ADB starts development program in Rajasthan with $ 273 mln loan

Singapore, Oct 31 (UNI) The Asian Development Bank (ADB) today said it will start its second urban development program RUSDIP in Rajasthan, participating in a 390 million dollar project designed to improve the living conditions of 1.6 million urban residents in the nation's largest state.

The Rajasthan Urban Sector Development Investment Program (RUSDIP) is a seven-year, multi-tranche lending facility under which ADB will provide loans totaling 273 million dollars, with the government of Rajasthan and other agencies funding the 117 million dollar balance.

The ADB will provide 60 million dollars in the first tranche, with the state funding 15 million dollars.

The ADB will provide a minimum of 50 million dollars in funding for each subsequent tranche.

In the 15 urban areas targeted initially, the program will address poverty reduction and develop urban infrastructure to improve the urban environment and living conditions as well as promote ongoing urban reforms.

''The environmental benefits of the program are expected to be large, including more and better-quality drinking water from water-supply sub-projects, better public health, particularly fewer waterborne diseases through investments in water supply, sewerage, drainage and solid waste management systems, and reduced flooding through drainage improvements,'' said Susanne Wendt of the ADB's South Asia Department.

While this is considered a low-risk project, the effectiveness of the project will depend on ownership and a continued commitment of the state and the urban local authorities to institutional change and financial reforms.

''The state and the local authorities have showed strong commitment to financial reforms, particularly cost recovery,'' Ms Wendt said.

''There must be sustained political will to continue increasing tariffs and service charges to achieve cost recovery in a reasonable time.'' Rajasthan is home to an estimated 56.5 million residents, with 13.2 million, or about 23 per cent living in urban areas.

While this is lower than the national average of nearly 28 per cent, the state's percentage of urban residents is expected to rise to 26 per cent by 2021.

In the 15 target areas, the urban population is expected to increase between two per cent and seven per cent per year over the next 10 years.

Since 1998, ADB-supported RUSDIP has provided significant improvements in six urban centres. However, the availability of services in other urban areas remains inadequate due to population increase, influx of tourists and generally poor management and operation of public services, which is common in many Indian cities.

The RUSDIP is supported with 250 million dollars in loans from the ADB.

UNI