70 0.70

15.33 4.31Town Planninig Schemes

Civil Works 15.11 15.11 5.87Design & Supervision 1.58 1.58Duties and Taxes 0.72 0.72Z

17.41 5.87Slum Upgrading

Civil Works 9.94 9.94 3.86Building Loans 7.05 2.05 0.80Dezign & Supervision LiD6 1.16Duties and Taxes 0.59 0.59

13.74 4.66Solid Waste Management

Civil Works 1.80 1.80 0.70Equipment & Materials 6.64 4.39 0.78 11.81 8.65Design & Supervision 0.69 0.69Duties and Taxes 1.97 1.97

16.Z7 9.35Urban Infrastructure

Civil Wor-ks 13.71 Z3.35 37.06 14.41Equipment & Materials 70.70 70.20 70.70Land 1.04 1,04Design & Supervision 3.75 3.75Duzties and Taxes 7.48 2.48

64.53 34.61

Institution Strengthening 3.ZO 3.70 3.70

Duties and taxes 0.07 0.07

TOTAL 40.55 64.18 75.78 130.51 67.00

DISBURSEMENT BY CATEGORYTotal % IDA IDA

Civil Works locally procured 59.79 59.79 39% 23.74Civil Works under ICB 13.71 13.71 39% 5.33Ma-terials locally procured (1) 4.39 0.78 5.17 39% Z.01Materials under ICB (1) 76.84 ZG.84 100% 76.84Buildinig Loans 3.55 3.55 39% 1.38'Training & Consulting Services, 3.Z0 3.70 100% 3.70Lanid 3.58 3.58 0% 0.00Design & Supervision 8.19 8.19 0% 0.00Du-ties & Taxes 6.49 6.49 0% 0.00

0.00

40.55 64.18 25.78 130.51 62.00

Unalloca-ted IDA Credit(1) Total material an-d equipment 37.01

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be in excess of one year would include price adjustment clauses for laborand materials. Assurance was given at negotiations that procedures for localcompetitive bidding under the project would be acceptable to IDA and that forall contracts valued over 80 lakhs (US$ 667,000) IDA would be provided theopportunity to review bid evaluations prior to award. In view of thenumerous cities and project agencies involved, the Government of Gujaratwould bring uniformity into the form of documents and procedures through theUrban Strategy and Project Management Cell (USPMC). This would permit easierand quicker evaluation of bids and award of contracts.

2.50 Six consultant contracts have been made for project preparationcosting a total of US$175,000, US$34,000 of which was for internationalconsultant fees. Provision has been made in the project for sustained sup-port in institutional strengthening (US$125,000) and for detailed engineering(US$1,117,000), all of which would be locally procured (see Annex 10).Estimates are based on an average man month rate of Rs 20,000 for localconsultants.

G. Disbursement

2.51 The proceeds of the credit would be disbursed against: (a) 100% offoreign expenditure for directly imported plant and equipment, and 100% oflocal expenditure (ex-factory) for locally manufactured plant and equipmentprocured through international competitive bidding; (b) 39% of expenditurefor plant, equipment and vehicles procured through local competitive biddingor prudent shopping; (c) 39% of expenditure on contracts for civil works;(d) 39% of expenditure on home improvement loans; and (e) 100% of expenditurefor technical assistance and training and related equipment. Disbursementsfor (d) above, for civil works payments not exceeding Rs 600,000 (US$50,000)for an aggregate value of Rs 100 Lakhs (US$833,000), and for the procurementof plant, vehicles and equipment not exceeding Rs 300,000 (US$25,000) for anaggregate value of Rs 100 La<hs (US$833,000) will be made against statementsof expenditure (SOE's), the documents for which would not be submitted to theBank but retained and made available for inspection during project supervi-sion missions. Assurance was given at negotiations that independent auditorswould be retained to carry out annual audits of all SOE's submitted in eachfiscal year and COG would furnish annual audits to IDA within nine monthsafter the end of each fiscal year. All other expenditure would be fullydocumented.

2.52 A schedule for project expenditure is shown in Table II.11. Aschedule for disbursement of the IDA credit is shown in Table II.12. TheBank-wide disbursement profile for the urban sector indicates a nine yeardisbursement period. A seven year disbursement period is estimated for thisproject, which is more consistent with urban project experience in India, theadvanced state of preparation of this project and the implementation capacityof the agencies invovled.

H. Accounts and Audits

2.53 GHB and the eight local governments would maintain separate projectaccounts. The Urban Strategy and Project Management Cell (USPMC) would haveresponsibility for reviewing and maintaining audited statements of project

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vvvsthtts .,~~~~~~~llllid>., LiII 4114. IlilU7;L Ll ,I;I uI,Lil. ii-J....................... LCII1I77

I otIal Jal 86 iul U-.j Id 87 J,1 11 3. .I" . .3 .1 90 I JII 24± iul1 9"Jun 06 Jon 7.? Jun 80 Jf. 9 I Jnr! 30 Jun 11 JUO 52 liec. 12

K.Area ieueiopnent 10CA 16 46)0 221 .92 306.13 404.04 349.6 3 276.02 117.2.1 9.'0Ph,,ing 100. O 2f .50% 12. OD 21 .00 22.0D.% 19.01% 15 01% S0.,'J." 0.50L ,

B.Town Planning 2i98'.2C8 0.O 159.26 318.52 532.7'7 417 .86 417.86 "20.93 34.09Schemes 1OO.0O: 0D.00i', 7.62X 15.25X 2.5.50.'s 20.AX% 2'O.Q00OX O0.OD' 1.63X

C.Slurt Upgradirg 1649.35 32.99 255.65 329.87 346.36 362.06 263.90 49.40 0.25100.00D' 2, .a0 i5.50.'s' 20.G00 1.DD,¢ 20'2 I. 16.0Q. 3.0 0.50X

U.Solid Waste 1952.74 136.69 i49.11 414.09 398.86 292.91 122.05 80.45 58.55Managemen'nt 100.008% 7.00X 23.00X 71.21% 2'0.43% 15.00X 6.25¢ 4.12% 3.00X

EUrban 7743.19 159.75 i79.26 1058.36 1700.93 1626.0?7 108.05 483.95 270.81Infrastructure 100.004 2.06L 6.11ji 24ii.00' % 23.00X 21.00' 14.00; ' 6.25 3.50Z

F.Tnstitution 386.77 46.41 s8.02 46.41 46.41 69.62 619.62 30.60 11.60Strengthening 100 112.00%¢ 15.001. 12.00X 12.00O 18.00%' 18.00% 10.00,' 3.00O

Trotal 15661.40 421.85 1622.14 3353._0 3510.17 3118.94 2233.49 1008.70 392.50

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GUJARAT URBAN PROJECT-TABLE II.1Z: ESTIMATED DISBURSEMENT SCHEDULE.

IDA Quarter Ending Disbursement Cumulative Cumul. QuarterFiscal Disbursement %Year (UJS$ Million) (US$ Million)

1986 March 31, 1986 0.00 0.00 0.00% 1June 30, 1986 0.00 0.00 0.007. 2

1987 September 30, 1986 0.93 0.93 1.50% 3December 31, 1986 0.93 1.86 3.00% 4March 31, 1987 1.24 3.10 5.00% 5June 30, 1987 1.86 4.96 8.00% 6

1988 September 30, 1987 1.86 6.82 11.00% 7December 31, 1987 2.48 9.30 15.00% 8March 31, 1988 Z.48 11.78 19.00% 9June 30, 1988 1.86 13.64 27.00% 10

1989 September 30, 1988 2.48 16.12 26.00% 11December 31, 1988 2.48 18.60 30.00% 12March 31, 1989 Z.48 21.08 34.00% 13June 30, 1989 2.48 23.56 38.00% 14

1990 September 30, 1989 7.48 26.04 42.00% 1sDecember 31, 1989 2.48 28.57 46.00% 16March 31, 1990 Z.48 31.00 50.00% 17June 30, 1990 3.10 34.10 55.00% 18

1991 September 30, 1990 2.48 36.58 59.00% 19December 31, 1990 3.10 39.68 64.00% 20March 31, 1991 2.48 42.16 68.00% 21June 30, 1991 2.48 44.64 72.00% 22

1992 September 30, 1991 3.72 48.36 78.00% 23December 31, 1991 4.34 52.70 85.00% 24March 31, 1992 3.10 55.80 90.00% 25June 30, 199Z 2.48 58.28 94.00% 26

1993 September 30, 1992 1.86 60.14 97.00% 27December 31, 1992 1.86 62.00 100.00% 28

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accounts for expenditure made by the implementing agencies. Assurance wasgiven at negotiations that annual audits of project accounts in allimplementing agencies would be undertaken by or on behalf of the AuditorGeneral and collected by USPMC and submitted to IDA within nine months afterthe close of each fiscal year.

I. Supervision

2.54 About 90 staff weeks of Bank supervision would be required over thefive year project implementation period. This is slightly less than theSouth Asia average of 20 staff weeks per year for supervision of urbanprojects. It is expected that the arrangement for a strong Urban Strategyand Project Management Cell (see para 3.02) would help to minimize Bank stafftime. Some supervision cost would be saved by combining with he supervisionof the Gujarat Water Supply and Sewerage Project.

III. PROJECT MANAGEMENT

A. Project Management Structure

3.01 At the state level the project would be overseen by the Housing andUrban Development Department. This Department has responsibility for over-seeing project implementing agencies including local governments, developmentauthorities and the GHB.

3.02 As has proved successful in the ongoing Madhya Pradesh Urban Develop-ment Project, the State Government has established an Urban Strategy andProject Management Cell (USPMC) at the secretariat level to manage theproject. It is headed by a Deputy Secretary and includes two town planningofficers, as well as support staff. The adequacy of this staffing will bereviewed with COG during project implemenation and adjusted if necessary (seeSection C of the Action Plan). Some members of the team already involved inthe preparation of the project (from TPVD and other project agencies) formthe nucleus of the USPMC. The USPMC has responsibility for finalizingproject formulation, monitoring project implementation, authorizing disburse-ments to project implementation agencies from funds provided under the StateGovernment budget and managing separate accounts and progress reporting. Theexpertise developed in the USPMC would be useful for reviewing the state'surban development strategies, planning and implementing future similarprojects and monitoring urban development issues and policies on a statewidebasis.

3.03 The Ahmedabad Urban Development Authority (AUDA) has coordinated thepreparation of the investment program in the East Ahmedabad area duringproject preparation. AUDA would continue this involvement with the planningof TP schemes and shelter components in the East Ahmedabad area.

3.04 Some aspects of the project would be managed at the state level bythe GMFB (see paras 3.13-3.15). GMFB would be responsible for financialanalysis and related technical assistance to municipal corporations andmunicipalities and it would administer a training program for local govern-ment employees. Legislation for the GMFB has recently been amended to enable

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it to act as a financial intermediary between the State Government and localgovernments. Due to its lack of experience, it has not been given this rolefor this project, but it is expected to build expertise for such a role inthe future. TPVD would assist local governments from the state level in theplanning and processing of TP schemes (see para 2.13).

3.05 HUDCO would not be involved directly as financial intermediary inthis project as it is in Madhya Pradesh, although HUDCO has prepared designsfor two of the area development projects. Bank involvement with HUDCO con-tinues in the supervision of the Madhya Pradesh project. However, GOI andHUDCO felt that HUDCO's resources and other commitments would not allow it tocommit itself to the same financing plan as in the Madhya Pradesh Project(67% of project cost from HUDCO without Plan additionality).

B. Implementation Responsibilities

3.06 The primary responsibility for individual project components wouldlie with the following agencies:

Project Management - Housing and Urban Development Department- Urban Strategy and Project Management Cell (USPMC)- AUDA (planning for East Ahmedabad)- GMFB (for Municipal Finance and Training)

Area Development - GHB (Vadodara and Ankleshwar), SMC, AMC, AUDA(E. Ahmedabad), Palanpur Municipality

TP Schemes - TPVD (scheme processing)- SMC, Ankleshwar Municipality, AUDA (for implementation)

Slum Upgrading - AMC, VMC, SMC, JMC, AUDA, Jetpur Municipality

Urban Infrastructure - SMC, VMC, (storm drainage)- AMC (for secondary sewerage and East Ahmedabad

water and sewerage)

InstitutionalStrengthening - GHB, TPVD, AMC, SMC, East Ahmedabad, AUDA, JMC,

GMFB (see paras 2.34-2.41)

C. Project Agencies

The Gujarat Housing Board

3.07 The GHB would implement two of the proposed area development schemes,including the largest (44 ha) in Vadodara and one in Ankleshwar (see para2.06). Until now GHB's program has been weighted towards the construction ofcompleted housing for upper and middle income groups. Shelter intended forlow income households has been affordable only with large capital and inter-est subsidies. Experiments with sites and services schemes have met withlimited success. The schemes proposed for this project, stressing moreefficient design and management, would seek to overcome past deficiencies.

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3.08 GHB has serious problems with financial management. There is a lackof adequate planning and budgeting, and information for management is inade-quate for proper control. A separate system of accounts is being establishedto maintain adequate control of project funds. However, over the longer termthe project is assisting to improve GHB's overall financial management.Consultants have begun work to review financial and managerial problems atGHB, and they are expected to make preliminary recommendations early in 1985including an integrated accounting system based on full project cost account-ing with the allocation of overheads and other costs to projects, andimproved debtor accounting. They will also recommend a system of budgetarycontrol and long-range planning. Implementation of a new project costaccounting and budget control system would be completed by April 1, 1986 (seeSection D of Action Plan). As these measures are put into effect, it isexpected that GHB will experience earlier fructification of assets andimproved recoveries from debtors. This should lead to gradual improvement inGHB's financial position as outlined in Annex 7.

Municipal Corporations and Municipalities

3.09 The cities of Gujarat are not overly dependent on State Governmentgrants (grants were 12% of total revenues in Ahmedabad in 1983/84 and 15% inSurat and Vadodara). However, much of this limited reliance on grants can beexplained by the inadequate levels of service and maintenance provided.Therefore, preparation of the project has included the analysis of complexissues related to municipal finance (see para 1.13) and the preparation offinancial projections for the project cities to assess the potential short-falls in revenue (see Annex 6). During project preparation, a number ofmeasures have been implemented to strengthen the financial position of localgovernments, the effects of which are shown in the financial projections.These include the enacting of legislation by GOG to partially delink propertyvaluations from rent control by allowing actual rental values to be usedwhere they are higher than controlled rents. AMC has also taken a number ofadministrative actions to improve tax administration and to reduce expendi-ture.

3.10 It will be important to ensure that local governments will be ableto cover the costs of improvements and extensions of service and maintenance,and debt service under the project without increasing their reliance ongrants. To assure this, agreement was reached at negotiations that COG willcuase local governments to take appropriate action to ensure that, witheffect from fiscal year 1985/86, total expenditure chargeable to revenueaccount will be covered by local taxes and charges and normal governmentgrants and that thereafter the revenue accounts of the involved localauthorities will be kept in balance. To begin to achieve this end, COG hasrecently amended the Bombay Provincial Municipal Corporations (BPMC) Actthrough an ordinance to introduce minimun charges for water and to raise theminimum conservancy charge and to introduce an interest penalty on propertytax arrears (items 1 and 2 of the Operational Action Plan, Annex 1, SectionE). The Action Plan includes a Municipal Finance Program (Section E) whichwould be undertaken to enhance municipal finance and which would be monitoredby GMFB. GMFB would also monitor the implementation of revenue enhancementmeasures after they are enacted. In the case of Ahmedabad, it is estimated

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that the quantifiable measures in the Action Plan would generate an addi-tional Rs 8.8 crores of revenue per year by 1990/91 (7% of total revenues)which would be roughly sufficient to cover expenditure. Rs .5 to 2 croresof this would be attributed to the minimum charges for water and conservancyand to the interest penalty described above. A similar impact would beexpected in other cities (see Annex 6). Assurance was sought at negotiationsthat the entire Operational Action Plan, Section E will oe followed (see para2.04).

3.11 The Gujarat Municipal Finance Board has begun to undertake analysisof local governments' taxation practices and recommend to the State Govern-ment where improvements can be made. Analysis by GMFB has shown thatimprovements in assessments and collections would be possible in many cities.The Operational Action Plan includes specific targets for improving collec-tions (see items 7 and 8, Section E).

3.12 Although the recent amendment to the Municipal Corporations Actenables the corporations to value rental property on the basis of actualrent, this is only a first step towards more fundamental changes in propertyvaluation. Further measures which would begin to change the method ofproperty valuation for some types of property (especially commercial andindustrial) are being considered. Steps toward drafting and introducing suchmeasures also form part of the Operational Action Plan.

The Gujarat Municipal Finance Board (GMFB)

3.13 GMFB has a broad mandate, but as yet it has had a limited role inimproving municipal finance (see para 1.13). Under the project, GMFB wouldbe strengthened in several ways. First, the GMFB Act has been changed toenable it to take a more active role in project identification and financein the local governments. To build GMFB's capacity for this role, it hasbeen involved in project preparation for the three municipal towns. (GOGprefers not to involve GMFB as a conduit of funds in this project in order tolimit the complexity of funds flows.)

3.14 Until now GMFB has dealt mainly with municipalities, and datacollection and analysis has been largely descriptive. Under the project,GMFB would initiate a Municipal Finance Analysis and Monitoring Cell (MFAMC)which would analyze potential financial improvements for both municipalcorporations and municipalities. The Cell would analyze municipal resourcesand expenditures, maintain and extend the municipal finance and statisticaldata base which has been created during project preparation and monitor theMunicipal Finance Program (see paras 3.09-3.12).

3.15 GMFB would also administer a training program for municipal manage-ment and finance. Similar to the program being carried out under the MadhyaPradesh Urban Development Project, this program is being designed to cater tovarious levels and disciplines in urban management. TPVD is also beinginvolved in the program to assist with training for urban planning.

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The Ahmedabad Municipal Corporation (AMC)

3.16 AMC, which would implement several components under the project, isalso a project agency under the Gujarat Water Supply and Sewerage Project(Credit 1280-IN). Since solid waste management investments, which would befinanced from general municipal revenues, would be undertaken by AMC, thefinances of AMC are being examined as part of the Municipal Finance Program(see para 3.10). In addition, the financing of AMC's water supply andsewerage operations has been reviewed in connection with the ongoing project.

3.17 An operations and management study of AMC's water supply and sewerageinvestments has been undertaken, and the recommendations have been imple-mented (e.g., decentralization of repair and maintenance functions to zonaloffices, introduction of a new management information system, a revisedstaffing pattern and a new materials management system). Under the ongoingproject, AMC agreed to a doubling of revenues from water and sewerage opera-tions from the 1981/82 base year to March 31, 1984. This has been 65%accomplished. Although rates have been doubled, revenues are lagging partlydue to legal challenges to property valuations. AMC expects most legalchallenges to property taxes to be resolved by early 1986, which would sig-nificantly contribute to meeting this covenant by March 31, 1986. Under theexisting water supply project, AMC is also commited to covering the cost ofoperations, maintenance and depreciation from water and sewerage charges byMarch 31, 1988 and covering the cost of operations, maintenance and debtservice, excluding depreciation, by March 31, 1993. At negotiations, thesetargets were confirmed. AMC has agreed to undertake a detailed assessment ofthe measures required to meet the targets.

3.18 AMC is extending its boundaries to include the project areas in EastAhmedabad. Assurance was given at negotiations that COG will cause AMC toimplement, operate and maintain project works in the East Ahmedabad area. Atimetable was also agreed for the full extension of AMC authority into thearea (see Section C of the Action Plan).

3.19 At present much of the cos- of water supply and sewerage operationsin the area are being met from general revenues. The area is not coveredunder the Gujarat Water Supply and Sewerage Project (Credit 1280-IN).Preliminary financial analysis for the proposed water supply and sewerageoperations has been made during project preparation (see Annex 6). Given thearea's large industrial base, the objective of full cost recovery should beattainable. Agreement was reached at negotiations that for East Ahmedabadwater supply and sewerage operations GOG will ensure that by March 31, 1991the cost of operations and maintenance, including 50% of deprecitation ordebt service, whichever is greater, are covered by charges on industries andwater and conservancy taxes on the users of the facilities. The costs ofoperation, maintenance and 100% of debt service will be met by March 31,1993. It was also agreed that by June 30, 1986 AMC will assess the measuresrequired to meet these targets (see Section C of the Action Plan).

The Ahmedabad Urban Development Authority (AUDA)

3.20 During project preparation AUDA's role as metropolitan developmentcoordinator has been strengthened by placing AUDA in charge of planning for

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the area east of Ahmedabad. With the expansion of AMC's boundaries, AMC willnow be responsible for implementation in the East Ahmedabad area, but AUDAwill continue with the planning of TP schemes in that area. As part ofproject preparation a study was undertaken of AUDA's financial management andorganization.

Town Planning and Valuation Department (TPVD)

3.21 TPVD has an especially important role to play in the planning andprocessing to TP schemes, and its ability to do so would be strengthenedunder the project (see para. 2.37).

IV. PRICING, AFFORDABILITY AND RESOURCE MOBILIZATION

A. Pricing and Cost Recovery

4.01 About 80% of total project cost would be recovered from beneficiaries(45% through payments in land development and shelter components and 35%through user charges in water and sewerage components). The interest rateson shelter loans to beneficiaries and on betterment taxes (outlined below)would be higher than in existing programs and positive in real terms, sincethe average rate of inflation over the project period is expected to be wellbelow this level. Price contingencies for the project period range from 6%to 9%.

4.02 Area Development. Full cost recovery would be achieved in areadevelopment schemes. This would demonstrate a methodology which could laterbe extended on a larger scale for reducing the high levels of subsidizationin land and housing development (see para 2.07). Approximately 96% of thetotal cost of this component would be directly chargeable (land, sitepreparation, on-site infrastructure, off-site infrastructure, on-plotdevelopment and shelter loans). Land would be costed at market prices (up toRs 80 per square meter compared to Rs 10 per square meter typical in pastprojects. Overheads would be included in costs to be recovered. Interest ofnot less than 12% would be charged, which is expected to be positive in realterms, since the annual inflation rate during the period is expected to beless than 7%. The rate is well above the 4% to 6% now charged in similarprojects. Cost recovery at this level would be made affordable throughappropriate designs and a system of differential land pricing with upperincome and business plot beneficiaries paying higher than average costs. Theterms of plot charges and loans would include: (i) for residential plots andshelter loans for EWS, LIG and MIG households, an average 10% downpayment onthe price of the plot with the balance of the plot price and loan amount (ifany) to be repaid at not less than 12% p.a. interest over 20 years; and(ii) for HIC and industrial and commercial plots, a 30% downpayment with thebalance to be repaid at not less than 12% p.a. over 15 years. Assurance wasgiven at negotiations that terms and conditions of lease and hire purchase inarea development would be satisfactory to IDA including that interest of notless than 12% p.a. would be charged to beneficiaries.

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4.03 The remaining cost of community facilities (4%) would not be directlyrecovered, but some cost of off-site infrastructure would be recoveredthrough user charges.

4.04 Town Planning Schemes. The high subsidies in TP schemes (see para1.10) would be eliminated by changing the basis for calculating bettermenttax, including the cost of off-site infrastructure, enabling local governmentto recover part of the cost in the form of land and charging a marketinterest rate instead of the present 6%. Costs would then be fully recoveredthrough betterment taxes and land sales with interest of about 12% per annumcharged on unpaid betterment tax balances. Since the TP legislation would bechanged, cost recovery would also be improved in TP schemes not included inthis project.

4.05 Slum Upgrading. Slum improvements have been designed to beaffordable with full cost recovery. The cost of improvements and a nearmarket price for land would be recovered through plot charges at a 12% inter-est rate. The value of publicly owned land to be charged to beneficiarieswould range from Rs 50 to Rs 100 per square meter in Ahmedabad and from Rs 20to Rs 60 in Jamnagar, Surat and Vadodara, depending on the location.Assurance was given at negotiations that in slum upgrading the cost of landand improvements would be recovered, that terms and conditions of lease wouldbe satisfactory to IDA and that interest of not less than 12% p.a. would becharged. Shelter loans would also be repaid at 12% over 20 years. Thiswould be the first direct recovery of the costs of slum upgrading in Gujarat.

4.06 Water Supply, Sewerage and Maintenance. Municipal governments willassume the responsibility for maintenance of area development sites andupgraded slums. Assurance was given at negotiations that water supply andsewerage facilities developed in area development sites would be taken overfor management by local governments or housing cooperative societies andprevailing water ans sewerage rates would be charged to beneficiaries withindividual connections. In slum upgrading, facilities will be transferred tolocal governments and prevailing rates will be charged. Since about 80% ofbeneficiaries would be exempt from normal property taxes, the maintenancefees would supplement the municipal governments' resources for operation andmaintenance.

4.07 Cost recovery for secondary sewerage infrastructure in AMC would belinked to terms set out in the ongoing Gujarat Water'Supply and SanitationProject (see para 3.17). The cost recovery program for proposed water andsewerage investments in the East Ahmedabad area is described in para 3.19.

B. Affordability

4.08 Area development sub-projects have been designed so that about 65% ofplots would be affordable to EWS and LIG households with incomes of less thanRs 650 per month (about the 40th percentile), with basic monthly chargesstarting at about Rs 25.00. Basic monthly charges for upgraded areas wouldbe about Rs 18 and Rs 25 for 12 m2 and 20 m2 plots and would be affordable tohouseholds earning Rs 350 and Rs 450 per month, respectively.

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4.09 Affordability analysis and indicative charges for the largest areadevelopment in Vadodara are given in Table IV.1. Table IV.2 gives affor-dability analysis and indicative charges for a typical slum upgrading sitein Surat.

C. Resource Mobilization

4.10 The costs of solid waste management and maintenance would largely berecovered through the general revenues of the municipal governments (althoughsome costs of water supply, sewerage and maintenance would be met by usercharges). The project includes a major effort to improve the general revenueof the local governments, as explained in paras 3.09-3.12.

V. BENEFITS AND RISKS

5.01 The immediate benefits of the proposed project would be to increasethe supply of developed land, primarily for low income groups; to improve theliving conditions of 275,000 slum households; to improve solid waste manage-ment and storm drainage in the the major cities of Gujarat; and to providepriority investments in sewage disposal and treatment, and water supply inthe area east of Ahmedabad. The long term benefits include improvements inthe system for urban land development (with public agencies concentrating onefficiently designed site development for low income groups, leaving houseconstruction to the private sector, and achieving more efficientpublic/private sector collaboration in town planning schemes). Secure tenureand cost recovery would be introduced in slum upgrading projects, and theseand other municipal services would be planned and implemented more effi-ciently. The system for urban management and finance in Gujarat would bestrengthened, including improved financial management in CHB, improvedmunicipal resource mobilization, improved local government in the EastAhmedabad area, and a new capacity at the state level (in the USPMC, GMFB andTPVD) to prepare, finance and supervise urban development programs and toprovide technical assistance and training to local governments.

5.02 The project would have an important impact on poverty groups inGujarat (see Annex 9). The area development component would serve about79,000 persons, about 75% of whom fall below the estimated poverty level,providing them with shelter, basic services, primary and secondary educationand health care. The average per household cost of plots, core houses andloans would be Rs 13,200 (US$1,200). Investments in town planning schemeinfrastructure would benefit an ultimate population of about 325,000 persons,about 50% of whom fall below the poverty level. Slum upgrading schemes wouldprovide basic infrastructure and sanitation to about 300,000 persons, about95% of whom fall below the urban poverty threshold and many of whom have noaccess to basic sanitary facilities. The average per-household cost ofupgrading plus building loans would be Rs 2,300 (US$190). Investments insolid waste management would improve environmental and health conditions fora population of about 4.5 million (50% below poverty level), and investmentsin storm drainage would benefit a population of about 610,000 (60% of whombelow poverty level). Investments in sewerage infrastructure in Ahmedabadwould benefit a population of about 900,000 (60% below poverty level). Water

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------------------------------------------------------------------------ __---__--------------

GUJARAT URBAN DEVELOPMENT PROJECT TABLE IV.l: PRICING, LAND USE & AFFORDABILITYVADODARA-GURWA AREA DEVELOPMENT SCHEME.

LAND USE.

*percenT Pricing ofTotal Area Ha 44.00 100.00 X Non-ResidentialCirculation mZ 106Z16 Z4.14 X LandOpen Space mZ 4Z59Z 9.68 % ----Primary Schools m2 12114 2.75 % 90Second. Schools m2 15127 3.44 X 90Other Facilities mZ 9685 2.20 % 240Commercial #1 m2 17869 4.06 X 700Commercial #2 m2 0 0.00 % 0Commercial #3 mZ 0 e.00 % 0Other Areas mZ 0 0.00 % 0

*TOTAL MARKETABLE AREA m2 291192 66.18 %*TOTAL RESIDENTIAL AREA r2 236397 53.73 %*TOTAL NUMBER OF PLOTS 4382 Hshd size : 5*POPULATION DENSITY/ha 489-------------------------------------------------------------- __-----------____-----------_-_

DEVELOPED LAND COST PER GROSS m2 118.28*DEVELOPED LAND COST PER NET m2 : 178.72

PRICING ANO AFFORDABILITY OF RESIDENTIAL PLOTS------------------------------------------------

Plot Types #1 #Z #3 #4 #5 #6 #7 #8 flats

Monthly Income/Household 350 400 588 600 1000 1500 2258 2750 2000Plot Size in r2 26.96 32.00 40.00 S5.00 105.00 150.00 Z00.00 270.00 50.00Percentage of Plots per Type ZZ.71 21.54 8.32 12.41 3.95 3.63 3.46 1.77 22.24*NUMBER OF PLOTS PER TYPE 977 927 358 534 170 156 149 76 957Land Sale Price per net m2 40.00 40.00 65.00 75.00 155.00 17S.00 210.00 225.00 27S.00Superstructure Cost per Plot 228 2Z28 2200 2Z28 0 0 0 0 0Other Cost per Plot 0 0 0 0 0 0 0 0 0

*TOTAL CAPITAL PER HOUSEHOLD 3Z78 3480 4800 5950 16275 Z6258 4288 60750 13758

Doun Payment (%) 7.58 10.00 12.00 15.00 25.00 2S.eo 30.00 30.00 100.00Interest Rate/Year 12.00 12.00 12.00 12.00 1Z.00 1Z.00 12.00 12.00 12.00Loan Term (years) 20 20 20 20 20 20 20 20 28

*LOAN MONTHLY PAYMENT 3Z.10 33.16 44.7Z 53.54 129.22 208.42 311.24 450.18 0.00Water & Electricity Charges 5.00 5.00 5.00 5.00 10.00 10.00 10.00 10.00 0.00Maintenance Charge 1/ 3.00 3.00 5.00 6.00 0.00 0.00 0.00 0.00 0.00

*TOTAL MONTHLY PAYMENT 40.10 41.16 54.72 64.54 139.22 218.42 321.24 460.18 0.00* %OF MONTHLY INCOME 11.46% 10.29% 10.94% 10.76% 13.92% 14.56% 14.28% 16.73% O.00%Building Loans:

-Amount of Building Loan 2888 2588 3500 4000-Percent Intake 50.00% 50.00% 25.00% 25.00%

a -Monthly Payment 22.82 27.53 38.54 44.04 0.00 0.00 0.00 0.00 0.00*TOTAL MONTHLY PAYMENT 62.12 68.68 93.25 108.58 139.22 218.42 321.Z4 4680.18 0.00*%OF MONTHLY INCOME 17.75% 17.17% 18.65% 18.10% 13.92% 14.56X 14.28% 16.73% 0.00%

*AMOUNT RECOVERED FOR OEVELOPEO LAND COST/NET mZ: 183.20*AVERAGE DEVELOPED LAND COST PER NET mZ :178.72

1/ Maintenance fee for plots larger than 80 square meters uill berecovered through property tax.

-36-

---------------------------------------------------------------------- __-_.--__-

GUJARfAl URBAN DEVELOPMENT PROJECT-TABLE IV.2: PRICING, LAND USE & AFFORDABILITYSURAT-LIMBAYAT SLUM UPGRADING SCHEME.

LAND USE.

'percenT Pricing ofTotal Area Ha 10.10 100.00 % Non-ResidentialCirculation m2 Z1968 21.75 X LandOpen Space t2 25755 Z5.50 % ----Primary Schools m'2 3204 3.17 % 0Second. Schiools n7 0 0.00 % 0Other Eacilities n2 78 0.03 % 0CoMmercial #1 nZ ZZ73 2.Z5 % 250CoMmercia] #Z M7 0 0.00 % 0CoMmercial #3 rZ 0 0.00 % 0Other Areas Mn 0 0.00 % 0[CrTAL MARKETABLE AREA mZ 53278 5Z.75 %*TOTAL RESIDENTIAL AREA m'Z 47773 47.30 %*TOTAL NUMBER OF PLOTS Z214 Hshd size 5*POPULATION DENSITY/ha 1096

DEVELOPED LAND COST PER GROSS mZ 48.40*DEVELOPED LAND COST PER NET rr7 91.76-----------------------------------------------------------------

PRICING AND AFFORDABILITY OF RESIDENTIAL PLOTS

Plot Types #1 #Z #3 #4

Monthly Income/Household 350 450 600 1000Plot Size in m7 17.00 20.00 35.00 65.00Percentage of Plots per Type 47.25 30.11 24.94 2.70'NUMBER OF PLOTS PER TYPE 935 667 55Z 60Land Sale Price per net m2 70.00 80.00 120.00 140.00Superstructure Cost per Plot 906 906 1259 1Z59Othei Cost per Plot 0 0 0 0

-TOTAL CAPITAL PER HOUSEHOLD 1746 2506 5459 10359

DowiIJr -ayment ( %) 5.00 7.50 10.00 I15.001i;terest Rate/Year 1Z.00 17.00 1Z.00 17.00Loan Term (years) Z0 70 70 70

*LOAN MONTHLY PAYMENT 17.SG 24.54 7Z.01 Y3.Z1Water & Electricity Charges 5.00 5.00 5.00 10.00Maitritenance Charge 1/ 1.00 7.00 4.00 8.00'Jl0lL MONTHLY PAYMENT 23.56 31.54 61.01 111.71* ZOF MONTHtY INCOME 6.73% 7.01% 10.17% 1l.1Z%Building Loans:

-Atmourit of Building Loan LOOO 7500 3500 4000Percent Intake 50.00% 50.00% Z5.00% 25.00%

* -Monthly Payment 71.17 26.47 37.05 47.35*TOTAL MONTHLY PAYMENT 44.73 58.01 98.06 153.56*%Oi: MONTHLY INCOME 1Z.78% 1Z.89% 16.34% 15.36%

*AMOUNT RECOVERED FOR DEVELOPED LAND COST/NET mZ: 99.18qAVERA(,F Of-VEIOPED LAND COST PER NET mZ : 91.76fi

1/ Mairtenance fee for plots larger than 80 square meters will herecovered through property tax.

-37-

supply and sewerage infrastructure would benefit a population of about630,000 in East Ahmedabad (65% below poverty level). Over 4.3 million urbanpoor would benefit from the project; about 63% of project cost would directlybenefit poverty groups, and 55% of the beneficiaries will be poor.

5.03 Economic rates of return have been calculated for the main componentsof the project. Area development components would have an ERR of 13%.Benefits were estimated using market information on rental values ofcompleted houses and on the sales prices of developed land. The planningtechniques introduced in this project (see para 2.07) have reduced costs byminimizing underutilized space (wide streets, large open spaces, etc.) whilecarefully maintaining the amenities most valued by beneficiaries. At thesame time, features valued by upper income groups and small businesses havebeen designed into the schemes. The designs are, thus, much more economi-cally feasible than previous similar projects in Cujarat. Sensitivityanalysis indicates that if the market rent levels were 10% less thanestimated, a 12% ERR would still result.

5.04 For TP schemes, land market information has been used to calculatethe difference between the existing land and plots after urbanization. Suchinformation is routinely collected as part of the TP scheme process. Thisyields an ERR of 29%, reflecting the high return on this type of landdevelopment in an environment of very constrained supply. Even assuming landvalues of 10% less resulting from the project, an ERR of 18% would result.The higher ERRs than in area development reflect the different market seg-ments being addressed. The high rates of return in TP schemes reinforce theargument for at least recovering investment costs from beneficiaries.

5.05 For slum upgrading, rental market information was used to determinethe difference in rental value between existing residential and commercialstructures before and after upgrading. This yields an ERR of 17%. Sen-sitivity analysis indicates that rent levels of 10% less after upgrading thanthose estimated would lower the ERR to 11%.

5.06 For the proposed trunk sewer in East Ahmedabad, a similar methodologywas used estimating the increases in land market value attributable to theinvestment and including the value of increased user charges by landowners.This yields an ERR of 16%.

5.07 The risks to which the economic rate of return is considered mostsensitive would be slippage in the realization of benefits relative to thetiming of costs incurred, although the likelihood of such an occurrence isconsidered low, given the high and inelastic demand for shelter and basicservices. A more likely occurrence would be for both costs and benefits tobe delayed together, in which event the rate of return would not be sig-nificantly altered. To demonstrate the effects of a more extreme case, forexample, a one year lag in benefits (plot allocation and sales) in areadevelopment with the timing of the costs remaining the same, the ERR would bereduced from 13.0% to 10.6%. Together the quantifiable components of theproject account for 58% of total costs and have a weighted ERR of 18.6%.These rates of return may not fully account for the benefits from improvedhealth as well as the many indirect and longer-term benefits resulting from

-38-

the demonstration of new planning and investment strategies and thestrengthening of urban sector management (as outlined in para 5.01).

5.08 A major risk relates to the complexity of the project and thecapacity of the project management and implementing agencies. Because ofconcern about potential complexity, several components and one additionalcity discussed during project preparation were deleted. A relatively simpleproject management and flow of funds system has been established (see para3.02). Although the capacities of some agencies at the state and locallevels are limited, state and local governments in Gujarat are relativelywell managed compared to other states, and the project would furtherstrengthen them, especially in their financial management. The largestinstitutional risk factor related to the requirement for a consolidated localgovernment in the East Ahmedabad area. Assurances have now been receivedfrom GOG that AMC will implement, operate and maintain project components inthe area.

5.09 Land acquisition has proven risky in most urban projects in India,but much more land for area development has been acquired prior to appraisalin this project (about 79%). Almost all of the land for area development notyet acquired is for the proposed area development scheme in Ahmedabad. Toaccelerate acquisition of this area, a draft revised TP scheme has recentlybeen approved by AMC, and letters of consent have been received from ownersof about 50% of the land. About two-thirds of the slums proposed for upgrad-ing are on municipal or Government land. The remaining one-third are onprivately owned land in Ahmedabad (65% of the proposed Ahmedabad slumprogram) which AMC is acquiring through modifications of existing TP schemes.Declarations of intent to modify all the existing 27 TP schemes have beenmade and AMC now has 36% of the slum land in its possession, enough for thefirst two years work.

5.10 The need to plan, process and implement the town planning schemeswithin the project period poses some risk since these schemes have taken 5 to10 years in the past. For this reason, special assurances of staffing andpriority are being sought from GOG, and simplifications in the processingsystem would be pursued under the project (see para 2.14). Especially toaccommodate these schemes, a five year project period has been chosen.

VI. AGREEMENTS REACHED AND RECOMMENDATIONS

6.01 The following agreements were reached at negotiations:

(a) GOG would submit quarterly reports to monitor progress in projectimplementation and to indicate progress on the implementation ofactions contained in the agreed Operational Action Plan (Annex 1) tobe adhered to by GOG and the state and local agencies under theproject; the Operational Action Plan would be reviewed and updatedannually by GOG and it would be satisfactory to IDA (see para 2.04);

-39-

(b) The proposed area development sub-projects would receive necessaryGOG and local planning, engineering and building approvals asappraised (see para 2.07);

(c) Beneficiary selection criteria and leasing procedures in areadevelopment would be acceptable to IDA (see para 2.10);

(d) In Town Planning Schemes (a) the definition of project cost wouldallow for estimates of cost increase during implementation; (b) theinterest rate would be tied to a market bank rate; (c) local govern-ments would be permitted to acquire and lease land for business and mixedresidential purposes; and (d) cost estimates would include anallowance for off-site infrastructure (see para 2.12);

(e) Procedures for local competitive bidding under the project would besatisfactory to IDA; for all contracts valued over Rs 80 lakhs (US$667,000), IDA would be provided the opportunity to review bid evalua-tions prior to award (see para 2.49);

(f) Independent auditors would be retained to carry out annual audits ofall SOEs submitted in each fiscal year and COG would furnish annualaudits to IDA within nine months after the end of each fiscal year(see para 2.51);

(g) Annual audits of project accounts in all implementing agencies wouldbe carried out by or on behalf of the Auditor General and collectedby USPMC and submitted to IDA within nine months after the close ofeach fiscal year (see para 2.53);

(h) COG would cause local governments under the project to takeappropriate action to ensure that, with effect from fiscal year1985/86, total expenditure chargeable to revenue account will becovered by local taxes and charges, and normal government grants,and that thereafter the revenue accounts of the involved localauthorities will be kept in balance (see para 3.10);

(i) GOG will cause AMC to implement, operate and maintain project worksin the East Ahemdabad area (see para 3.18).

(j) For AMC water supply and sewerage, the cost of operations, main-tenance and depreciation will be covered from water and seweragecharges by March 31, 1988 and the cost of operations, maintenance anddebt service, exluding depreciation, will be covered by March 31,1993 (see para 3.17)

(k) In East Ahmedabad water supply and sewerage operations, GOG willensure that by March 31, 1991 the cost of operations and maintenance,including 50% of depreciation or debt service, whichever is greater,are covered by charges on industries and water and conservancy taxeson the users of the facilities. The costs of operation, maintenanceand 100% of debt service will be met by March 31, 1993 (see para3.19)

-40-

(1) Terms and conditions of lease and hire purchase in area developmentwould be satisfactory to IDA including that interest of not less than12% p.a. would be charged to beneficiaries (see para 4.02);

(m) In slum upgrading the cost of land and improvements would berecovered; terms and conditions of lease would be satisfactory toIDA; and interest of not less than 12% p.a. would be charged (seepara. 4.05); and

(n) Water supply and sewerage facilities developed in area developmentsites would be taken over for management by local governments orhousing cooperative societies, and prevailing water and seweragerates would be charged to beneficiaries with individual connections.In slum upgrading, facilities will be transferred to local govermentand prevailing rates will be charged (see para 4.06).

6.03 On the basis of the above agreements, the project would be suitablefor an IDA credit to GOI of US$62 million.

ANNEX 1-41- Page 1

OPERATIONAL ACTION PLAN

A. TECHNICAL ASPECTS Agency Due Date

1. Preparation of detailed engineeringand tender documents for:

Area Development at Gorwa GHB DoneArea Development at Surat SMC/TPVD Ready *Slum Improvement at Surat SMC/TPVD Ready *Slum Improvement at Jamnagar JMC Ready *Solid Waste Management in Ahmedabad AMC December 31, 1985Solid Waste Management in Vadodara VMC Ready *Solid Waste Management in Surat SMC Ready *Solid Waste Management in Rajkot RMC Ready *Solid Waste Management in Jamnagar JMC Ready *Sewerage in Ahmedabad AMC DoneStorm Drainage in Vadodara VMC DoneStorm Drainage in Surat SMC November 30, 1985

2. Draft Final Report for AMC SolidWaste Management sent to Bank AMC Done

3. Submission of Feasibility Report onVadodara Slum Improvement VMC Done

4. Bank to be informed of status of landacquisition for transfer station andof creation of Solid Waste ManagementDepartment in Surat SMC November 30, 1985

5. Bank to be informed of creationof Solid Waste Management Departmentin Rajkot. RMC November 30, 1985

6. Design Report on Area Development inGhodasar AUDA May 1, 1986

7. Feasibility Report on SewageTreatment Land and Technologyto be sent to Bank AMC January 1, 1986

8. Detailed Engineering and TenderDocuments to be prepared forE. Ahmedabad Trunk Sewer AMC March 31, 1986

i Ready indicates prepared but not yet received by IDA.

-42-

ANNEX 1Page 2

9. Slum Upgrading in E. Ahmedabad AUDA March 31, 1986Area Development in Ankleshwar GHB November 30, 1985Slum Improvement in Palanpur TPVD December 31, 1985Area Development in Jetpur TPVD November 30, 1985

10. Appointment of DrainageAdvisor to Surat to beconsidered by next mission SMC January 31, 1986

11. Appointment of consultants forstorm drainage study of Jamnagarfollowing agreement to TOR,invitation and evaluation ofproposals and award of contractto be considered by next mission JMC January 31, 1986

B. TOWN PLANNING SCHEMES ACTION PLAN

SURAT GHODASSAR E. AHM. ANKLESHWAR(Other 2sites)

Draft Scheme

1. Completion of surveys and design done done done doneCTP AUDA AUDA CTP

2. Municipal Council resolution done done done doneSMC AUDA AUDA AM

3. Resolution approved by CTP done done done doneCTP AUDA CTP CTP

4. Declaration of intention and done done Nov 85 donecall for public meeting SMC AUDA AUDA AM

5. Hearing of objections Oct 85 done Feb 86 Oct 85SMC AUDA AUDA AM

6. Final submission of draft proposal Nov 85 done Mar 86 Nov 85SMC AUDA AUDA AM

7. State Government approval of Draft Jan 86 Sept 85 May 86 Jan 86Scheme GOG AUDA GOG COG

8. Appointment of a Town Planning Feb 86 Oct 85 Jun 86 Feb 86Officer COG AUDA COG COG

-43-

ANNEX 1Page 3

Preliminary Scheme

9. Start preparation of tender Feb 87 Oct 86 June 87 Feb 87documents for civil works SMC AMC AMC AM

10. Demarcation of new plots Feb 87 Oct 86 June 87 Feb 87completed by TP officer TPO AUDA TPO TPO

11. Sanction of TP Scheme by State Aug 87 Apr 87 Dec 87 Jan 88Goverment GOG AUDA GOG GOG

12. Implementation Agency takes Aug 87 Apr 87 Dec 87 Aug 87possession of public land SMC AMC AMC AM

13. Invitation for tenders Sep 87 May 87 Jan 88 Sep 87SMC AMC AMC AM

14. Award of contracts Nov 87 Jul 87 Mar 88 Nov 87SMC AMC AMC AM

Final Scheme

15. TP officer to finalize Nov 87 Jul 87 Mar 88 Nov 87compensation decisions TPO AUDA TPO TPO

16. Board of appeal Feb 88 Oct 87 Jun 88 Feb 88

17. Approval of financial scheme Aug 88 Apr 88 Dec 88 Aug 88by State Government GOG GOG GOG GOG

18. First notice issued for Sep 88 May 88 Jan 89 Sep 88collection of betterment taxes SMC AMC AMC AM

19. Completion of civil works Nov 88 Jul 88 Mar 89 Nov 88SMC AMC AMC AM

General

20. GOG to prepare proposals forimprovements in TP Scheme processingand discuss with IDA a timetable forimplementation of appropriate actions June 30, 1985

-44-

ANNEX IPage 4

21. GOG to prepare proposals for furtherenhancing cost recovery in TP schemesand discuss with IDA a timetable forimplementation of appropriate actions June 30, 1986

C. EAST AHMEDABAD (This assumes AMC to take over area)

Agency Due Date

1. Preliminary notification of extensionof AMC GOG November 30, 1985

2. Notification of Extended Corporation GOG January, 1986

3. Commence Octroi Collection AMC January, 1986

4. Commence property valuation innew area AMC January, 1986

5. Undertake internal assessment of tariffand other measures required in existingand new water and sewerage operationsnecessary to meet financial targets AMC June 30, 1986

D. GHB FINANCIAL MANAGEMENT

Agency Due Date

1. Completion of first draft ofFinancial Systems Report GHB Done

2. Preparation of draft Five-YearPlan GHB December 31, 1985

3. Final Systems Report submittedto Bank GHB December 31, 1985

4. Completion of systems andprocedural manuals GHB January 31, 1986

5. Other appropriate recommendationsfrom the study will be adopted asagreed by GHB and the Bank GHB April 31, 1986

-45-

ANNEX 1Page 5

6. Full implementation of new project costaccounting and budget control systemto begin for financial year 1986/87 GHB April 1, 1986

7. Five-Year Plan commences GHB April 1, 1986

E. MUNICIPAL FINANCE PROGRAM

Agency Due Date

1. Amend BPMC Act to increase theminimum charge for conservancyfrom Rs. 0.50 per month toRs. 3.00 per month and to pro-vide for Rs 5.00 charge for water cOG Done

2. Amend taxation rules in Chapter VIIIof Schedule A of BPMC Act to providefor interest penalty on arrears ofproperty tax COG Done

3. Means of strengthening municipalfinancial analysis to be discussedwith Bank GMFB January, 1986

4. GMFB to assess the feasibility foreach city of introducing measuresalready introduced in AMC andestablish a timetable forintroducing feasible measuresin each city GMFB/GOG July 31, 1986

5. GOG to assess possibility ofestablishing minimum tax ratesin respect of municipalitiesfor improving their finances COG July 31, 1986

6. Reports to be prepared and discussedwith IDA on possibility of measures for:

(a) further delinking property taxesfrom rents;

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ANNEX 1Page 6

(b) changing the basis for GMFB/GOG July 31, 1986exemption from the generaltax from rateble value tofloor area; and

(c) amending Section 139 of BPMC Actto make occupant liable forpayment of all taxes COG July 31, 1986

7. Collections of current year'sproperty tax demand to be achievedof 55% in project municipal towns Localand 65% in corporation cities * Governments March 31, 1987

8. Collections of current year'sproperty tax demand to beachieved of 65% in projectmunicipal towns and 75% in Localcorporation cities - Governments March 31, 1989

F. LAND ACQUISITION AND INITIAL PROCESSING OF PRIVATELY OWNEDSLUMS IN AHMEDABAD

Draft Scheme (for all slums)

1. Completion of Land Surveys done

2. Municipal Council Resolution done

3. Resolution approved by CTP done

4. Declaration of intention and callfor public meeting done

5. Hearing of objections May 1986AMC

It is understood that amounts in litigation would not be included incomputing current demand, since recovery of these dues would be outsidethe control of the local goverment.

-47-

ANNEX 1Page 7

6. Final submission of draft proposals July 1986AMC

7. State Government approval of August 1986Draft Schemes GOG

8. Appointment of 6 Town Planning DoneOfficers COG

Preliminary Scheme (for 160 ha of 280 ha)

9. Demarcation of acquired slums May 1986completed by TP officer TPO

10. Completion of tender documents for May 1986civil works AMC

11. Sanction of TP Scheme by State July 1986Government COG

12. Implementation agency takes July 1986possession of public land AMC

13. Invitation for tenders August 1986AMC

14. Award of contracts October 1986AMC

Final Scheme (for 160 ha of 280 ha)

15. TP officer finalizes compensation October 1986decisions TPO

16. Board of Appeal March 1987Court

17. Approval of final scheme by July 1987State Government GOG

18. First notice issued for collection August 1987of betterment taxes AMC

* Remainder to be processed with one year lag

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ANNEX 1Page 8

G. GENERAL

1. The Urban Strategy and ProjectManagement Cell (USPMC) will beestablished consisting initiallyof a Deputy Secretary and twoTown Planners with support staff.Staffing needs will be reviewed asthe project proceeds (see para 3.02) Done

2. The results of the Ahmedabad HousingStrategy Study to be reviewed by GOG,AMC and IDA and a timetable forimplementing appropriate recommendationsthat are agreed upon September 30, 1986

3. COG and IDA to agree on detailsof training program September 30, 1986

November 6, 1985

_49_ ANNEX 2

GUJARfAT URBAN PROJECT-TABLE 1- TOTAL PROJECT COST 10-Nov------------------------------- _.-------------------------------

A.MUNICIPAL CORPORATIONS CITIES.name of scheme cost total

(lakhs) costl.T.P.Schemes (crores)

Surat Fulpadra 171.66Kapadra 160.76

-__---…, 3.322.Area Development

Vadodara Gorwa 607.69Surat flnjana 139.08

Limbayat 52.59Ahmedabad Khokra Mehemdabad 293.04

)-------> 10.92

3.Slum ImprovementSurat Kamelo Tikaro 15.17

Limbayat 48.30Mann Darwaja 49.10

Vadodara 33.62Ahmedabad 605.06Jamnagar Shankar Teckri 127.36

Jay Bhim Vas 28.17Dharar Nagar 146.67

10.53

4.Solid Waste ManagementAhmedabad 547.14Vadodara 263.56Surat 375.71Raj kot 218.65Jamnagar 133.05

-------? 15.38S.Priority Infrastructure

Ahmedabad (sewer) 686.28Vadodara (storm drainage) 161.73Surat (storm drainage) 401.12

---------- 12.49

B.EAST AHMEDABAD1. T.P.Schemes Ghodasar 1285.26

Nikol 394.17Khokra Mehemedabad 397.22

10.77A. Area Development Ghodasar 67.21

_ ___-…-> 0,673. Slum Improvement 132.43

-______-- 1.324.Infrastructure

TrunF sewer 2058.57Water Supply 1501.99Secondary Sewerage 962.47

__-_---- 45.23C.MEDIUM TOWNS

1.T.P. SchemesAnkleshwar 123.10

I . 2 32.Area Development/'Slum Upgrading

Pinileshwar 98.09fPalanpur 135.30.Tetpur Bangladesh 15.34

Manubhad Nagaf 59.32._____--- 3.09

D.INSTITUTION STRENGTHENING 2.93

TOThL 117.90Pr-ice contingencies: 3.72

TOTAL PROJECT COST (Rs.Crores) 156.61(US.$ Millions5 130.51US$1=R5 12.00

-50- ANNEX 3Table 1

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

DETAILED COSTS OF SOLID WASTE MANAGEMENT SCHEMES

Table 1: Solid Waste Management - Apportionment of Total Coststo Main Components (Rs Lakhs)

Design/ Of WhichBase Phys.Cont. Superv. Price Cont. Taxes Total

AhmedabadLand - - - - _Civil Works 49.80 4.98 2.52 22.53 - -Vehicles 301.56 - 13.25 118.50 39.34 433.31Equipment 167.67 - 7.36 65.87 21.87 240.90

519.03 4.98 23.13 206.90 61.21 754.04

VadodaraLand - - - - - -Civil Works 11.50 1.15 0.58 4.02 - 17.25Vehicles 170.65 - 7.46 51.83 22.25 229.94Equipment 69.20 - 3.02 21.02 9.02 93.24

251.35 1.15 11.06 76.87 31.27 340.43

SuratLand 3.00 - - - - 3.00Civil Works 48.59 4.86 2.62 10.33 - 66.40Vehicles 233.98 - 10.33 40.74 30.52 285.05Equipment 69.27 - 3.06 12.06 9.04 84.39

354.84 4.86 16.01 63.13 39.56 438.84

RajkotLand - - - - -

Civil Works 33.00 3.29 1.68 7.34 - 45.31Vehicles 133.74 - 5.91 25.82 17.44 165.47Equipment 39.29 - 1.74 7.58 5.12 48.61

206.03 3.29 9.33 40.74 22.56 259.39

JamnagarLand - - - - - -Civil Works 35.30 3.54 1.82 8.39 - 49.05Vehicles 64.35 - 2.89 13.30 8.39 165.47Equipment 24.07 - 1.08 4.97 3.14 48.61

123.72 3.54 5.79 26.66 11.53 159.71

Total without price contingencies: 1,538.11

TOTAL 1,454.97 17.82 65.32 414.30 166.13 1,952.41

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

DETAILED COSTS OF SOLID WASTE MANAGEMENT SCHEMES

Table 2: Solid Waste Management - VadodaraBase Costs: Mld 1984 Prices in Rs Lakhs

Item Unit 1985/86 1986/87 1987/88 1988/89 1989/90 TotalCost Nr Cost Nr Cost Mr Cost Nr Cost Nr Cost Nr Cost

LANDCIVIL WORKS-Transfer Stations-Disposal Sites-Workshops - 11.50 - 11.50

VEHICLES-Small Trucks-Medium Trucks 1.40 - - 1 1.40 1 1.40 1 1.40 1 1.40 4 5.60-Heavy Trucks 2.50 2 5.00 3 7. 50 4 10.00 4 10.00 4 10.00 16 40.00-Arm Roll Trucks 4.50 1 4.50 2 9.00 2 9.00 2 9.00 2 9.00 9 40.50-Arm Roll Containers 0.30 9 2.70 18 5.40 18 5.40 18 5.40 18 5.40 81 24.30-Hech. Loaders-Tractor-Trailers-Mech. Sveepers 6.00 1 6.00 1 6.00 1 6.00 - - - - 3 18.00-Breakdown Vehicles L-Bulldozers 10.00 1 10.00 - - - - - - I 10.00 2 20.00

BMU IPMENT-Co. Bins (S)-Co. Bins (H)-Cimm. Bins (L)-Handcarts 0.005 1300 6.50 1800 9.00 2200 11.00 2750 13.75 3300 16.50 11350 56.75-Handtools-Weighbridges-Workshop Equip. - - - - 3.43 - - - - - - - 3.43

-Other

TOTAL BASE COST - - 46.20 - 41.73 - 40.30 - 39.55 - 52.30 - 220.08-Phys. Cont. - - 1.15 - - - - - 1.15

-Design & Superv. - - 2.37 - 2.09 - 2.01 - 1.98 - 2.61 - 11.06

Yeary Escalation - (1.085) - (1.177) - (1.277) - (1.306) - (1.504) - - -

-Price Cont. - - 4.67 - 8.86 - 13.39 - 18.32 - 31.63 - 76.87 tD >C

TOTAL COST - - 54.39 - 52.68 - 55.70 - 59.85 - 86.54 - 309.16 t L

Taxes - - 5.20 - 6.26 - 6.04 - 5.93 - 7. 84 - 31.27

- - 59.59 - 58.94 - 61.74 - 65.78 - 94.38 - 340.43

Total without price contingencies: 263.56

Note: Physical construction at 10% of civil vorks costs.Design and supervision at 52 of base costs and physical cost.Price contingencies at factors shown on base costs plus physical, construction plus

design and supervision plus taxes.Taxes generally at 152 on vehicles and equipment base cost.

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

DETAILED COSTS OF SOLID WASTE MANAGEMENT SCHEMES

Table 3: Solid Waste Management - SuratBase Costs: Mld 1984 Prices in Rs Lakhs

Item Unit 1985186 1986/87 1987/88 1988/89 1989/90 TotalCost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost

LAND - 3.00 - 3.00CIVIL WORKS-Transfer Stations - 5.00 - 5.00 - 10.00-Disposal Sites - 1.02 - 2.38 - 3.40-Workshops - 11.00 - 16.19 - 2.00 - 1.00 - 30.19-Electrics - 2.50 - 2.50 - 5.00

VEHICLES-Small Trucks 0.98 30 29.40 30 29.40 20 19.60 7 6.86 87 85.26-Medium Trucks 1.40 11 15.40 1 1.40 1 1.40 3 4.20 16 22.40-Heavy Trucks 2.70 10 27.00 1 2.70 1 2.70 2 5.40 14 37.80-Arm Roll Trucks 4.50 1 4.50 1 4.50 2 9.00-Arm Roll Containers 0.50 10 5.00 10 5.00-Mecb. Loaders 2.90 3 8.70 2 5.80 2 5.80 2 5.80 9 26.10-Tractor-Trailers-Mech. Sweepers 6.00 1 6.00 1 6.00-Breakdown Vehicles 1.90 1 1.90 1 1.90-Bulldozers 10.00 1 10.00 1 10.00

HIU IPMENT-Comm. Bins (S) 0.025 389 9.725 71 1.775 71 1.775 72 1.80 603 15.075-Comm. Bins (M) 0.03 179 5.37 4 0.12 4 0.12 4 0.12 191 5.73-Cimm. Bins (L) 0.04 208 8.32 209 8.36 34 1.36 35 1.40 486 19.44-^andcarts 0.014 400 5.60 276 3.864 147 2.058 140 1.96 963 13.482-Handtools-Weighbridges 1 3.00 1 3.00-Workshop Equip. - 1.00 - 2.00 - 0.50 - 3.50-Other

TOTAL BASE COST - 149.935 - 89.489 - 44.813 - 31.040 - 315.277-Phys. Cont. - 1.20 - 2.36 - 0.95 - 0.35 - 4.86-Design & Superv. - 7.56 - 4.59 - 2.29 - 1.57 - 16.01Yeary Escalation (1.085) (1.177) (1.277) (1.386)-Price Cont. - 15.21 - 16.82 - 14.78 - 14.32 - 63.13

TOTAL COST - 173.905 - 115.259 - 62.833 - 47.28 - 399.277 PCTaxes - 20.24 - 9.89 - 5.30 - 4.13 - 39.56

- 194.145 - 125.149 - 68.133 - 51.41 - 438.837

Total without price contingencies: 375.71

Note: Physical construction at 10% of civil works costs.Design and supervisior. at 5% of base costs and physical cost.Price contingencies at factors shown on base costs plus physical, construction plus

design and supervision plus taxes.Taxes generally at 15% on vehicles and equipment base cost.

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

DETAILED COSTS OF SOLID WASTE MANAGEMENT SCHES

Table 4: Solid Waste Management - RajkotBase Costs: Mld 1984 Prices in Rs Lakhs

Item Unit 1985/86 1986/87 1987/88 1988/89 1989/90 TotalCost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost

LANDCIVIL WORKS-Transfer Stations - 2.50 - 2.50 - 1.00 - 6.00

-Disposal Sites - 1.00 - 2.00 - 1.50 - 1.50 - 6.00

-Workshops - 7.50 - 7.50 - 2.50 - 2.50 - 20.00

- 0.25 - 0.50 - 0.25 - 1.00

VEHICLES-Small Trucks 0.98 5 4.90 4 3.92 1 0.98 10 9.80-Medium Trucks 1.40 12 16.80 12 16.80 4 5.60 32 44.80

-Heavy Trucks-Arm Roll Trucks 4.50 2 9.00 2 9.00 2 9.00 1 4.50 7 31.50

-Arm Roll Containers 0.50 4 2.00 4 2.00 1 0.50 1 0.50 10 5.00

-Mech. Loaders 2.90 1 2.90 1 2.90 2 5.80 n

-Tractor-Trailers L

-Mech. Sveepers 6.00 1 6.00 1 6.00-Breakdown Vehicles 1.90 1 1.90 1 1.90

-Bulldozers 10.00 1 10.00 1 10.00

-Veh. Moditication - 1.50 1.50

EQU IPMENT-Comm. Bins (S)-Comm. Bins (M)-Comm. Bins (L) 0.040 150 6.00 150 6.00 81 3.24 81 3.24 462 18.48-Handcarts 0.014 200 2.80 300 4.20 100 1.40 92 1.29 692 9.69

-Handtools-Weighbridges 1 3.00 1 3.00-Workshop Equip. - 1.00 - 1.00 - 2.00

-llandling Equip - 1.00 - - 1.00

TOTAL BASE COST - 67.15 - 61.32 - 32.97 - 22.03 - 183.47

-Phys. Cont. - 1.12 - 1.25 - 0.52 - 0.40 - 3.29 Z

-Design & Superv. - 3.41 - 3.13 - 1.67 - 1.12 - 9.33 (D P

Yearly Escalation (1.085) - (1.177) - (1.277) - (1.386) --Price Cont. - 6. 80 - 12.92 - 10. 89 - 10.13 - 40.74

TOTAL COST - 78.48 - 78.62 - 46.05 - 33.68 - 236.83

Taxes - 8.38 - 7.32 - 4.16 - 2.70 - 22.56

- 86.86 - 85.94 - 50.21 - 36.38 - 259.39

Note: Physical construction at 10% of civil works costs.Design and supervision at 5% of base costs and physical cost.Price contingencies at factors shown on base costs plus physical, construction plus

design and supervision plus taxes.Taxes generally at 15% on vehicles and equipment base cost.

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

DETAILED COSTS OF SOLID WASTE MANAGEMENT SCHEMES

Table 5: Solid Waste Management - Jamnagar

Base Costs: Mld 1984 Prices in Rs Lakhs

Item l nit 1985/86 1986/87 1987/88 1988/89 1989/90 Total

Cost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost

LAND

CIVIL WORKS

-Transfer Stations 3.60 3.65 7.25-Disposal Sites 1.00 1.80 2. 80

-Workshops 5.95 12.40 3.90 1.00 23.251.00 1.00 2.00

VENICLES-Small Trucks 0.98 3 2.94 3 2.94 4 3.92 2 1.96 12 11.76-Medium Trucks 1.40 2 2.80 2 2.80 2 2.80 3 4.20 9 12.60

-Heavy Trucks 2.70 1 2.70 1 2.70 1 2.70 2 5.40 5 13.50

-Arm Roll Trucks-Arm Roll Containers-Mech. Loaders 2.90 1 2.90 1 2.90 1

-Tractor-Trailers 1.30 2 2.60 2 2.60 4 5.20 Z'-Mech. Sweepers-Breakdown Vehicles-Bulldozers 10.00 1 10.00 1 10.00

41B IPMENT-Comm. Bins (S)-Comm. Bins (M)-Cimm. Bins (L) 0.025 200 5.00 150 3.75 350 8.75

-Handcarts 0.014 200 2.80 170 2.38 370 5.18

-Nandtools-Weighbridges 1 3.00 1 3.00

-Workshop Equip. 0.50 1.00 1.00 0.50 3.00

-Handling Equip. 0.50 0.50 1.00

TOTAL BASE COST 35.79 35.79 23.77 16.96 112.19

-Phys. Cont. 0.60 1.70 1.04 0.20 3.54 pz 5

-Design & Superv. 1. 82 1.87 1.24 0.86 5.79

Yearly Escalation (1.085) (1.177) (1.277) (1.386) mtx-Price Cont. 3.63 7.44 7.77 7.82 26.66 LO

TOTAL COST 41.84 46.68 33.82 25.84 148.18

Taxes 4.48 2.80 2.01 2.24 11.53

46.32 49.48 35.83 28.08 159.71

Total without price contingency: 133.05

Note: Physical construction at 10% of civil works costs.Design and supervision at 5% of base costs and physical cost.Price contingencies at factors shown on base costs plus physical, construction plus

design and supervision plus taxes.Taxes generally at 15% on vehicles and equipment base cost.

INDIA

03JARLAT URBAN DEVELOPMENT PROJECT

DETAILED COSTS OF SOLID WASTE MANAGEMENT SCHEMES

Table 6: Solid Waste Management - AhmedabadBase Costs: Mld 1984 Prices in Rs Lakhs

Item Unit 1985/86 1986/87 1987/88 1988/89 1989/90 TotalCost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost Nr Cost

LANDCIV IL WORKS-Transfer Stations-Disposal Sites-Workshops 2.45 - 3.25 - 5.70

18.75 - 25.35 - 44.10

VEHICLES-Rickshaws 0.14 1 0.14 1 0.14 2 0.28

-Rickshaw Tippers - 0.19 5 0.95 44 8.36 53 10.07 50 9.50 152 28.88-Heavy Trucks-Arm Roll Trucks 4.50 2 9.00 2 9.00 2 9.00 14 63.00 20 90.00-Arm Roll Containers 0.30 82 24.60 200 60.00 282 84.60-Mech. Loaders 4.83 1 4.83 8 38.64 9 43.47

-Tractor-Trailers-Mech. Sweepers-Breakdown Vehicles 2.91 1 2.91 1 2.91-Bulldozers 10.00 1 10.00 1 10.00-Transport Vehicles 1.04 1 1.04 1 1.04 2 2.08

M2U IPMENT-Comm. Bins (S) 0.002 1000 2.00 4000 8.00 12000 24.00 11000 22.00 3000 6.00 31000 62.00

-Comm. Bins (M) 0.004 150 0.60 850 3.40 2500 10.00 2500 10.00 1200 4.80 7200 28.80-Comm. Bins (L)-Handcarts 0.01 250 2.50 250 2.50 400 4.00 400 4.00 1000 10.00 2300 23.00

-Handtools-Weighbridges-Workshop Equip. - 1.75 - 5.25 - 7.00 - 8.50 - 22.00

-Radio Equip. 3.50 - 3.50-Education Equip. 1.00 - 2.00 - 1.00 - 1.00 - 1.00 - 6.00

TOTAL BASE COST 10.78 - 74.44 - 95.04 - 63.07 - 214.49 - 457.82

-Phys. Cont. - 2.12 - 2.86 - 4.98

-Design & Superv. 0.54 - 3.83 - 4.89 - 3.15 - 10.72 - 23.13

Yearly Escalation (1.085) - (1.177) - (1.277) - (1.386) - (1.504) -

-Price Cont. 1.10 - 15.64 - 31.23 - 29.21 - 129.72 - 206.90

12.42 - 96.03 - 134.02 - 95.43 - 354.93 - 692.83 ( >C

TOTAL COST 1.62 - 7.99 - 9.97 - 9.46 - 32.17 - 61.21Taxes 14.04 - 104.02 - 143.99 - 104.89 - 387.10 - 754.04

Total without price contingencies: 547.14

Note: Physical construction at 10% of civil works costs.Design and supervision at 5% of base costs and physical cost.Price contingencLes at factors shown on base costs plus physical, construction plus

design and supervision plus taxes.Taxes generally at 15% on vehicles and equipment base cost.

-56- ANNEX 4

Tables I to 6.

DETAILED COSTS OF URBAN INFRASTRUCTURE SCHEMES

INDIA

GUJARAT URBAN DEVELOPMEN4T PROJECT

AHMEDABAD SEWERAGE

Yearwise Breakup of Capital Cost from 1985/86 - 1987/88 for Works Included in Priority. Infrastructure Project

Description Total 1985-86 1986-87 1987-88L F T L F T L F T L F T

1. R. C. SEWERSi) Eastern peripheral &

Gomatipur u/s area 47.03 - 47.03 18.81 - 18.81 23.52 - 23.52 4.70 - 4.70ii) 1800 0 sewer in

Gomatipur D/S area 187.96 - 187.96 75.18 - 75.18 93.98 - 93.98 18.80 - 18.80iii) Shahibag, New Shahibag

& Girdharnagar area 43.45 - 43.45 17.38 - 17.38 21.72 - 21.72 4.35 - 4.35iv) Branch sewers and

transfer of connections 35.90 - 35.90 14.36 - 14.36 17.95 - 17.95 3.59 - 3.59Subtotal (A): 314.34 125.73 157.17 31.44

2. SEWAGE PUMPING STATIONSCIVIL WORKSi) Gomatipur SPS 115.00 - 115.00 46.00 - 46.00 57.50 - 57.50 11.50 - 11.50ii) Chamanpura and

Girdharnagar SPS 85.00 - 85.00 34.00 - 34.00 42.00 - 42.50 8.50 - 8.50Subtotal (B): 200.00 80.00 100.00 20.00

MECHANICAL EDU IPMENTi) Goaatipur SPS 14.40 8.57 22.97 5.76 3.43 9.19 7.20 4.28 11.48 1.44 0.86 2.30

ii) Chamanpura andGirdharnagar SPS 14.40 8.57 22.97 5.76 3.43 9.19 7.20 4.28 11.48 1.44 0.86 2.30Subtotal (C): 45,94 18.38 22.96 4.60

ELECTRICAL R3UIPMENTi) Gomatipur SPS 8.00 3.57 11.57 3.20 1.43 4.63 4.00 1.78 5.78 0.80 0.36 1.16ii) Girdharnagar SPS 8.00 - 8.00 3.20 - 3.20 4.00 - 4.00 0.80 - 0.80

Subtotal (D): 19.57 7.83 9.78 1.96TOTAL (A+B+C+D): 579. 85 231.94 289.91 58.00

3. OTHERSi) Investigation and survey 2.83 - 2.83 1.13 - 1.13 1.42 - 1.42 0.28 - 0.28ii) Consultancy (Design) 16.27 - 16.27 6.51 - 6.51 8.13 - 8.13 1.63 - 1.63iii) Supervision 16.41 - 16.41 6.56 - 6.56 8.21 - 8.21 1.64 - 1.64

4. CONTINGENCIESi) Physical 51.43 - 51.43 20.57 - 20.57 25.72 - 25.72 5.14 - 5.14 Jxi) Price 98.01 5.16 103.17 22.16 1.17 23.33 57.77 3.04 60.81 18.08 0.95 19.03 fp X

5. CUSTOM WTY 8.29 - 8.29 3.32 - 3.32 3.32 4.14 4.14 0.83 - 0.83 4

6. TAXES 11.20 - 11.20 4.48 - 4.48 5.60 - 5.60 1.12 - 1.12

TOTAL: 763.58 25.87 789.45 288.38 9.46 297.84 390.56 13.38 403.94 84.64 3.03 87.67

Total without price contingency: 686.28

ANNEX 4Table 2

usrl6/aspuw/helena/0JJARAT/Ann3Tab2

INDIA

GUJARAT URBANI DEVELOPMENT PROJECT

SURAT STORM WATER DRAINAGE YEAR WISE PHASED PROGRAMME - YEAR I

Drain Descriptions Size of Box Length Total CostNo. or Pipe in Mt. Rs lakhs (base)

A. CIVIL WORKS5A Sagrampura putli to Kabir Mandir 1.80 x 1.20 m 120.00 3.36

(single box)

5B Kabir mandir to Udhna darwaja 1.80 x 1.80 m 330.00 10.04(single box)

l1B-l Varachha road Tapsil society to 1.80 x 1.80 m 400.00 12.18existing S. W. drain near (single box)Dholikui Jakatnaka.

8C Majuragate to R.T.O. Office 1.80 x 1.80 m 426.00 12.97(single box)

8E R.T.O. Office to Athwagate. 1.80 x 2.40 m 580.00 19.08(single box)

17B Ashwanikumar road - T.B. Hospital 1600 mm 0 2 x 548.00 14.02to existing S.W. drain near I.C. (double pipe)Gandhi Mills

17A Ashwanikumar road - Leprosy 1600 mm 0 2 x 472.00 12.08Hospital to T.B. Hospital (double pipe)

7B Nanpura sewage pumping station to 1.80 x 2.40 m 563.00 32.35existing S.W. drain near (double box)Khanderaopura

7C Nanpura Khanderaopura to 2.40 x 2.40 m 350.00 22.83Nanpura Makai pool (double box)

1 Nanavat Pratap Press to 1200 mm 0 170.00 1.47Bhagatalao S.M.V. Hospital

7A Sagrampura Health centre to 1800 mm 0 335.00 5.17Nanpura sewage pumping station.

6 Sagrampura Dhed Talavadi to 1600 mm 0 245.00 3.13existing S.W. drain near Ruderpura

25A2 Rander Gymkhana to M.M.P Hostel 1000 mm 0 305.00 2.11

25B1 M.M.P. Hostel to Halpativas 1800 mm 0 185.00 2.85Subtotal 153.64

B. EQUIPMENTSurveying instruments 1.00Jeep 1. 50High Pressure Jetting Machine 8.00Winch and Bucket Machine 4.00Sluice Regulator 5.00Subtotal 19.50TOTAL (YEAR 1) 173.14

-59-ANNEX 4Table 2a

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

SURAT STORM WATER DRAINAGEYEAR WISE PHASED PROGRAMME - YEAR 2

Drain Descriptions Size of Box Length Total Cost *

No. or Pipe in Mt. Rs lakhs(base)

A. CIVIL WORKS

7B Nanpura pumping station to existing 1.8 x 2.40 m 563.00 13.00S.W. drain near Khanderaopura (double box)

15C Parle point to river Tapti 1600 mm 0 2x800.00 20.48(single box)

24D Rander road Krishnanagar Housing 1.80 x 2.10 m 1100.00 35.00society to river Tapti Via. (double box)Vishalnagar

8D1 Ladies swimming pool to R.T.O. 1400 mm 0 518.00 5.36office

8D Nanpura Timaliawad to R.T.O. 1800 mm 0 365.00 5.64office

13 Ghoddod road Union Park Apartment 1600 mm 0 275.00 3.52to existing S.W. drain near Athwasewage pumping station

14A Choddod road Santosh Apartment 1400 mm 0 180.00 1.86to Athwa Health centre

148 Athwa HeaLth centre to existing 1600 mm 0 2 x 460.00 11.78S.W. drain near Lourds ConventSchool

15B Choddod road Gurukrupa society 1400 mm 0 550.00 6.59to Parle point 1600 mm 0 550.00 7.04

15A Ghoddod road Santosh Apartments 1400 mm 0 182.00 1.88to Gurukrupa Housing society

18A Warachha road canal to Tapsil 1600 mm 0 400.00 5.12society

23C Kubernagar junction to Ved darwaja 2.40 x 2.40 m 520.00 25.00(double box)

26B Rander Lokmanya school to 1800 mm 0 2 x 365.00 11.28River Tapti (double pipe)

26A Mora Bhagol to Lokmanya school 1600 mm 0 2 x 550.00 14.08(double pipe) ------

TOTAL (YEAR 2) 166.73

Year I Base Cost = Rs 173.14 lakhsYear 2 Base Cost = Rs 166.73 lakhsTotal Base Cost = 339.87 lakhs

+ Survey Costs = 1.76 lakhs+ Taxes 8.35 Lakhs

349.98 lakhs+ Physical Cont. 32.04 lakhs+ Design & Superv. 19.10 lakhs

Total 401.12 lakhs+ Price Cont. 52.27 lakhs

TOTAL 453.39

INDIA

Q1JARAT URBAN DEVELOPMENT PROJECT

VADODARA STORM WATER DRAINAGE

Summary of Works and Costs

Ref. Drain Location Drain Details Labor Materials Total Base*Description Size Length Cost Cost Cost

1. Hatikhana and surrounding area Pipe drain and catch pits 600mm 300m 0.20 0.80 1.002. Rarni main road to Karelibaug Open trapezoidal channel 1mm bed 3000m 1.74 6.96 8.703. Kishanwadi and surrounding Open trapezoidal channel * 3000m 1.74 6.96 8.70

area in T.P.S. No. 54. Kishanwadi and surrounding Open trapezoidal channel *

area in T.P.S. No. 55. Area surrounding Ajwa Waghodia Open trapezoidal channel * 8600m 5.00 19.94 24.94

Ring Road6. Area surrounding Ajwa Waghodia Open trapezoidal channel *

Ring Road7. Area surrounding Ajwa Waghodia Open trapezoidal channel *

Ring Road8. Surrounding Area at Memon Colony Box culvert 1200mm 200m 0.56 1.32 1.889. Shantiniketan society Pipe drain and catchpits 600mm 120m 0.13 0.26 0.39

10. Danteshwar Santosh wadi Box culvert 1200mm 1200m 1.84 5.54 7.3811. Surrounding area at Makarpura Open trapezoidal channel lm bed 4600m 2.78 11.14 13.00 1

12. Surrounding area at Makarpura Open trapezoidal channel lm bed 4600m 2.78 11.14 13.00 0

13. Surrounding area at A.D.C. at Open trapezoidal channel lm bed 1600m 0.93 3.71 4.64railway line

14. Surrounding area at Atlakra stores Open trapezoidal channel lm bed 2000m 1.16 4.64 5.8015. Slum area near Akota Village Open trapezoidal channel lm bed 2800m 1.62 5.40 8.1216. Slum near V.U.P.A. at old Padra Box culvert 1200mm 2000m 5.64 13.16 18.80

Road wide17. Surrounding area at Social Dept. Open trapezoidal channel lm bed 2000m 1.16 4.64 5.80

facility18. Nizampura main road Box culvert 1200mm IOOOm 2.82 6.58 9.4019. Sarabhai char-rasta near model Open trapezoidal channel lm bed 2400m 1.39 5.57 6.96

farm20. Gotri main road around T.B. Hosp. Open trapezoidal channel lm bed 3600m 2.09 8.3 5 10.4421. Gotri main road around T.B. Hosp. Open trapezoidal channel lm bed22. Gotri main road around T.B. Hosp. Open trapezoidal channel lm bed

TOTALS 30.80 106.07 136.87

+ Survey 0.74+ Tax 2.73Total Base Cost 140.34+ Physical cont. 13.59 a tz

+ Design & Superv. 7.70 D >4Total 161.73+ Price Contingency 52.44Total 224.17

-61-Tal4INDIA ~~~~~~ANNEX 4

GUJARAT URBAN DEVELOPMENT PROJECT

COST OF EAST AHMEDABAD WATER SUPPLY

AmountType Base cost Phys. Base +

Cont. Phys.Cont.A.Civil Works: ------------------------------------

1. Tube well drilling, gravel LCB 17.37 0.89 18.26packing and developing of wells

2. Bore rooms 5uimp, LCB 13Z.36 6.80 139.15

3. Laying of pipes LCB 196.37 10.08 206.46

TOTAL CIVIL WORKS 346.10 17.77 363.87

B.tMaterial and Equipment:

1. Pumps, Electrical Eq. ICB 36.19 1.86 38.05

2. Pipes ICB 936.44 48.09 984.53___________________________

TOTAL MATERIALS 972.63 49.95 1022.58

C. Surveys NA 1.07 1.07

0. Land NA 2.08 2.08

E. Taxes NA 56.53 56.53

TOTAL COST 1378.41 67.72 1446.13

Phys.Cont Base C. Land Survey Civil W. Equip. Taxeswater E.A 67.72 1378.41 Z.08 1.07 346.10 972.63 56.53

1378.41

-62-

ANNEX 4INDIA Table 5

GUJARAT URBAN DEVELOPMENT PROJECT

COST OF EAST A}1!EABAD SEWERAGE

AmountType Base cost Phys. Base +

1.05 Cont. Phys.Cont.A.Civil Works: -------------------------------------

1. Supply + laying of sewers LCB ZZ2.55 26.0Z Z48.57in Naroda zone

2. Supply + laying of sewers LCB 194.94 22.80 217.74in Sahijpur Bogha zone

3. Supply + laying of sewers LCB 181.91 21.26 203.07in Odhev zone

4. Zonal pumping station LCE 68.53 8.01 76.55

5. Pumping Station (terminal) LCB 64.73 7.57 7Z.30Contract

6. Treatment Plant ICB 211.63 24.75 236.38 351.80*Material for treatment plant in B 3.

7. Trunksewer, Force Main, ICe 886.19 103.63 989.82Bye Pass:RCC Pipes 190.37Clucts 614.91Steel Pipes 80.91

TOTAL CIVIL WORKS 1830.38 214.04 2044.42

B. Material & Equipment

1. Pumping & Electrical ICa 220.55 14.66 246.34Eq.uipment : Zonal 1Z5.36 11.13

Terminal 95.19

Z. Material for Force Main ICe 158.49 18.53 177.02

3. Material for Treatmeiet Plant ICB 103.34 1Z.08 115.4Z

TOTAL MATERIALS 48Z.37 56.41 538.78

C.Surveys Trunk S. 10.80 12.8B 12.88---------- Zonal S. Z.88

0. Land Trunk S. 90.00 91.20 91.Z8--------- Zonal S. 1.20

E. Taxes Trunk S. 97.70 110.64 110.64--------- Zonal S. 12.94

TOTAL COST 2527.47 Z7e.45 2797.92

Phys.Cont Base C. Land Survey Civil W. Equip. TaxesTrunk S. 177.70 1717.26 9s.08 10.00 116Z.55 357.01 97.70

Second.S. 92.75 810.21 1.20 2.88 667.83 125.36 1Z.94

270.45 2SZ7.47 91.20 1Z.88 1830.38 482.37 110.64270.45 2707.47

Total LCB Civil Works 818.22 including physical contingenciesTotal ICB Civil Works 1226.ZOTotal ICB Materials 538.78

Z583.20

-63-

ANNEX 4Table 6

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

SUMMARY OF URBAN INFRASTRUCTURE COSTS

US$ MillionEast Ahmedabad Sewer Price Con ICB C.U. ICB Mat. LCB C.W.Total LCB Civil Works 818.22 279.40 9.15Total ICB Civil Works lZ6.20 418.71 13.71Total ICB Materials 538.78 183.98 6.02

2583.Z0East Afhmedabad waterTotal LCB Civil Works 363.87 124.25 4.07Total ICB Civil Works 0.00 0.00 0.00Total ICB Materials 1022.58 349.18 11.43

1386.4S

Ahmedabad sewerTotal LCB Civil Works 558.27 190.63 6.24Total ICB Civil Works 0.00 0.00 0.00Total ICB Materials 71.11 24.28 0.79

629.37

Vadodara storm drainageTotal LCB Civil Works 100.37 34.27 1.12Total ICB Civil Works 0.00 0.00 0.00Total ICB Materials 50.19 17.14 0.56

150.56

Surat storm drainageTotal LCB Civil Works 247.94 84.66 2.77Total ICB Civil Works 0.00 0.00 0.00Total ICB Materials 123.97 42.33 1.39

371.9113.71 20.20 23.35

-64-

ANNEX 5

LIST OF DOCUMENTS IN THE PROJECT FILE

1. Surat Storm Water Disposal Scheme - Project Drawings (2 Volumes)

2. Report on Accounting Systems of the Gujarat Housing Board

3. Solid Waste Management Feasibility Report for Surat

4. Solid Waste Management Feasibility Report for Rajkot (2 Volumes)

5. Jamnagar Solid Waste Management

6. Ahmedabad Municipal Corporation Solid Waste Project (2 Volumes)

7. Project Report on Area East of AhmedabadVolume I East Ahmedabad Development PlanVolume II(A) Project ComponentsVolume II(B) Waste Water Development Project (NOVED)Volume II(C) Financial ProjectionsVolume II(D) DrawingsVolume III Resource Mobilization Study

8. Area Development Project in T.P. Scheme Ghodasar

9. Jamnagar Slum Upgrading

10. Baroda Storm Drainage Proposal

11. Urban Shelter Project at Gorwa, Baroda (3 Volumes)

12. Draft Report on the Study for Management Accounting Systemsand Procedures, AUDA (4 Volumes)

13. Draft Report on the Study for Organization, Staffing and Training, AUDA(3 Volumes)

14. Project Proposal for Slum Upgrading for the City of Ahmedabad

15. Slum Improvement Project Plans and Estimates (AMC), (2 Volumes)

16. Project Proposal for Priority Infrastructure for the City of Ahmedabad(2 Volumes)

17. Project Proposal for Area Development for the City of Ahmedabad

18. Project Proposal for Solid Waste Management for the City of Ahmedabad

19. Details of Economic Analysis

ANNEX 6

-65- Page 1

FINANCIAL PROJECTIONS OF LOCAL GOVERNMENTS

A. AHMEDABAD MUNICIPAL CORPORATION

1. The projections for Ahmedabad Municipal Corporation are based onactual figures abstracted from their Accounts to 1983/84, on the revisedbudget for 1984/85 and the latest budget for 1985/86. They includeprojections of the financial impact of the extension of AMC's boundaries.AMC's accounts are kept on a cash basis but AMC tend to exercise rela-tively good financial control and to be up-to-date with their accounting.Their accounts, therefore, represent a reasonably reliable indication ofthe financial position of AMC.

2. The projections have been prepared as for:

Table 1 - AMC's General Revenue Account showing the annualsurplus/ deficit for general services, water account andsewerage account. These latter two accounts have beenkept separate only since 1981/82, as required under theGujarat Water Project (Cr. 1280-IN). AMC keeps separateaccrual accounts for water supply and sewerage. Theseare kept as separate ledgers since they cannot bebalanced with the corporation's cash accounts.

Comments on the Financial Position to 1983/84

3. Between 1981/82 and 1983/84, AMC ran surpluses on its GeneralRevenue Account excluding water and sewerage services. During theseyears, the Water Account deficit rose from Rs 809.90 lakhs to Rs 925.58lakhs and on Sewerage Account the deficit was reduced from Rs 283.11 lakhsto Rs 262.17 lakhs.

4. During this period, overall recoveries of outstanding debtors'accounts (excluding debts under litigation) was about 65%. However, thereis a considerable underrecovery on both the sewerage and water accounts,and arrears. During the three years 1981/82 to 1983/84, provisions forbad debts of some 40% have been made and AMC still face the difficult taskof recovering outstanding debts.

Projections through 1993/94

5. The base projections include an inflation rate of 8 1/2% to1986/87 and 8% thereafter and allow for a population growth rate of 3 1/2%throughout the whole period. It is anticipated that service requirementswill increase in accordance with these rates. General property tax is

-66-

ANNEX 6page 2

less buoyant and is expected to grow at 3% through 1990/91. Water tax andconservancy tax are expected to increase in accordance with requirementsof the Gujarat Water Supply and Sewerage Project at the rate of 15% perannum throughout the period. An allowance has been made for bad debts onwater and sewerage account which would bring the net position of theseaccounts to reflect the actual position in AMC's cash accounts.

6. There would be a surplus on the General Revenue Account throughoutthe period but this would be more than offset by projected deficits onwater and sewerage accounts which will leave a net deficit on RevenueAccount for each year of the provisions if no further revenue enhancementaction is taken by AMC.

The Bank-Assisted Project

7. The General Revenue Account sets out the financial effects of eachof the components of the proposed Bank assisted project which would haveto be financed from General Revenue Account. Running expenses for solidwaste management include an allowance for depreciation of equipment. Theadditional on-going financial burden is relatively small in relation tothe overall expenditure programmes for AMC's services. However, givenAMC's financial projections, further effort would be required to enhancerevenues.

Revenue Enhancement Measures

8. AMC are aware of the need to improve their recoveries of propertytaxes which are currently about 65% of recoverable demand. AMC has agreedto seek ways of improving recoveries on the following schedule:

70% by 1985/8675% by 1986/8780% by 1987/88.

9. The recent measures taken on delinking property valuation from theeffects of rent control should produce an increase in the property valuebase in real terms. AMC have indicated that a 7 1/2% increase per annumwould be attainable.

10. AMC are also pursuing measures to improve octroi collections.These include seeking legislation to enable specific penalties to belevied for octroi evasion. Administrative measures such as the appoint-ment of more octroi inspectors have recently been introduced. This shouldenable a modest improvement in octroi of at least 1 1/2% per annum.

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ANNEX 6page 3

11. AMC are also proposing that the education cess service chargewhich it receives from the State Government should increase from one-thirdto one-half of collections.

12. AMC is pursuing a disposal of property programme which will con-siderably assist its finances during the project period. AMC wishes tobring the whole of its capital receipts into its Revenue Account, but Bankmissions pointed out that this would be unsound financial practice andthey have therefore been excluded. However, there will be considerableadditional tax and rental income from the development and sale ofproperty. AMC have estimated that this would increase income by Rs 200lakhs in 1986/87 to Rs 400 lakhs in 1990/91.

13. AMC have introduced stringent establishment control measures whichshould produce savings throughout the project period.

14. It can be seen, therefore, that there is considerable scope forimproving the income and containing the expenditure of Ahmedabad MunicipalCorporation. The measure proposed would be sufficient virtually toeliminate the total deficit on revenue account as well as to finance theon-going revenue expenditure in the Bank-assisted scheme. Furtherimprovements in the water and sewerage accounts which are expected underthe project but are not fully portrayed in these accounts would enable AMCto finance an increasing percentage of capital expenditure from internallygenerated resourses.

B. VADODARA MUNICIPAL CORPORATION

Revenue Account Projections

15. The basic assumptions for the projections for the VadodaraMunicipal Corporation (VMC) are the same as for AMC.

16. Without improvement measures, the Revenue Account would be indeficit by 1985/86 and have an increasing deficit through 1990/91.

17. However, with project improvement measures similar to thosedicussed for AMC, especially increased conservancy and water taxes,increased octroi collection, and the introduction of minimum charges forwater and conservancy, the deficit could be substantially reduced. Addi-tional minor changes in the rate of capital investment and in revenuecollection would eliminate the deficit.

C. OTHER MUNICIPAL CORPORATIONS

18. Similar projections have been prepared for Surat, Rajkot andJamnagar showing the impact of the proposed project and the impact ofproposed revenue enhancement measures.

06-Oct-85 AHIMEDABAD IIUNICIPAL CORPORATION OVERALL SUlIIIARY

fRUPEES IN LAKHS)ACTUALS FORECASTS

------------------------ lf#{ #ftt #Iff lif ##§§§§ iff####ffffff * H t§(+# tt# *mff { **I*#§ Of m #f *jj§f###0f{i§§#f1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 19B9-90 1990-91 1991-92 199b93 1993-94

General Revenue Account - Existing Area 416.07 170.74 876.67 1045.32 1582.10 1859.17 1802.92 1831.43 1887.11 l1890.19 1770.50 1651.51 1532.51

General Revenue Account - Extension Area 15.89 21.10 29.63 32.14 64.71 168959 285.18 399.17 304.16 421.57 453.67 496.60 - 521.29

Total General Revenue Account 431.96 191.84 906.30 1077.46 1646.81 2027.76 2098.10 2229.60 2191.26 2311.76 2224.16 2138.12 2053.80

Water Supply Account - Existing Area -769.87 -766.80 -840.73 -964.43 -1166.65 -1340.46 -1524.27 -1559.37 -1598.20 -1638.39 -1679.59 -1721.35 -1763.14

Water Supply Account - Extension Area -195.66 -019.34 -187.33 -183.86 -180.78

Total Water Supply Account -769.87 -766.80 -840.73 -964.43 -1166.65 -1340.46 -1524.27 -1559.37 -1793.86 -1829.72 -1866.91 -1905.21 -1943.91

Seuerage Account - Existing Area -234.63 -328.70 -141.18 -290.72 -445.51 -511.51 -534.35 -501.69 -453.47 -395.32 -325.42 -241.66 -141.55

Sewerage Akcount - Extension Area -169.85 -162.56 -155.50 -119.30 -143.41

total Sewerage Account -234.63 -328.70 -1t4.18 -290.72 -445.51 -511.51 -534.35 -501.69 -623.32 -557.88 -480.92 -390.96 -284.96

Eastern Area NOVEl Schese 32.40 63.98 60.04 54.19 46.28

TOTAL AHIIEDABAD MUNICIPAL CORPORATION -572.55 -903.67 -75.61 -177.69 34.65 175.79 29.48 169.55 -193.44 -11.87 -63.63 -103.86 -128.80

NOTE: THE ABOVE PROJECTIONS ALLOW FOR ANNUAL INCREASES IN SEWERAGE AND WATERCHARGES AND TAXES OF 15% P.A. ONLY. FURTHER INCREASES ARE NECESSARY TO XBRING THESE ACCOUNTS INTO BALRNCE.

GTAHNJA 06-Oct-85 AHMEDARAD NUNICIPAL CORPORATION REVENUE ACCOUNT (1)---- --- ---- --- --- ---- --- ---- --- --- - (RUPEES IN LAKNSI

ACTUALS FORECASTS

1979-80 1980-01 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-80 1988-89 1989-90 1990-91 1991-92 1992-9J 1993-94RATE Of INFLATION 8.5? 8.5? 8.5? 8.0? 8.0? 8.0? 8.0? 8.0? 8.0? 8.0?GRONIH RATE 3,5? 3.5? 3.5? 3.5? 3.5? 3.5? 3.5? 3.5? 3,41 3.5?

EXPENDITOiREESTABLSRHMNT 1101.80 1289.2J 1579.81 1691.75 1836.04 2592.86 2750.60 J088.86 3452.72 3859.45 4J14.10 4822.30 5390.36 6025.35 6735.14ORDINARY CONTINGENCY 51.45 65.24 84.76 71.73 84.27 109.37 115.97 130.23 145.57 162.72 181.89 203.32 227.27 254.04 283.96CONTINGENCY EXIRAORDINARY 93.42 121.28 119.88 126.57 146.29 172.00 198.41 222.81 249.06 278.40 311.19 347.85 388.82 434.6J 465.8JENERG a EIGHT 242.80 278.55 61.30 50.00 50.00 56.15 6J.05 70.81 79.15 88.47 98.89 110.54 123.57 138.12 154.J9REPAIRS I MAINTENANCE 342.69 367.45 156.96 283.00 219,47 315.89 242.36 272.17 304.23 340.07 380.13 424.91 414.96 530.9! 593.45SPECIAL EXPENDITURE 91.76 94.17 88.65 77.79 83.39 169.41 191.07 214.57 239.84 268.10 299.68 334.98 374.44 418.55 467.86OTHER EXPENDiTURE 28.90 10.20 7,77 15.06 18.39 44.18 34.40 38.63 43.18 48.27 53.95 60.31 67.41 75.36 84.23GRANTS 830.55 886.15 1099.74 1328.91 1428.14 1787.83 1699.47 1908.46 213J.28 2384.58 2665.48 2979.48 3330.46 J722,79 4161.33CONTS. TO RESERVE FUNDS 6.17 5,95 6.20 6.49 0.00 10.21 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

SUN-TOTAL 2779.54 3118.22 3205.07 3651.30 3865,99 5257.90 5295.J4 5946.5J 6647.03 7430.05 8305.32 9283.68 10377.30 11599.75 12966.19PERT SERVICING 908.60 1079.70 989.56 989.87 640.18 676.79 75J.06 830.31 935.51 1120,58 1355.50 1590.42 1825.34 2060.26 2295,18MUNICIPAL FUND CAP. EXPENDITURE 100.63 99.79 146.10 140.69 127.60 136.35 243.50 191.59 206.92 223.47 241.35 260.66 281.51 304.03 328.36

SUB-TOTAL 3788.17 4297.71 4340.73 4789.86 4631,85 6071.04 6291.90 6968.43 7789.46 8774.11 9902.17 11134.76 12484.15 13964.04 15589.73

EXPENDITURE ON BANK ASSTD.SCHEMEAREA DEVELOPMENTDETo SERVICING 0.55 2.12 5.43 4.03 0.53 0.74 0.74 0.74 0.74RUNNING EXPENSES 0.0 0.21 0.58 1.63 2,44 2.94 3.29 3.68 4.11

SUB-TOTAL AREA DEVCLOPHIENT 0,00 0.00 0.00 0.00 0.00 0.00 0.55 2.33 6.01 5.65 2.98 3.69 4.03 4.42 4.86

slug IMPROVENENTDEBT SERVICING 55.92 146.73 202.22 207.50 197.25 192.83 192.83 192.83 192.83RUNNING EXPENSES 0.00 4.95 12.53 25.25 42.15 44.60 49.85 55.73 62,29

SUBTOTAL SLUM IMPROVEMENT 0.00 0.00 0.00 0.00 0.00 0.00 55.92 151.68 214.75 232.75 239.40 237.43 242.68 248.56 255.12

SOLID HASTE MANAGEMEN1DEBT SERVICING 0.81 7.28 20.34 33.34 59.68 80.41 80.41 8fl.41 80.41RUNNING EXPENSES 0.00 20.30 19.60 29,20 -20.00 -40.00 -40.00 -40.00 -40.00

…-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -SUBTOTAL SOLID HASTE MANAGEMENTf 0,00 0.00 0.00 0,00 0.00 0.00 0.81 27.58 39.94 62.54 39,68 40.41 40.41 40.41 40.41

--- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -PRIORITY INFRASIRUCTDREDEBT SERVICING 17.49 58.71 87.58 92.7J 92.73 92.73 92.73 92.71 92.73J RUNNING EXPENSES 98.68 110.31 12J.JO 137.83 154.06 172.21 192.50

…-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -SUBTOTAL PRIORiTY INFRASTRUCTURE 0.00 0,00 0.00 0.00 0.00 0.00 17.49 58.71 186.26 203.04 216.03 230.56 246.79 264.94 285.23

…-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -TOTAL EXPENDITURE 3788.77 4297.71 4340.73 4789.86 4633.85 6071.04 6366.67 7208.74 8236.42 9278.09 10400.26 11646.85 13018.07 14522.37 16175.35

ARNEDABAD MUNICIPAL CORPORATION REVENUE ACCOUNI 121--------------------------------------------- (RUPEES IN LAKHS)

ACIUALS FORECASTS

1979-90 19S0-81 1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94INCOME

TREND INCREASE IN PROPERIY IAX 3.01 3.01 3.0 3.01 3.01 3.01 3.01 3.01 3.01 J.0

MUNICIPAL RATES & TAXESOCIROI DutY 2114.J0 2395.50 2792.10 3040.10 3224.55 3980.00 4300.00 4828.79 5397.62 6033.46 6744.21 7538.67 8426.73 9419.40 10529.00PROPERTY TAXESGENERAL TAX 1000.40 989.30 932.90 814.20 872.42 982.34 1025.12 1055.87 1087.55 1120.18 1153.78 1188.40 1224.05 1260.77 1298.59

ANINALIVEHICLE TAX 40.20 34.80 55.60 52.40 62.31 75.70 88.99 99.91 111.71 124.86 139.57 156.02 174.39 194.94 217.90IHEAIRE TAX 8.60 8.70 9.40 12.60 14.34 11.97 14.77 16.59 18.54 20.72 23.17 25.89 28.94 32.35 36.17

SUB-TOTAL ALL TAXES 3183.50 3428.10 3790.00 3919.30 4173.62 5050.01 5428.88 6001.19 6615.42 7299.23 8060.73 8908.98 9854.12 10907.46 12081.66

SPECIAL ACT INCOME 5.10 6.20 6.40 6.50 8.78 7.36 8.47 9.19 9.93 10.72 11.58 12.50 13.50 14.58 15.75PROPERTY INCONE 260.40 276.20 303.00 284.30 279.33 868.86 942.71 1022.84 1104.67 1193.04 1288.49 1391.57 1502.89 1623.12 1752.97GRANTS AND CONIRI1UTIONS 400.90 471.80 578.60 636.00 677.86 877.35 954.33 1035.45 1118.29 1207.75 1304.37 1409.72 1521.41 1643.13 1774.58OIER INCOME 71.20 76.10 52.10 75.00 170.93 95.78 142.08 159.55 179.35 199.36 222.84 249.09 278.43 311.2J 347.90REVENUE CAPITAL INCOME 33.40 30.50 26.70 39.50 200.00 217.00 235.45 255.46 275.89 297.97 321.80 347.55 375.35 405.39 437.81

TOTAL INCOME CURRENI SERVICES 3954.70 4289.30 4756.80 4960.60 5510.52 7116.36 7711.92 8483.68 9102.54 10208.06 11209.80 12318.40 13545.71 14904.91 16410.67

BANK ASSISTED PROJECT INCOMEAREA PEVELOPHENI 0.00 2.16 5.40 14.04 19.44 21.60 21.60 21.60 21.60SLUV UPORAPING 19.89 116.40 216.17 . 332.58 J32.58 332.58 332.58

TOIAL INCOME 3954.70 4289.30 4756.80 4960.60 5510.52 7116.36 7711.92 8485.84 9327.83 10338.50 11445.41 12672.59 13899.89 15259.09 16764.85

SURPLUS/DEFIClT(-) GEN REV ACCI. 165.93 -9.41 416.07 170.i4 876.67 1045.32 1345.25 1277.10 1091.41 1060.41 1045.16 1025.74 881.82 736.72 589.51

PROJECT INPROVENENT HEASURESADDL. PROP. TAX RECOYS. 5.00 78.86 162.44 250.97 259.50 266.26 274.25 282.47 290.95 299.67IMPROVED VALUAIIONS 7.50l 79.19 81.57 84.01 96.53 89.13 91.80 94.56 97.39OCTROI PENAlTY HEASURES 1.50l 72.4J 80.96 90.50 101,16 113.08 126.40 141.29 157.94INCREASE IN EDllCAIION CESS SERVICE CHARGE 88.00 89.00 88.00 88.00 86.00 88.00 888.0 88.00 88.00ADDITIONAL ANNUAL INCOME FROM PROPERTY 100.00 120.00 150.00 200.00 200.00 200.00 200.00 200.00ESTABLISHEINT CONTROL MEASURES 70.00 80.00 90.00 100.00 100.00 100.00 10 0I,0 100.00 100.00

SUBTOTAL 236.86 582.06 711.50 771.02 841.95 864.45 888.68 914.90 943.00

REVISED SURPLUSIDEFICI[(-) 165.93 -8.41 416.07 170.74 876.67 1045.32 1582.10 1859.17 1802.92 18JI.43 1887.11 1890.19 1770.50 1651.51 1532.51

0'

06-Oct-85 ANNEDABAD MUNICIPAL CORPORATION MATER ACCOUNT

(RUPEES IN LAKHSJACTUALS FORECASIS

--------------------------- iiiiiiir iiiffii# HiiitriiiiiiiIiif4 §tiiiiiti

1981-82 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 199243 1993-94E0PENPITUREEMPLOYEES 66.75 123.51 116.22 I30.51 146.56 164.59 181.97 205.65 229.87 256.95 287.72 321.05 358.87MATERIAL CONSUMED 140.27 48.19 102.81 115.45 129.65 145.59 162.75 181.92 203.35 227.30 254.08 284.01 317.46ELECTRICITY AND POdER 238.03 339.60 447.33 502.34 564.12 633.49 708.11 791.53 884.77 989.00 1105.50 1235.7J 1381.30REPAIRS AND MAINTENANCE 13.91 5.90 4.20 4.72 5.30 5.95 6.65 7.4J 8.31 9.29 10.39 11.60 *12.97OTHER EXPEND1TORE 20.67 20.33 45.78 51.41 57.73 64.83 72.47 81.01 90.55 101.21 113.14 126.47 141.36DEPRECIAIION 235.63 238.24 237.75 270.25 340.25 410.25 460.25 460.21 460.25 460.25 460.25 460.25 460.25PROVISION fOR BAD DEBTS 40.02 51.S7 84.85 90.00 103.50 134.03 151.89 129.31 147.02 167.38 190.80 217.73 248.71

TOTAL EXPENDIURE 755.28 827.64 1038.94 1164.68 1347.11 1558.72 1746.08 1857.09 2024.11 2211.38 2421.36 2656.84 2920.92

INCOMEMATER IAX 149.95 196.00 354.92 450.00 517.50 595.13 684.39 787.05 905.11 1040.88 1197.01 1376.56 1583.04MATER CHARGE 11.52 10.97 14.79MEtERED dATER SUPPLY 38.65 52.40 54.55INCREASE IN MINIMUM RATER CHARGE 75.00 75.00 75.00 75.00 75.00 75.00 75.00 75.00

TOTAL TAXES/CHARGES 200.12 259.37 424.26 450.00 517.50 670.13 759.39 862.05 980.11 1115.88 1272.01 1451.56 1659.04OIHER INCOME 2.84 43.41 48.60 54.58 61.29 68.83 76.93 86.00 96.13 107.45 120.11 134.26 150.07

TOTAL INCOME 202.96 302.78 472.86 504.58 578.79 738.95 836.33 948.05 1076.24 1223.33 I392.12 1585.82 1808.11

DEFICIT FOR YEAR BEFORE DEBT SERVICING -552.32 -524.86 -566.08 -660.11 -768.32 -819.77 -909.75 -909.04 -947.87 -988.05 -1029.25 -1071.02 -1112.81

DEBT SERVICING 217.55 241.94 274.65 304.32 398.33 520.69 614.52 650.33 650.33 650.33 650.33 650.33 650.33

TOTAL OffICi1 fOR YEAR -769.87 -766.80 -840.73 -964.43 -1166.65 -1340.46 -1574.27 -1559.37 -1598.20 -1638.38 -1679.58 -1721.35 -1763.14

H >

tD >zh

06-Oct-85 AHNEVADAD MUNICIPAL CORPORATION SEHERAGE REVENUE ACCOUNT

fRUPEES IN LAKlS5ACTUALS FORECASTS

------------------------- }iif}}}ffftfTftt}}f#fffff }ifflitff}!tt/t7ttf1981-8? 1982-63 1963-64 1964-65 IS8S-86 1986-87 1967-88 1981-69 1096-90 1990-91 1990-91 19(-91 1990-91

EtPERDIIUREEMPLOYEES 122.89 244.12 225.56 253.30 284.45 319.43 357.06 399.12 446.13 498.69 557.43 623.10 696,50hATERIAL COHSUMED 65.76 32.25 31.60 35.49 39.85 44.75 50.02 55.91 62.50 69.86 78.09 87.29 97.58ELECBRIC17Y AND POHER 60.66 63.07 79.62 69.41 100.41 112.75 126.04 140.88 157.48 176.03 196.77 219.95 -245.86REPAIRS AND NAINTENANCE 25.69 29.76 23.21 26.06 29.27 32.87 36.74 41.07 45.91 51.31 57.36 64.12 71.67OIHER EXPEHDIIVRE 6.75 47.29 64.30 72.21 61.09 91.06 101.79 113.76 127.18 142.16 158.91 177.63 198.55DEPRECIATION 77.28 80.15 79.39 161.79 23J.24 279.59 289.59 289.59 289.59 289.59 289.59 289.59 289.59PROVISION FOR HAD DEBIS 48.47 56.61 120.99 126.00 144.90 181.64 206.63 235.37 268.43 306.45 350.16 400.44 458.25

IOTAL EXPENDIHURE 409.50 553.25 624.67 764.26 913.20 1062.08 1167.86 1275.73 1397.22 1534.09 1688.31 1862.11 2057.99

INCOMESENERAGE 7Ar 159.17 201.06 387.53 630.00 724.50 833.18 956.15 1101.87 1267.16 1457.23 1675.81 1927.18 2216.26SENERAGE CHARGE 83.20 62.00 217.42INCREASE IN IHIMN1U CONSERVANCY CHAROE 75.00 75.00 75.00 75.00 75.00 75.00 75.00 75.00

_-- -- -- -- --_ -- ---_ ----- -- --- --------- --- ---_---- -- -- -- -- --- ----_- ---- ---_- -__ __ _ __ _ _ _ _ _ _ _ _ __ _ _ _ _ __-_- _--_ _ _-_-__- __-- _- _--_-_-__- _-_ __-_-- _-_- __-_- _ _-_- _ _- _-_--_-_--_-_-

1OTAL IAXESICHARGES 242.37 283.06 604.95 630.00 724.50 908.18 1033.15 1176.87 1342.16 1532.23 1750.01 2002.18 2291.26 kOIHER INCOME 6.69 19.48 21.25 23.86 26.60 30.09 33.64 37.60 42.03 46.98 52.52 58.70 65.62

IQIAL INCOME 249.06 302.54 626.20 653.86 751.30 938.27 1066.79 1214.47 1384.19 1579.21 1803.33 2060.89 2356.88

DEFICIT FOR YEAR BEFORE DEBT SERVICING -160.44 -250.71 1.53 -110.39 -161.90 -123.82 -101.07 -61.25 -13.04 45.12 115.02 198.78 298.88

DEBT SERVICING 74.19 77.99 142.71 180.32 283.61 387.70 433.27 440.44 440.44 440.44 440.44 440.44 440.44

-234.63 -328.70 -141.18 -290.72 -445.51 -511.51 -534.35 -501.69 -453.47 -395.32 -325.42 -241.66 -141.55

l~~~~~~~~~~~~~~~~~7

aN

ANNEX12 06-Oct-85 ANNIIEDARilD NONICIPAL CORPORATION EINANCI PROJECT IONS FOR EASIERN AREA EXTENSION EXCLUDING IIATER SUPPLY 11 SENERAGE

ACTUAtS PROJECTIONS

1900-81 1991-82 19B2-83 1983-84 1984-85 1995-86 1986-87 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94EXPENDIT URE

TNO MUNICIPALIIIESAnnual recurring expenditure 7.19 9.20 11.02 13.05 14.7J 16.62 18.75 21.16 23.87 26.94 30.40 34.30 38.71 43.68Repairs 1.16 3.88 4.89 5.80 6.54 7.39 8.33 9.40 10.61 11.97 13.51 15.25 17.20 19.41Poster 2.67 8.67 8.34 10.15 11.45 12.92 14.58 16.46 18.57 20.95 23.64 26.68 30.10 33.97Adainistration 0.77 0.99 2.15 1.45 1.64 1.85 2.08 2.35 2.65 2.99 3.38 3.81 4.30 4.85Che*icallother expenses 0.23 0.38 1.19 1.45 1.64 1.85 2.08 2.35 2.65 2.99 3.38 3.81 4.30 4.85

SUB-TOTAL 12.02 23.12 27.59 31.90 36.00 40.62 45.83 51.72 58.36 65.85 74.31 83.85 94.61 106.76THREE NAGAR PANCHAYATS 3.96 11.49 14.14 16.95 19.13 21.58 24.35 27.48 31.01 34.99 39.48 44.55 50.27 56.73 _TNENTY-FlVE 5RA1 PANCHAWATS 6.28 7.04 10.24 13.12 14.80 16.71 18.85 21.27 24.00 27.08 30.56 34.49 39.91 43.91

SUB-IOTAL-EXISTING AVIHS. 27.26 41.64 51.97 61.97 69.93 78.91 89.04 100.47 113.37 121.93 144.35 162.89 183.80 207.40ADOL. OCTROI COLLECTION 0.00 14.53 31.98 43.98 48.36 63.86 70.28 71.30 85.03NEil SERVICES 36.88 84.87 144.74 163.33 184.30 207.97 234.67 264.80 298.80

IOTIAL EXPENDITURE 27.26 41.64 51.97 61.97 69.93 115.78 188.44 277.19 320.68 360.58 416.18 467.83 525.90 591.23

INCOMEGeneral Property tax 29.38 40.88 49.17 52.80 58.29 131.08 155.97 179.68 208.04 101.07 109.76 116.76 124.19 132.33Octroi-Exittine settlesents 4.12 5.12 14.69 30.50 34.42 38.84 43.82 49.45 55.80 62.96 71.05 80.17 90.46 102.08Octroi-GIDC Eslates 145.31 319.79 439.83 483.57 638.60 702.76 773.03 850.33

Other Income 0.63 11.53 10.21 8.30 9.37 10.57 11.93 13.46 15.18 17.13 19.33 21.82 24.62 27.78

TOTAL INCOME 34.13 57.53 73.07 91.60 102.07 180.49 357.03 562.37 718.85 664.74 837.74 921.50 1012.51 1112.52

SURPLIS/DEFICIT(-) 6.87 15.89 21.10 29.63 32.14 64.71 168.59 285.18 398.17 304.16 421.57 453.67 486.60 521.29

PER CAPITA EXPENDITURE Rs. 7.47 10.87 12.73 14.68 15.92 25.12 39.26 55.56 61.56 66.41 73.54 79.30 85.53 92.24H>

PER CAPITA INCOGE Rs. 9.35 15.02 18.18 21.71 23.10 39.16 74.39 112.71 137.99 122.43 148.03 156.21 164.66 173.57FtDl0'

GIVADIA 1)8-hpr-US VADOOARA MUNICIPAL CORPORATION REVENUE ACCOUNT 1)--------------------------------------------- (RUPEES IN LAKHS)

ACTUALS FORECASTS

1979-BO 1980-81 1981-82 19B2-03 1983-84 1984-85 1905-86 1986-87 1987-88 1988-89 1989-90 1990-91PATE OF INFLATIoN 6.5t 8.5x 9.01 8.0ox 8.00 8.o0 a."GROWTH RATE 3.5, 3.sx 3.50 3.s7. 3.57. S.51 3.51.

EIPENDITUREGENERUL ADnINISTRATION 248.67 243.55 288.69 330.30 365.79 41U.77 461.29 515.63 516.37 644.26 720.1b o)4s99ESTATE LAND HNAAGEMENr 37.01 31.21 44.44 45.20 50.06 56.22 63.13 70.57 1838 88.17 99.56 110.1710TN DEVELOPMENT 14.40 12.50 14.11 16.38 10.14 20.37 22.88 25.57 28.58 31.95 35.71 39.82RECREATION ETC. 42.09 60.Q8 63.42 .75.13 83.20 93.43 104.92 117.28 131.10 146.54 163.80 183.10FIRE BRIGADE 17170 25.59 20.36 29.28 32,43 36.42 4). 90 45.71 51.10 57.12 63.85 71.37STREET LIsHTING 10.85 17.90 21.03 35.50 39.31 44.14 49.57 55.41 61.94 69.24 17,39 86.51WATER SUPPLY 102.34 132.38 t42.03 169.91 1P8.17 211.31 257.30 265.25 296.50 331.42 370.46 414.1CONSERVANCY 51.36 63.10 71.58 83.38 92.35 103.71 116.46 130.18 145.51 162.66 181.82 203.23FUPLIC HEALTH 36.00 41.09 42.37 44.91 49.74 55.86 62.73 10.11 18.37 B7.61 97.93 109.46RE6. OF B8RTHS & DEATHS 3.57 3.11 2.85 4.45 4.93 5.54 6.22 6.95 7.77 8.68 9,71 10.05HOSPITAL MEDICAL RELIEF 30.92 26.37 45.56 52.43 58.06 65.20 73.22 81.B4 91.48 102.26 114,31 127.77HARYET & SLAUGIITERHOUSE 2.58 3.78 3.27 3.44 3.81 4.28 4.80 5.37 6.00 6.11 7s50 8.38PUBLIC WORPS DEPOT 53.91 49.87 54.27 92.4 102.82 115.46 129.66 144.94 162.01 101.10 202.43 226.29ROADS BRID6ES b DRAINS 105.51 103.02 115.76 136.25 150.89 169.45 190.28 212.70 227.75 2b5.7b 297.07 332.0bSECURITY 14.95 14.69 17.66 20.83 23.07 25.91 29.09 32.52 36.35 40.63 45.42 50.77PUBLIC EDUcATIOR 186.50 220.68 226.36 291.63 322.97 362.69 407.29 455.27 500.qO 5693.5 6350,6 710.76MISCELLANEOUS 4.92 10.07 12.04 17.30 19.16 21.52 24.16 27.01 30.19 33,75 37.72 42.17EXTRAORDINARY EXPENDITURE -114.71 -128.76 -104.56 -133.66 0.oo 0.00 0.00 0.00 0.00 o.oo 0 000 0.00!

SUB-TOTAL 848.65 931.01 1089.30 1315.51 1604.90 1802.26 2023.90 2212.31 2528.81 2826.70 3157.69 3511.91DEBT SERVICING 276.94 288.90 294.54 319.05 .335.20 370.11 407.60 444.27 479.31 516.35 557,19 60)2.21

SUB-ToTAL 1125.59 1219,91 1383.84 1634.56 1940.10 2172.37 2431.56 2706.38 3008.12 3343.00 3716.88 4134.11

EXPENDITURE ON BANK ASSID.SCHEnEAhEA OEVELOPtEN0TRUiNING EXPENSES 0.00 0.00 0.52 1.41 3.05 5.62

SLUM IMPROVEMENTEOET SERVICING 0.61 1.62 2.77 3.10 2.49 2.17

RUNNING EXPENSES 0.00 0.10 0.25 0.50 0.83 0.00

SUBTOTAL SLUM IMPROVEnENT 0.00 0.08 0.00 0.00 0.00 0,00 0.61 1.72 3.02 3.0b 3.32 3.05

SOLID WASTE MIANAGEMENTDE1T SERVIC3N6 3.17 9.41 15.70 22.35 30.69 35.69RUNNIN6 EXPENSES 58.90 69.10 74.32 79.48 94.93 91.26

SUBTOTAL SOLID WASTE nANAGENENT o.oo 0.00 o.oo 0.00 0.oU 0.00 61.97 79.51 90.02 101.82 115.62 1206 D X------------------------ - -------- -- ------------------- ----- --- --- ---- - ---- -- --- --------- --- ----- - --- --- --- - I J

PRIORITY INFRASTRUCTURE[E0T SERVICING 0.90 3.28 8.55 15.57 21.98 25.16RUNUING EXPENSES 13.13 20.02 26.77 26.77

SUBTOTAL PRIORITY INFRASTRUCTURE 0.00 0.00 0.00 o.oo 0.00 0.00 o .90 3.28 21.68 35.59 48.75 51.93

tDtAL ElPEITIIURE il25.59 1219.91 1383.84 1634.5b 1940.10 2172.37 2495.04 2719.89 3123.36 3485.49 3887.;2 4321,56-- -- - -- - -- -- - -- - -- -- - -- - -- -- - -- - -- -- --_- -- -- - -- - - -- - -- - -- -- - -- - -- -

VADODARA MUNICIPAL CORPORATION REVENUE ACCOUNT 12)--------------------------------------------- IRUPEES IN LAKHSi

ACTUALS FORECASTS

1979-80 1980-81 1981-82 1962-83 1983-B4 19B4-05 1955-8 1986-07 1981-88 1988-89 1989-90 1990-91

INiCOME

TRENO INCREASE IN PROPERTY TAX 3.0l 3.01 3.01. 3.0l 3;.l 3.01 3. 07.INCREASE IN WATER/CONS. TAXES L CHARGES 7.5l 7.51 7.5X 7.5l 7.51.

H(1JICIPAL RATES & TAXESOCTRDI DUTY 523.36 6486.5 759.13 B27.47 916.38 1029.07 1155.62 1291.75 1443.92 1614.02 1804.15 2016.68

PRCFERTY TAXESGENERAL TAX 227.26 250.11 257.15 300.65 318.69 328.25 330.10 348.24 350.89 369.45 380.53 391.95WATER TAX 76.44 73.23 70.60 89.45 99.06 111.24 124.92 139.64 156,09 174.47 195.03 218.0'

CONSERVANCY TAX 52.69 60.56 61.93 70.49 78.06 87.66 98.44 110.04 123.00 137.49 153.68 171.79

SUB-TOTAL PROPERTY TAXES 356.39 383.90 389.68 46O.59 495.81 527.15 561.46 597.91 637.77 681.41 729.24 781.74

ANIMAL/VEHICLE TAX 4.06 4.39 5.39 5.23 5.79 6.5') 7.30 8.16 9.12 10.20 11.40 12.74

THEATRE TAX 4.02 5.32 5.42 5.36 5.94 6.67 7.49 8.37 9.36 10.46 11.69 13.07

SUB-.OTAL ALL TAXES B.63 1042.46 1159.62 1298.65 1423.92 1589.40 1731.87 1906.20 2100.18 2316.09 2556.48 2824.23

DEVELOPMENT CHARGES 14.74 15.65 17.35 12.02 12.06 13.95 15,14 18.35 17.66 19.07 20.60 22.24PROPFERTY INCOME 21.25 30.76 30.49 32.13 34.38 37.30 40.47 43.71 47.21 50.98 55.06 59.47

FEES AND CHAR6ES 23.73 26.09 28.02 25.87 27.68 30.03 32.59 35.19 . 3B.01 41.05 44.33 47.88

GOVERNMENT GRANTS 140.90 194.90 211.95 273.41 302.79 340.03 381.04 42b.82 477.10 533.30 59S.13 688.35 1

OTHER INCOME 129.05 136.84 156.38 164.58 176.10 191.07 207.31 223.89 241.81 261.15 282.04 304.61 ¢

EXTfAORDINARY INCOME -14.74 -15.65 -17.35 -12.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 '

TOTAL INCOME CURRENT SERVICES 1211.56 1431.05 1586.46 1794.64 1977.73 2181.78 2409.22 2652.17 2921.96 3221.64 3554.64 3924.77

DANK ASSISTED PROJECT INCOMESLUM UPGRADING 0.00 0.44 1.02 1.90 2.92 2.92

TOTAL INCOME 1211.56 1431.05 1586.46 1794.64 1977.73 2(81.78 2409.22 2652.81 2922.98 3223.54 3557.56 3927.69

SURPLUS/GEFICITI-) B5.97 211.14 202.62 (60.08 37.63 9.41 -85.82 -137.28 -200.39 -261.95 -330.06 -393.87

CUMULATIVE SURPLUS/DEFICIT(-) 85.97 297.11 499.73 659.81 697.44 706.85 621,03 483.75 283.36 21.42 -308.64 -702.51

PROJECT IMPROVEMENT MEASURESADDL. PROP. TAX RECOVS. 5.00 43.19 91.99 147.18 157.25 (68.29 180.40IMPROVED VALUATIONS 7.507 34.37 36.13 38.02 40.07 42.28INCREASED CONS./WATER TAXES 18.73 41.06 67.54 98.76 1i35.41)INCREASED OCTROI 1.50 19.38 21.66 24.21 27.0$ 30.25 ,

MINIMUM CHARGES NATER/ CONSERVANCY 50.00 5').00 50.00 50.00 50.00 S. v

SUBTOTAL 43.19 214.46 296.02 337.02 384.17 438.33 c

REVISED SURPLUSIDEFICITI-) 85.97 211.14 202.62 160.08 37.63 9.41 -42.63 77.10 95.64 75.07 54.11 44.46

CUMULATIVE 85.97 297.11 499.73 659.B1 697.44 706.85 664.22 741.40 837.04 912.11 966.22 1010.68

SURAT MIUNICIPAL CORPORATION REVENUE ACCOUNI (1)---------- I----------------------------------- IRUPEES IN LAKHSI

ACTUALS FORECASTS---------------- --------------- I---------------# I * u I , u *

1979-80 19B0-81 1931-32 1982-83 1983-84 1984-85 1985-86 1986-87 1987-88 1908-89 1989-90 1990-91PE OF ItFLAIION 8.51 8.52 8.52 8.0 B.01. 8.0X 8.07.GRVWIH RAlE 3.51 3.50 3.57 3.52 3.51 3.52 3.5X

E7FEND I UPESEtiEPAL 000IOISIOOIIO 41.19 42.82 46.74 54.00 65.50 74.50 83.66 93.95 105.02 117.39 131.22 146.67COLLECTIOlt OF REVEIIUE 30.93 38.19 4b.E3 72.97 60.46 67.02 75.26 84.52 94.41 105.60 119.04 131.95F'U6LIC HEAITH 72.53 107.39 130.27 153.31 164.90 244.43 274.49 308.24 344.56 305.14 430.51 481.23PUBLIC SAFETY 19.06 18.44 20.32 29.35 35.06 40.22 45.17 50.7Z 56.70 63.37 70.84 79.ilMEDICAL PELIEF 83.32 92.65 133.65 135.01 165.50 19B.IB 222.55 249.92 279.36 312.27 349.05 390.17

AI1R SUPPLY 61.63 97.19 119.86 146,84 152.66 185.62 208.45 234.08 261.66 292.48 326.93 365.44SEKPAGE 23.29 26.20 28.89 45.54 52.38 63.29 71.07 79.81 89.22 99.72 111.47 124.60ElUCAliON 198.73 231.44 262.56 303.35 375.36 417.40 468.73 526.37 588.3 6517.69 735.17 821.77ROhOS 88.77 99.77 91.74 105.87 74.23 112.00 125.77 141.24 157.88 176.48 197.27 220.50SREET I.16HTING 18.94 15.42 17.69 19.76 34.75 27.40 30.77 34.55 38.62 43.17 48.26 53.94GEQEliS 4.39 3.91 6,42 10.00 13.07 19.88 22.23 24.97 27.91 31.20 34.87 3B.9BOIHER SERVICES 158.50 248.68 237.19 288.60 352.69 400.07 449.27 504.52 563.95 830.38 704.64 787.65M0Rl4ElS 3.66 4.20 5.00 6.19 6.93 8.15 9.15 10.28 11.49 12.84 14.35 86,05LIBRARY ETC. 3.99 3.23 3.28 3.86 6.01 6.48 7.28 B.17 9.13 10.21 11.41 12.76

SUP-100L 816.93 1029.53 1150.44 1373.71 1567.50 1664.56 2093.85 2351.35 2628.33 2937.95 3284.04 3670.90DEBT SERVICING 171.66 163.81 176.19 184.23 209.81 222.13 256.37 301.06 347.54 395.89 446.16 498.45MUIIICIPAL FUND CAP. ElPENDIIURE 357.83 137.43 140.28 292.27 340.90 381.93 192.47 197.20 202.02 206.93 211.92 217.00

-- - -- - --- ---- -- --- -- - - --- - --- - -- - -- --- -- - -- - -- -- - -- - -- - - - ---- --_----- -- -- - -- -- --- - - -- -- --- - - - -- -- - - - - - - -- - --

SUB-TOTAL 1346.42 1330.77 1466.91 1850.21 2118.21 2468.62 2542.69 2049.61 3177.90 3540.77 3942.13 4386.35 I

EIFEOOIIURE ON PAhK ASSID.SCHEtEAREA DEYELOFPENJOEET EFVICtIN6 0.22 2.47 7.81 13.67 13.79 8.60RUNNIG6 EXPENSES 0.00 0.Q5 0.22 0.51 0.96 1.53

SUB-TOiAL AREA DEVELOFtENIT 0.00 0.00 0.00 0.00 0.00 0.00 0.22 2.52 8.02 14.10 14.75 10.12

SLUM IMFROVEMENTDEBT SER'ICIN6 1.64 6.61 11.86 12.93 12.34 12.13RUNNIN6 EXPENSES 0.00 0.37 0.92 1.86 3.10 3.29

SUBlOIAL SLUMt IMPROVEMEN 0.00 0.00 0.00 0.00 0.00 0.00 1.64 6.9B 12.78 14.79 15.44 15.42

SOLID MAST[ MAl1A6EtiENTDEBT SERVICING 11.47 30.32 41.74 48.81 51.86 51.86RUNNING EXPENSES 0.00 22.65 71.32 77.27 811.14 141.13

SUBTOTAL SOLID WA01IE MANAGEMENT 0.00 0.00 0.00 0.00 0.00 0.00 11.47 52.97 113.06 126.09 163.00 192.99

PRIORITY IIlFRASTRUCTUREDEBI SERVICIN6 13.00 39.63 53.25 53.25 53.25 53.25RUN1NING EXPENSES 56.67 56.67 56.67 56.67

SUBTOT1L PRIORITY INFRASTRUCTURE 0.00 0.08 0.00 0.00 0.00 0.00 13.00 39.63 109.93 109.93 109.93 109.93--ALE-- -----------346.42--3307---4--.---850.-1-211.2--2468.62 -569.02 -295.71 -3421.6- -3805.1 -- 45.-- - .-8-1-

TOTAL EXPENDITURE 1346.42 1330.77 1466.91 1850.71 211B.21 2460.62 2569.02 2951.71 3421.60 3B05.76 4215.214 1714.81

SURAT MUNICIPAL CORPORATION REVENUE ACCOUNT (2)------------------ (RUPEES IN LAKHS)

ACTUALS FORECASTS----- ~----------------------------------------5*§§§|§##1t{§i§§§{§§}§*1+{§}}f1979-BO 19BO-S1 I98-82 1982-03 1983-84 1904-85 1985-06 1986-87 1987-88 1908-89 1989-90 1990-91

I NCOKE

TREND INCREASE IN PROPERTY TAT 3.01 3.01 3.0X 3.0X 3.01 3.01 3.01

MUNICIPAL RATES & TAXESOCTRIU DUlY 593.76 651.22 858.43 979.63 1193.80 1344.00 1509.29 1094.88 1894.54 2117.72 23b7.18 2b46.04

FPOFERTY TAXESGENERAL TAX 176.14 165.92 242.84 263.73 295.36 409.09 421.98 434.64 447.68 461.11 474.94 489.19

WATER TAx 65.71 61.47 84.01 86.34 76.15 100.48 104.00 107.64 111.40 115.30 119.34 123.52COllSERVANCY TAX 38.76 37.48 54.93 64.00 68.34 85.74 08.74 91.85 95.06 98.39 101.83 105.40

SUS-TOTAL PROFERTY TAXES 280.11 264.87 381.78 414.07 439.85 595.91 614.72 634.12 654.14 674.80 696.11 718.10

ANIMAL/VEHICLE TAX 3.77 1.92 5.70 5.29 6.20 21.32 23.94 26.89 30.05 33.59 37.55 41.97THEATRE TAX 6.56 7.13 8.05 7.85 7.65 7.68 8.62 9.69 10.83 12.10 13.53 15.12

SUB-TOTAL ALL TAXES 884.20 925.14 1253.96 1407.04 1647.56 1968.91 2756.56 2365.58 2589.56 2B38.21 3114.37 3421.23

SPECIAL ACT INCOME 0.24 0.06 0.20 0.24 0.43 0.50 0.54 0.59 0.64 0.69 0.74 0.80PROFERTY INCOME 29.01 30.65 33.52 36.14 47.09 62.59 67.91 73.68 79.58 85.94 92.82 100.24GRANTS ANIT COUITRINUTIONS 176.55 2)8.97 239.52 300.90 312.94 364.06 395.0) 428.58 462.87 499.90 539.89 583.08OTHER INCOIIE 3V8.82 65.26 47.11 122.41 52.67 9.32 77.84 87.42 97.72 109.Z3 (22.09 136.48REVENUE CAPITAL INCOME 51.53 126.37 71.57 54.54 62.49 60.00 65.10 70.63 76.28 82.39 88.98 96.10

TOTAL INCOME CURRENT SERVICES 1450.35 1366.45 1645.88 1921.27 2123.18 2525.38 2762.97 3026.48 3306.64 3616.35 3958.89 4337.93

BANK ATSISTED PROJECT INCOME

AREA OEVELOFMENT 0.0' 0.64 1.96 4.10 6.62 9.03SLUM UP6RADING 0.00 2.81 6.55 12.17 18.73 IB.73

TOTAL INCOME 1450.35 1366.45 1645.88 1921.27 2123.18 2525.38 2762.97 3029.92 3315.15 3632.62 3984.24 4365.69

SURPLUSiDEFICIT(-) 103.93 35.68 178.97 71.06 4.97 56.76 193.94 78.22 -106.54 -173.14 -261.00 -349.13CUMULATIVE SURPLUS/DEFICIT)-) 103.93 139.61 318.58 389.64 394.61 451.37 645.31 723.53 616.98 443.85 182.84 -(66.284

PROJECT IMPROVEMENlT MEASURESADDL. PROP. TAX RECOVS. 5.00 39.29 81.00 125.25 129.)) 133.10 137.21IMPROVED VALUATIONS 7.501 45.56 50.10 51.65 53.24 54.89

HINIMUM W0ATER TAT 25.007 26.91 27.85 28.83 29.83 30.88MINIMUM CONSERVANCY TAO 25.00X 22.96 23.77 24.60 25.46 26.35OCTROI PENALTY MEASURES 1.501 25.42 28.42 31.77 35.51 39.69

SUBTOTAL 39.29 20I.85 255.38 265.95 277.14 289.02

REVISED SURPLUSIDEFICIT)-) 103.93 35.69 178.97 71.06 4.97 56.76 233.23 280.07 148.84 92.81 16.14 -60.11

CUHULATIVE 103.93 139.61 318.58 389.64 394.61 45L,37 684.60 964.67 1113.50 1206.32 (222.46 1162.35

6TRAJIA 09-Apr-85 RAJIOT MUNICIPAL CORPORATION REVENUE ACCOUNT (11- ----------------------------------- (RUPEES IN LAKHS)

ACTUALS FORECASTS--------------------------------------- i++}tt>*l**}***t+t**ft"le+*>elu>

1979-80 1980-81 1981-82 1982-03 1903-84 1984-85 1985-86 1986-87 1987-88 1988-89 1989-90 1990-91RATE OF INFLAhION 8.57. 8.57. 8.5! 8.5. 8.07. 8.0X. 8.0'l 8.07.GROWTH RATE 3.5% 3! .57 3*.5X 3*5Z 3.5% 3.51 3.57. 3.5'l

EXPEIIDITUREGENERAL ADMINIStRATION 48.49 83.72 117.27 109.07 122.48 137.55 154.46 173.45 193.89 216.73 242.26 270.80WATER SUPPLY 34.78 40.72 48.00 59.21 66.49 74.67 83.85 94.16 105.25 117.65 131.J1 147.00PUBLIC HEALTH tl GEN. CONSERVANCY 55.09 64.03 84.39 108.54 121.89 136.88 153.71 172.61 192.95 215.b7 241.08 269.48EDUCATION 31.31 55.43 130.19 132.36 148.64 166.92 187.44 210.49 235.29 263.01 293.99 329.62ROADS & OTHER CITY DEV. 58.47 64.40 0.00 0.0 13 0.00 0.OO 0.00 0.00 0.00 0.00STREET LIGHTINIG 14.62 17.90 18.37 22.24 24.97 28.05 31.50 35.37 39.53 44.19 49.40 55.22HEALTH FACILITIES 15.49 18.33 5.58 6.81 7.65 8.59 9.64 10.83 12.11 13.53 15.13 16.91OTHER SERVICES 33.67 43.13 105.56 167.62 188.23 211.38 237.38 266.57 297.97 333.07 372.30 416.16

SUB-TOTAL 291.92 387.66 509.36 605.85 680.35 764.02 857.98 963.49 1076.98 1203.85 17'45.67 1504.19DEDT SERVICING 37.93 45.29 49.52 63.70 79.62 113.49 151.72 194.85 243.52 298.44 360.42 430.35MUNICIPAL FUND CAP. EXPENDITURE 78.34 60.18 82.21 188.32 102.73 115.92 130.80 147.60 166.55 187.94 212.07 239.3r)

SUB-TOTAL 408.19 493.12 641.09 857.87 862.70 993.43 1140.50 1305.94 1487.06 1690.23 1918.15 2173.83

EXPENDITURE Oll BANK ASSTD.SCHEHESOLID WASTE MANAGEMENTDEBT SERVICING 5.13 15.34 23.38 28.49 30.64 310.64RUNNING EXPENSES 10.92 21.72 28.04 32.61 32.61 32.61

SUBTOTAL SOLID WASTE MANAGEMENT 0.00 0.00 0.00 0.00 0.00 0.00 16.05 37.06 51.41 61.10 63.25 63.25

TOTAL EXPENDITURE 408.19 493.12 641.09 857.87 862.70 993.43 1156.55 1342.99 1538.47 1751.33 1981.40 2237.0'8

-----

t-t

RAJKOT MUNICIPAL CORPORATION REVENUE ACCOUNT (21--------------------------------------------- (RUPEES IN LAKHS)

ACTUALS FORECASTS

1979-80 1980-BI 1991-82 1982-83 1983-84 1984-85 1985-86 1986-87 1907-88 1988-89 19B9-90 1990-91

INCOMlE

TREND INCREASE IN PROPERTY TAX 6.O 6.0X 6.0X 6.07. 6.0X 6.0 b.0 6.0/.

CHAN6E IN OCTROi BASE 5.00% 5.00%

MUIJICIPAL FRTES 1 TAXESOCTROI DUTY 260.89 338.44 398.59 452.55 542.00 639.09 753,56 846.23 945.92 1057.34 II8I.90 1321.13

PROFERTY TAXESGENERAL TAO 58.57 53.17 71.94 109.44 14D.00 156.88 166.29 176.27 186.05 198.06 209.94 222.54

WATER TAX 25.91 15.57 24.65 32.17 50.00 51.75 53.56 55.44 57.38 59.38 61.46 63.61CONSERVANCY TAX 4.12 3.83 5.60 16.25 30.00 31.05 32.14 33.26 34.43 35.63 36.88 38.17

SUB-TOTAL PROPERTY TAXES 88.60 72.57 102.19 157.86 228.00 239.68 251.99 264.97 278.65 293.07 308.28 324.32

ANIMAL/VEHICLE TAX 0.04 0.15 0.00 0.14 0.16 0.18 0.20 0.22 0.25 0.28 0.31 0.35THEATRE TAX 3.92 3.62 3.92 3.97 4.46 5.01 5.62 6.31 7.06 7.89 8.82 9.8b

SUB-TOTAL ALL TAXES 353.45 414.98 504.70 614.52 774.62 883.95 1011.37 1117.73 1231.87 1358.58 1499.31 1655.65

SPECIAL ACT INCOME 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

MhAREr RENTS 5.47 7.37 9.65 11.85 12.86 13.95 15.14 16.42 17.74 19.16 20.69 22.34

GRANTS AND CONTRIBUTIONS 20.81 28.04 116.67 140.98 152.96 165.97 180.07 195.38 211.01 227.89 246.12 265.81

OTHER INCOME 22.72 39.41 46.15 77.05 B6.53 97.17 109.11 122.53 136.97 153.10 171.14 191.30

TOTAL INCOME CURRENT SERVICES 402.45 409.80 677.17 844.40 1026.96 1161.03 1315.69 1452.07 1597.58 175B.73 1937.25 2135.10

SURPLUS/DEFICIT(-) -5.74 -3.32 36.08 -13.47 164.26 167.60 159.15 109.07 59.11 7.40 -44.15 -101.98

CUMULATIVE SURPLUS/DEFICIT(-) -5.74 -9.06 27.02 13.55 177.81 345.41 504.56 613.63 672.74 680.14 635.99 534.01

PROJECT IMPROVEMENT MEASURESADDL. PROP. TAX RECOVS. 5.00 25.20 52.99 83.59 117.23 154.14 194.59

IMPROVED VALUATIONS 7.50% 23.85 27.17 30.77 34.68 38.92

MINIMUM WAIER TAX 25.00x 13.86 14.34 14.85 15.37 15.90

MINIMUM CONSERVANCY TAX 25.00l 8.32 8.61 8.91 9.22 9.54

OCTROI PENALTY MEASURES 1.50% 12.69 14.19 15.86 17.73 19.82

SUBTOTAL 25.20 111.71 147.90 187.62 231.14 278.77

REVISED SURPLUS/DEFICIT(-) -5.74 -3.32 36.08 -13.47 164.26 167.60 184.35 220.78 207.01 195.01 186.99 176.79

CUMULAOIVE -5.74 -9.06 27.02 13.55 177.81 345.41 529.76 750.54 957.55 1152.56 1339.55 1516.34

3 >4

H ON

GTJAMIA 11-Apr-85 JAMNAGAR MUNICIPAL CORPORATION REVENUE ACCOUNT (1)--------------------------------------------- (RUPEES IN LAKHSI

ACTUALS FORECASTS------------------------------------}*§I§}+t§*§X**ta{{**}tJ}t}*l*+h

198o-81 1981-82 19B2-83 1983-84 1984-85 1985-86 1986-87 1987-8B 1988-89 1989-90 1990-91RATE OF INFLATION 8.5X 8.SX 8.5x 8.0X 8.0% 8.0% 6.Q0GROWTH RATE 3.5s 3.5x 3.5% 3.5% 3.5% 3.5% 3.5Z

EXPENDITUREGENERAL ADMINISTRATION 27.21 28.01 41.48 46.37 52.07 58.48 65.67 73.40 82.05 91.71 102.52WATER SUPPLY 24.02 24.43 32.43 36.25 40.71 45.71 51.34 57.38 64.14 71.70 80.14DRAINAGE 62.31 60.82 70.58 78.89 88.59 99.49 111.72 124.88 139.59 156.04 174.42EDUCAT ION 79.74 68.89 83.29 93.10 104.55 117.41 131.84 147.38 164.74 184.14 205.83STREETLIGHTING 9.29 9.00 11.89 13.29 14.92 16.76 18.82 21.04 23.52 26.29 29.38HEALTH FACILITIES 0.44 0.53 0.75 0.84 0.94 1.06 1.19 1.33 1.49 1.66 1.86OTHER 71.46 189.39 107.50 120.16 134.94 151.53 170.16 190.21 212.62 237.66 265.66

SUB-TOTAL 274.47 381.07 347.92 388.90 436.72 490.43 550.74 615.62 6b88.14 769.20 859.81DEBT SERVICING 6.91 9.30 12.37 18.83 36.60 64.05 96.92 130.94 166.14 202.58MUNICIPAL FUND CAP. EXPENDITURE 0.00 0.00 0.00 30.00 52.50 75.00 77.63 80.34 83.15 86.06

SUB-TOTAL 274.47 387.98 357.22 401.27 485.56 579.53 689.79 790.16 B99.42 1018.50 1148.460

EXPENDITURE ON BANK ASSTD.SCHEMESLUM IMPROVEMENTDEBT SERVICING 6.87 17.51 25.80 27.94 24.72 22.61.RUNNING EXPENSES 0.00 0.91 2.28 4.60 7.68 8.14

SUBTOTAL SLUM IMPROVEMENT 0.00 0.00 0.00 0.00 0.00 6.87 18.42 28.08 32.54 32.40 30.75

SOLID WASTE MANAGEMENTDEBT SERVICING 2.73 8.38 13.41 17.18 18.84 18.84RUNNING EXPENSES 5.82 12.03 16.52 20.05 20.05 20.05

SUBTOTAL SOLID WASTE MANAGEMENT 0.00 0.00 0.00 0.00 0.00 8.55 20.41 29.93 37.23 38.89 38.89

TOTAL EXPENDITURE 274.47 387.98 357.22 401.27 485.56 594.95 728.62 848.18 969.19 1089.79 1218.10

--- -- -- --- -- -- --- -- -- -- --- -- -- --- -- -- --- -- -- -- --- -- -- --- -- -- --- -- -- --

JAMNAGAR MUNICIPAL CORPORATION REVENUE ACCOUNT (2)-- - -- - ---- (RUPEES IN LAKHS)

ACTUALS FORECASTS-- -- - -- - - -- - -- - - -* -. -i - - - i- - - - - - - - - - - - - -*|**l****

1980-81 1981-82 1982-83 1983-84 IV84-85 1985-86 1986-87 19817-88 198-89 1989-90 1990-91INCOHE

TREND INCREASE IN PROPERTY TAX 10.0X 10.01 10.0 10.01 10.0 10.0XPROPERTY TAX REVALUATION 30.0XMUNICIPAL RATES & TAXESOCTROI DUTY 168.37 161.34 173.33 193.75 300.00 336.89 378.32 422.89 472.70 528.39 590.63PROPERTY TAXES

*GENERAL TAX/CONSERVANCY TAX 31.34 47.37 44.85 46.42 73.00 80.30 88.33 97.16 1O6.B8 117.51 129.32,WATER TAX 12.96 17.11 40.78 45,58 69.00 71.42 73.91 76.50 79.18 81.95 84.82

SUB-TOTAL PROPERTY TAXES 44.30 64.48 85.63 92.00 142.00 151.72 162.24 173.66 186.06 199.52 214.14

THEATRE TAX 0.75 0.81 0.89 0.99 1.ll 1.25 1.40 1.57 1.75 1.96 2.19OTHER TAXES 0.54 0.35 0.34 1.00 1.12 1.26 1.41 1.58 1.76 1.97

SUB-TOTAL ALL TAXES 213.96 226.98 260.19 286.74 444.11 490.98 543.23 599.53 662.09 731.63 808.93

PROPERTY INCOME 0.94 2.41 1.98 2.21 2.40 2.60 2.82 3.05 3.29 3.56 3.84GRANTS AND CONTRIBUTIONS 100.31 100.74 118.06 131.97 143.19 155.36 168.56 192.05 196.61 212.34 229.33OTHER INCOME 11.01 29.57 41.60 46.50 52.22 58.64 65.85 73.61 82.28 91.97 102.81

TOTAL INCOME CURRENT SERVICES 326.22 359.70 421.83 467.42 641.92 707.58 7B0.47 858.24 944.28 1039.50 1144.91

BANK ASSISTED PROJECT INCOMEAREA DEVELOPMENT I

SLUn UPGRADING 0.00 6.05 14.12 26.23 40.36 40.36

TOTAL INCOME 326.22 359.70 421.83 467.42 641.92 707.58 786.52 872.36 970.51 1079.86 1185.27

SURPLUS/DEFICIT(-) 51.75 -28.28 64.61 66.15 156.36 112.63 57.89 24.18 1.31 -9.94 -32.84CUMULATIVE SURPLUS/DEFICIT(-) 51.75 23.47 88.08 154.23 310.59 423.22 461.11 505.29 506.60 496.67 463.8327

PROJECT IMPROVEMENT MEASURESADDL. PROP. TAX RECOVS. 5.00. 8.03 17.67 29.15 42.75 58.78 77.59IMPROVED VALUATIONS 7.501 7.95 9.47 11.22 13.23 15.52MINIiUM WATER TAX 25.00X 18.48 19.13 19.79 20.49 21.20MINIMUM CONSERVANCY TAX 25.001 18.48 19.13 19.79 20.49 21.20OCTROI PENALTY MEASURES 1.501 5.67 6.34 7.09 7.93 8.86

SUBTOTAL 8.03 68.25 83.22 100.65 120.91 144.38

REVISED SURPLUS/DEFICIT(-) 51.75 -28.28 64.61 66.15 156.36 120.66 126.14 107.39 101.97 110.97 1I1.55 (D >

CUMULATIVE 51.75 23.47 88.08 154.23 310.59 431.25 557,39 664.78 766.75 877.73 989.27 " O

-82- ANNEX 7

Page 1

GUJARAT HOUSING BOARD

FINANCIAL PROJECTIONS THROUGH 1990/91

1. Financial projections for the Gujarat Housing Board have beenbased on actual accounts between 1979/80 and 1983/84. During this period,the Gujarat Housing Board kept its accounts on a hybrid cash/accrualsystem which does not truly reflect its financial position. In addition,some financial practices have distorted the financial results of theHousing Board.

2. The projections have been prepared as follows:

- CHB Revenue Accounts showing the net revenue accountfor each year

- GHB balance sheet

- GHB Sources and Applications of Funds Statement.

Comments on the Financial Position to 1983/84

3. The actual accounts from 1979/80 through 1983/84 show that exceptfor 1982/83, GHB was running a surplus on its Revenue Account. However,these figures are not a true reflection of its financial position.Although it is difficult to precisely establish the true position, it isestimated that there were actual losses of between Rs 30-50 lakhs peryear.

4. In addition, it is clear that GHB have relied on the use ofdeposits as a means of financing current schemes. GHB can eliminate theseproblems by adopting sound financial practices and they are currentlybeing assisted to do so by consultants.

Projections through 1990/91

5. Projections have been prepared to show the financial performanceof GHB through 1990/91. These are based on a capital investment programmegiven by GHB. In preparing the projections, it has been assumed thatthere will be a proper system of cost recovery which has been determinedin two ways. Firstly, an average profit on capital investment of 8% hasbeen included in hire purchase capital recoveries (ranging from abreak-even on EWS to 15% on HIG). Secondly, a differential of 1/2%between borrowing rates and lending rates has been included. It isassumed that the average cost of new loans will be 11% which is consistentwith present costs of funds and the impact of the proposed project. Anaverage rate of recovery from beneficiaries of 11 1/2% over 10 years hasbeen assumed.

-83-

ANNEX 7Page 2

6. The projections show that by adopting sound financial practicesand with a proper cost recovery system, the CHB can move into, and main-tain surpluses throughout the period.

Bank Assisted Project

7. In terms of its overall capital programme, the component of theBank-assisted project is relatively small and could be easily accommodatedwithin the financial constrants of the Housing Board if the improvementsin financial management under the project are properly implemented.

6UJARAh HOUSING BOARD REVENUE ACCOUNTSRUPEES IN LARNS

ACIUALS FORECASIS

1919-80 19B0-81 1901-82 1982-03 1983-04 1984-85 1985-86 1906-81 1907-88 1900-89 1907-90 1979S-91E tf EIIDI IU0EREIEAIR L AIIClO. Or FROfERTY 4.16 4.16 4.16 7.06 7.17 8.99 1Q.14 11.45 12.92 14.57 16.45 18.5660O0UID FENIS 4.19 O.60 0.12 16.19 10.27 20.61 23.26 2k.25 29.62 33.42 37.71 42.56RENIS hAIE5 hHO TAIES 17.95 10.25 17.56 9.54 10.76 12.15 13.11 15.47 17.45 19.69 22.22 25.t0SERVILE ElPElSES 11.02 17.05 19.88 24.15 27.25 0'i.75 34.70 39.15 44.10 49.85 56.25 63.48

ESIA1E IIAEAGEIENII 21.92 31.09 34.1.3 41.1 47.02 53.06 59.81 67.56 76.23 06.02 97.07 109.53

SiliflO FUhO CONTRIPUTIOII 41.79 39.64 30.28 38.14 43.04 48.56 54.90D 61.01 69.77 70.73 80.84 100,.25SfECIAL EXIlLN.ES 10.07 9.11 8.92 10.99 12.40 13.99 15.79 17.92 20.t1 22.69 25.6b 290.89IhNEREiT Oil LOANS 244.21 351.76 312.32 331.91 541.58 774.31 999.55 1214.79 1417.11 Ib'1.30 1769.85 iq.l.6

TOTAL EIfEIIIIUfE 361.33 472.46 436.47 479.73 714.29 962.42 1211.82 1454.31 1686.99 1908.20 2113.99 2297.59

IIICOtEFEillS Of Fl.lif:IfTES 40.44 2b.999 30.24 29.41 20.41 28.47 '28.41 2M.4 1 20.47 28.47 28.41 28.41H.P. INSIALlIENIIS 0HS.ISIHS 78.42 Boh.67 76.86 74.14 74.14 74.14 74.14 74.14 14.14 74.14 14.14 74.14H.P. IIiSIALIIEITlS OIHER 175.73 324.t9 342.21 327.96 543.14 793.44 IO62.17 1331.t'7 116.080 1896.49 2174.34 2447.34GOVI.SUi5I1'Y IHl. NORIERS UOUSES 6.20 0.70 0.70GKVI.SUpS1tl 5RO HOUSES 0.88 0t.30 0.3101nSc RECEIPS 9.24 6.40 10.23 13.40 15.12 11.16 19.25 21.72 24.51 21.S " 31.21 35. 22

IOTAL ILIOHE 310.51 439.15 460.54 443.91 660.81 913.12 1184.04 1462.40 1744.01 20626.17 2138.17 2585.17

SURPLUSIDEFI(ITI-IREV.ALCOUNT -50.82 -33. 31 24.01 -35.76 -53.43 -49.31 -2I. 70 8.09 51.02 110.49 194.18 287.59

ADD INTEREST RECEIVED 67.10 76.07 60. 28 1.3L7 00.40 90.81 1I12.47 115.63 130.47 141.23 166.13 1j1.46OMiER llENS 11.56 -. b66 -0.90 -45.8b

toE11 REVEDUE AECOII! hILMILE 27.84 42.90 91.45 -1I.30 21.05 41.50 74.69 123. I2, 107.49 265.11 360.31 4 75.05

LUIiULAI l'JE ~~~~2 4 Q' 269.8.6 312.16 404.21 3931.91 420.96 462.46 531.15 66o.01 848.36 1114.08 1474.39 1949.43

GIJJARiil 110115111f 8IJAriD P.(,IAtCE 511EE15k1JfEES IHI tAlIS

ACIUALS FGGiECASIS

I19790O 1980-91 1981-802 1902-03 1983-84 1904-85 1905-0 1996 891 198I7-8 1988-89 1989-90 1990-I

FI'Dt g'ASEIS-VAHIAL HO0MES 784;.1If 806.51 1o453.16 12461.85 14771.8 1715i3.85 10793.85 24'2i.85 29091.35 32211.64 36682.15 415.2.65

l~EPI0ft 84.86 0;.67 8'.66 33.16 17.42 42.22 47.64 5'.16 60.bhb 6.45 77.24 97.1IAt.BRaP 0J80.1I 1411.14 147.93 113.01 196.15 2.1.!4 249.15 281.82 119.nl 358.14 404.92 45f.,IiUlli.Ui INIERSI 13.99 21).17 7.'.2 16.68 10.82 21.24 2i.91 .Y 2.4 i S1 34.41 '8.05 43.84WIIA5 A1l AlMilltM5 51.64 16.tA7 95.29 70.619 19.16 90t."O) lI'.I55 114.59 I2D.341 145.91 164.64 185.79

OIIIER lLikPlIll ASUEIS 157.96 34.6L' 78.73 297.09 336.14 379.10 429.00 462.96 544.97 614.94 693.90 18;'. P0CfAH tillt PftiIs I.HS.68 1166.53 7062.17 Io64.70 1038.01 udl.1l Id23.28 1o67.61 1164.80 1327.77 1571.24 1913.49SEtUEIIIE5 31.31 31.61 40.26( 39.76 44.87 5tJ.63 57.13 64.46 72.74 82.09 92.b2 104.51

IOIAL CUfFElNI AHEIS 1I10.o4 1559.79 7515.76 1696.70 1751.10 IB23.t3 1931.3;2 2092.217 23211.01 2632.42 3043.41 3574.69

EUrhEIII LitAiHlilTS 96.72 94.11 InO.49 106.92 I2L.b5 136.14 153r2.6? 113.34 195.61' 720.72 249.06 281.04- ~ ~ ~ ~

IIET LuJkE111 ASSEISILItbSI-l 1713.32 1465.'.9 2415.27 1589.78 1630.53 1696.89' 1771.7l 1911.92 2125.39 2411.10 2794.36 3293.65

IOlAL 65,SEIS 9556.42 10211.59 1286e.43 14051.63 16402.30 19280.74 22571.55 26212.77 39216.74 34623.34 394176.51 449286.31

PAR1I(lFOClS b[FUSlCS 814.73 766.04 1675.1B 2202.32 23B16.02 ;.61.95 4451.95 5'pi6.95 6422.29 7534.75 8741.79 I9i 6 1.43LOA11S Elt. 6091.35 6429.415 672.41 7341.04 0lle.11 10122.94 HUL A 14526.52 16392.69 18195.45 19083.92 21181.60Sll14lI.'G & EltFllt rJ fUlIl[S 1169.1b 1610(.7( 2151.8b 2685.214 2194.737 31149.60 3465.50 4137.Il2 5i,43.04 6241.017 170.09 917b.17HIRE FURIA5S ALCtPlIII DEGOSIIS 1124.41 10I0.43 22.70.50 1260.11 1'S.11 l169.11 12b69.11 1768.11 1268.11 1268.11 1269.11 12t68.11FfstpE'?E FUNliS 4. P4.41 94. 3" o 61.14 114.84 189. 7tB 27!.2 7231.3 742. 3 262.99 295.24 !309.47FEVElfi SIfiLUIIJi 2Ž69.86 312.74 O4.10 191.89 420.94 462.44 537.13 660.85 848.34 1114.06 1414.37 1749.41

I0IOIL FIRUMICIlIO 9.5b.413 20271.59 12368.43 14051.63 402Ib .38 19286.74 22571.55 26212.dl 31216.74 34623.34 394176.51 4486.11miasmi um asigsim. m.essemme mm..m.. es inog m*sm*"§*|Z"|***|§||Z|||ea moms.sin mnesme.ssasmme..ensms

4u10

SOURCE ANlD AfPfLICATIII OF FUINS STAIEtENTRUPEES IN LAEOIIS

hCIUALS FORECASTS-,,aigueelsmuiueeouaeuugaes,ueuu*Ivev,,,,,,,,,,,,,,,ei,,mu.,u.,m

171Z9-80 198u-8l 1901-32 1982-83 1983-84 1904-85 1985-86 1996-01 1997-88 1988-89 1989-90 1990-9l

FFutI O! EPfil li,S;SUFfitU5/i'EFiCI1e7 .7.J4 42.90 91.45 -10.30 27.05 41.50 74.69 123.12 187.49 265.71 360.31 415."15

IHI!lltIfM4lIS [1Eki:-I3 -47.a9 ',d. 4 1121.113 62 3.71 7b1.9J4 864.0 945. 6o 1025.32 1112.40 12101.04 1.3il.4LOililS EIC. '36.10 442.76 468.63 1577.07 18014.03 1990.l(O 19')3. 4 1366.16 1802.77 1'O18. 41 1577.68'iltIl IIIG I F[[riTIF I ION l8 4i8'.94 401.16 533.20 1119.21 255.2' 435. 9" 651.52 906.02 1205.04 1555.01 1963.19HIRE fU:CIIASCE ALCO'JTJI [EpoSIIS -116.98 1263.07 -11002.39 0.01) 0. I,1 O.Oli u.110 0.011 1!.'0 0.0P .11.10liE'Ef.';E FIRUS 2'.1.11 9.81 66.04 13.71) 14.016 16.12 17.49 1I.98 20.t60 22.35 24.25

IOTAL SOUPLIS 115.18 2596.85 1183.19 2350.75 2878.36 3290.81 3641..2 4003.91 4406.60 4853.17 5319.B'i

Affl-CKATliNN Of MUILKFIJED ASSElS 963.41 1u46.65 21109.69 2110.0f, 7822.00 3200.0') .500.10 3797.5 412J0.29 4470.51 495'x.51l

MHUltMbES III 1io:i,i: cAI'IAIL -246.23 950.20 -E25.50 40.75 56.16 90.81 141.22 2t6. 47 206.31 '82.65 499.29

CO!S15111tG li C!lhANSES IlN:-oElIEf S -1.19 -0.01 -50b50 4.26 4.80 5.42 6.12 b.91) 7.79 8.79 9.92APPEk'IS 66.43 0.79 25.90 22.3.2 2".1. 284 2 32.117 i6.19 4I'.B1 46.08 51.90AiL t1FlA IIlElkESI 6.29 -12.65 9.16 2.14 2.42 2.13 -. 0t 3.r47 3.92 4.42 4.99LQMIIS ANG O A'ANVES 24.43 19. 22 -24.61 9.08 1I'.24 11.56 17.114 14.71 16.60 18.7'. 21.14011IER CURfEIII ASSETS -12. ;b 44.13 219.16 38.25 43.16 48.1') 54.96 62.0)1 69.97 78.96 8f.10SECURITIES J.3'.) 8.65 -0.50 5.11 5.16 6.5'if 7.'4 a.23 9.-4 10.54 11.87GUkREIII LIAF'ILITIES 2.ul -5.78 -6.43 -13.17 -15.49 -17.48 -19.7. -22. 26 -25.12 -28.31 -31.98

-25.0(9 54.75 172.18 67.42 76.08 85.85 96.81 1119.31 12J3.34 139.11 15i."5'i

tIO'EIErIl 1 IIEI ¶1,11( -223.1 8955.84 -997.67 -26.61 -19.71 4.91 44. 5 97.17 162.91 243.48 342.25-246.24--- 950.- 9 --825.4 40.75 5-.36 0---1.-----2--8 -8-2-----6 --5 49-9--

-140. 24 950.197 -825.49 40.75 56.36 90.81 141.2 14 2g 47 .86 31 18.6 .1 499.9 mt >¢

-87- ANNEX 8

Page 1

DETAILS OF ECONOMIC ANALYSIS

Area Development

1. Economic analysis has been undertaken for the Corwa site inVadodara (Baroda) which represents 44% of the cost of this component.Costs include the estimated market price of unimproved land (Rs 49 persquare meter) and estimated civil works expenditure in the project, phasedfrom 1985 to 1988. In addition, it has been estimated that individualplot recipients would invest an average of Rs 2500 of their own resourcesin home improvement. These latter costs would be phased from 1988 to1990.

2. Benefits were estimated to be represented by incremental rentson two types of improved units. A total of 1904 EWS units would have amarket rent of Rs 80 per month, and 892 LIG units would have a market rentof Rs 170 per month. These benefits would begin to be realized in 1987(as the project nears completion) and reach their full amount by 1990.The rents were based on analysis of equivalent market rents in nearbyresidential areas.

3. The market price of non-residential and high income plots wouldrepresent an additional benefit to the project. For non-residential land,market prices were estimated to range from Rs 90 per square meter for landprovided for public facilities to Rs 700 per square meter for land in thebest location for commerce. Market prices of high income plots wereestimated to vary from Rs 155 to Rs 275 per square meter. These priceswere estimated from land valuation data available with the Town Planningand Valuation Department which is routinely collected for Town PlanningSchemes. The benefits to be realized from land sales are expected to berealized between 1987 and 1988. In the design of area development com-ponents, care has been taken to maximize the value created fornon-residential and high income residential purposes. In similar projectsin Cujarat, little attention was paid to using high potential areas suchas land near busy intersections for high value purposes. The new practicehas enhanced both the economic and the financial feasibility of theschemes.

4. The above analysis yielded an EER of 13%. Some of the values ofbenefits were then subjected to sensitivity analysis. It market rentswere 10% less than estimated, an EER of 12.% would result. If marketrents were 10% higher than estimated, an EER of 13.9% would result. Ifplot occupation and land sales were delayed and benefits were lagged oneyear with costs incurred as originally estimated, an EER of 10.7% wouldstill result. This is a pessimistic assumption, since delays in plotoccupation would probably be associated with comparable lags in costs.The low EER relative to TP schemes reflects the intentional creation ofbenefits mainly for low income groups. Land development schemes for a

-88-

ANNEX 8Page 2

broader market segment (such as TP schemes) typically have greater ratesof return.

Town Planning Schemes

5. Economic analysis has been made using a typical TP scheme ac theFulpadra site in Surat. The costs include civil works in land developmentphased from 1986 to 1989. Benefits include the increment in value betweenthe market value of raw land before the scheme and the market value ofboth residential and commercial land after the scheme is implemented.This benefit is expected to be realized between 1989 and 1992. Marketvalues for raw and serviced land adjacent to TP schemes are gatheredroutinely by the Town Planning and Valuation Department for use in thefinancial calculations, and this information was available for use in thecost/benefit calculations. The market values assumed in these calcula-tions were considered to be somewhat conservative due to the systematicunderstatement of values in land transactions. However, since estimatesof both original and improved land values are affected, the distortion ofEER calculations is limited.

6. The EER calculated in this manner is 29.1%. Sensitivity analysisshows that if the benefit (land value) were 10% less the EER would be17.9%. If it were 10% higher, the EER would be 38.9%. The high rates ofreturn reflect that this type of project is a means of breaking supplyconstraints in an extremely constrained land market. They also reinforcethe argument for full cost recovery in this type of project so that all ofthese benefits are not bestowed on landowners at government expense.

Slum Upgrading

7. Cost/benefit analysis for slum upgrading proposals is based on atypical slum in Limbayat, Surat. Costs, phased from 1985 to 1988, includecivil works for slum improvement and an estimate of the pre-project marketvalue of land to be sold for commercial use. Cost also includes theexpected cost of home improvements to be made by beneficiaries, phasedfrom 1986 to 1988.

8. Separate benefit streams were estimated for each of four residen-tial unit types. This was done by estimating the market rental value ofeach type of shelter before and after upgrading, based on a rental marketsurvey undertaken by the Ahmedabad Study Action Group. In addition, thesale value of improved land for commercial use was included as a benefit.

9. An ERR of 16.8% was calculated. Sensitivity analysis was con-ducted to assess the impact of higher or lower market rents. If benefits(as estimated by market rents) were 10% less, an ERR of 11.0% would

-89-

ANNEX 8Page 3

result. If market rental value were actually 10% higher, an EER of 22.8%would result.

East Ahmedabad Trunk Sewer

10. Costs for this component were estimated to include capital expen-diture (civil works, equipment, and a market price for land) phased from1985 to 1988. Estimates also include running expenses beginning in 1989.Benefits include industrial and domestic user charges. Benefits alsoinclude the increased value of land benefiting from the project, but it isassumed that much of this value would be taxed away from landowners in theform of user charges, especially to industry.

11. Based on an analysis of land use patterns in the East Ahmedabadarea carried out by AUDA consultants, the catchment area of the sewer iscalculated as 70 sq.km. About 60% of this land is assumed to bemarketable (the rest being roads, canals, etc.). Abo'it 30% of thismarketable land is residential land which is expected to be sufficientlyimpacted by the project to have its value enhanced. Of this, 1/3 wouldhave a 10% increase in value and 2/3 would have a 5% increase. Theseestimates were based on observations of market land prices (which areroutinely gathered by TPVD for planning TP schemes in the area) both nearand at some distance from the worst sources of pollution. They are con-servative, given the very large pollution and health problems, especiallyon land adjacent to industrial areas.

12. A conservative estimate of industrial and residential user char-ges, based on data collected by AUDA's consultants, was used. To beconservative, it was assumed that all of the benefit to industrial landwas captured by the user charge and no additional benefit would be real-ized from increases in industrial land value.

13. The above assumptions yielded a 15.6% EER. The rate of returnrepresents the expected large benefits, especially from eliminating aserious and wide-spread industrial waste disposal problem which has beenlong neglected in a rapidly urbanizing area.

-90- ANNEX 9

GUJARAT URBAN PROJECT-PROJECT POPULATION BELOW POVERTY THRESHOLD----------------------------------------------------------------- __-----

The poverty threshold used in the following calculations is assumedto be Rs 690 per household per Month 1/.

Total Project Project Populat. % Below CostCost Area Populat. Below Poverty for pop.

(Rs Lakhs) (Ha) (per5ons> Poverty Thresh. belowThresh. Poverty

Components Thresh.---------------------------------------------------------- __------------

Area DevelopMent 1,533.46 101.36 79,000 99,000 75.00% 1,150.1

SluM Upgrading 1,432.89 244.88 301,000 286,000 95.00% 1,361.2

TP ScheMes 1,891.88 674.2Z 328,000 164,000 50.00% 949.9

Trunk Infrastructure 2/-East Arhmedabad 9,006.59 7,000.00 630,000 410,000 65.00M 3,24.3-Ahemadabad Sew. 789.45 2,285.32 914,000 548,000 60.00% 473.7-Vadodara Drain. 214.17 1,400.00 420,000 252,000 60.00% 128.9-Surat Drain. 493.89 1,996.80 599,000 369,000 60.00% 272.3

Solid Waste-Ahmedabad 754.04 2,124,000 996,000 45.00% 339.3-Yadodara 340.43 744,000 372,000 50.00% 170.2-Surat 438.84 913,000 948,000 60.00X Z63.3-Rajkot 299.39 444,000 222,000 90.00% 129.7-Jamnagar 159.71 317,000 199,000 50.00% 79.9

Institution Str. 250.00

----------------------------------------------------------------- __-----

TOTAL 13,624.70 7,813,000 4,339,000 95.48% 8,568.4

Percentage of project cost directly benefiting populationbelow the poverty threshold: 63.35%

----------------------------------------------------------- __-----------

I/ The appproximation of the urban poverty threshold has been calculatedin accordance with OPN 2.07

2/ The population benefiting directly fre the trunk infrastructurecomponent has been *-s3uMed to be the population living within thearea served by this infrastrucure. The population below thepoverty threshold ht:; been calculated using land use patternswithin the area served.

-9 1- ANNEX 10

DETAILS OF TECHNICAL ASSISTANCE

Details of Technical Assistance Rs lakhs

1. Institutional Strengthening and Project Preparation

GHB Financial ManagementAMC Area DevelopmentAMC Slum Improvement 21AMC Solid WasteVadodara Slum UpgradingAMC Housing Strategy

Provision for sustained support - GMFB, GHB, SMC 15

2. Detailed Engineering

AMC (Sewerage) )AMC (Tp schemes, sum upgrading, solid waste) ) 34SMC, RMC, JMC (Solid Waste) )AMC (E.;Ahmedabad Water and Sewerage) 100

3. Reinforcement for GMFB - equipment 5

4. Reinforcement for TPVD

Surveys and photography 10Mapping gEquipment for Analysis of data 4Research and evaluation studies 5

5. Training

(a) Policy seminars for senior officials 15(b) Training in local government finance (GMFB) 25(c) Technical training (planning, engineering,

budgeting) for TPVD, development authorities,local governments 25

(d) Training for community development workers 10(e) Training of support staff in municipalities

and development authorities 15293

INDIA

GUJARAT URBAN DEVELOPMENT PROJECT

Flow of Funds

IDA

GOVERNMENT OF INDIA

, I f [f~~~~~! -v =--' = _

]!. 8 17.64 4 9 !"] 3. 5 0 ] 1 } 149.77 2.5

GHO S) unmicipol Corps. | | |lunjoipaJ Corps. | |llaticjpaJ Corps. | t | < t | State aid Local0.29 llnicipal Corps. ]7 1 alicipalJties 1 75 wiicipolities :13 Iicipl Carps. 4977 Cove t sit

W C Junicip ities Gr _ \ C11SSB lAgencies15.33 _ ~~~~19.92 __ 4.33 _19.52 64.64 2.5

Areoa| T. P. l l SJu l Solid l l Urbon } | InstitutionDevelopsent Sches Upgrading Vlste Infrastructure Strngthning

_, I .I I

Civil Works Civil Works Civil WorksI Btuild' qLo"r

1 3 1 r t19 4.73

HoushoJds | Land |Lond s l um z LblcFocili l Dewslsners l Dwellers

Public Facilities ~~~~~~~~~19. 52 6. 2.5

1 1 II -13 , 11 1g Plot Charges Bett nt Land Plot Charges |Not Not Dy rctly Not

17.5 l I Chorges llEargesl l l 15 l | recovered roered Recovered

All fiVes in Crares (D,000,000) of Indian except IDA lending to GO] in US$ Millions.

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