Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No. 8688

PROJECT COMPLETION REPORT

INDIA

MADRAS URBAN DEVELOPMENT PROJECT II(CREDIT 1082-IN)

MAY 23, 1990

Population, Human Resources, Urban and Water Operations DivisionAsia Country Department IV

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

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GLOSSARY OF ABBREVIATIONS

DHRW - Department of Highways and Rural WorksDOH - Department of HealthDSW - Department of Social WelfareGTN - Goverrnent of Tamil NaduIRR - Inner Rural RoadMetrowater - Madras Metropolitan Water Supply and Sanitation BoardMMA - Madras Metropolitan AreaMMC (or MC) - Madras Municipal Corporation (or Madras Corporation)MMDA - Madras Metropolitan Development AuthorityMUDP I - First Madras Urban Development ProjectMUDP II - Second Madras Urban Development ProjectPC - Public ConveniencePTC - Pallavan Transport CompanyPWD - Public Works DepartmentSIDCO - Small Industries Development CorporationTIIC - Tamil Nadu Industrial Investment CorporationTNHB - Tamil Nadu Housing BoardTNSCB - Tamil Nadu Slum Clearance BoardTNUDP - Tamil Nadu Urban Development Project

FOR OFRICLAL USE ONLYTHE WORLD BANK

Washington, O.C 20433USA

Ofike df ODrfcttw-CewiaOpmatnf I{vatuan

May 23, 1990

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIQENT

SUBJECT: Project Completion Report on India - Madras UrbanDevelonment Project II (Credit 1082-IN)

Attached, for information, is a copy of a report entitled "ProjectCompletion Report on India - Madras Urban Development Project II (Credit1082-IN)" prepared by the Asia Regional Office with Part II of the reportcontributed by the Borrower. No audit of this project has been made by theOperations Evaluation Department at this time.

Attachment

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

TOR OFFCIAL USE ONLI

MADRAS_ URBAN DPEMVELOMENT PROECT (CREDIT 1082-INS

PROJECT COMPLETION REPORT

TABLE OF QONTENTS

Page No.

Preface . ............................................................ iEvaluation Su zry ................. ......... *.........** . .......*.....*....*.*...*..* . i

PART I PROJECT REVIEW FROM BANK'S PERSPECTIVE

Project Identity .................................................. 1Background ....................................... .... 1Project Objectives and Description ......................... 2Project Design and Organization ........................... 3Project Preparation .............. ..... * *.............. ........ 6Project Implementation ........ .................. * ......... 7Project Results ................................................... 12Project Impacts ................................................... 18Project Sustainability and Rates of Return ................ 19Bank Performance .......................................... 20Borrower Performance *..*..*...*t.......................... 20IDA/Borrower Relationship .......... ............ ............. 21Consulting Services .. . . ......................... . 21Contractors .. ................. . .. ..................... 22Project Documentation and Data ............................ 22Evaluation Summary and Lessons of Experience ............ . 22

PART II PROJECT REVIEW PROM BORROVER'S PERSPECTIVE

Borrower's Perspective of the Design and Implementationand its Development Impact on the Project ................. 25

PART III STATISTICAL INFORMATION

Related Bank Loans and/or Credits ......................... 44Project Timetable ................. ........................ 44Disbursements ...................................... 45Project Implementation ......................... 46Project Costs and Financing ............................... 47Status of Covenants .................................... . 48Use of Bank Resources ............ *.#...... .. . ...... 50

This document has a restrted distdbution and may be used by recipients only In the performance-of their official duties Its contents may not othenise be disclosed without World Bank authorization.

INDIA

MADRAS URBAN DEVELOPMENT PROJECT II (CREDIT 1082-IN)

PROJECT COMPLETION REPORT

PREFACE

This is the Project Completion Report (PCR) for the Second UrbanDevelopment Project in Madras, for which Credit 1082-IN in the amount ofUS$42.0 million was approved on December 16, 1990. The Credit was closedon March 31, 1988, two years behind schedule. It was fully disbursed andthe last disbursement was on October 3, 1988.

The PCR was jointly prepared by the Population, Human Resources,Urban and Water Operations Division, India Department of the Asia RegionalOffice (Preface, Evaluation Summary, Parts I and III) and the Borrower,(Part II).

This PCR is based, inter alia, on the Staff Appraisal Report; theCredit and Project Agreements; supervision reports; correspondence betweenthe Bank and the Borrower; and internal Bank memoranda.

iiIMDIINDJ

MADRAS URBAN DEVELOPMENT PROJECT II (CREDIT 1082-IN}

PROJECT COMPLETION REPORT

EVALUATION SUMMARY

Objectives

i. The objectives (para. 7) of the Second Madras Urban DevelopmentProject (MUDP II) were: (i) to further develop and expand low cost solutions tourban problems in Madras, initiated under the first Madras Urban DevelopmentProject, particularly in the shelter sector; (ii) to support the re-orientationof shelter and infrastructure investments and programs in the Madras MetropolitanArea to be more responsive to the needs of the urban poor; (iii) to expand thecapacity of the institutions providing shelter, infrastructure and transport;(iv) to ensure replicability of project approaches by continuing full costrecovery in slum improvement and other sectors; (v) to support more effectivemetropolitan planning and capital programming and budgeting.

Implementation Exoerience

ii. The project was to be completed in about 5 years. However, the projecthad to be extended for two one-year periods and actually took closer to 8 yearsto implement (paras. 25-28). The execution of the project was delayed bydifficulty in acquiring land for sites and services and slowness in the output ofpublic sector plots for the sites and services scheme. It also took longer thanplanned to acquire land for the Ring Road, the construction of which was also notwell-managed. Difficulty in removing squatters delayed the execution of thestorm drainage component of the project. The experience with procurement underthe project was mixed. There were considerable delays early in the project dueto a lack of attention to procurement during preparation and Borrower weakness inhandling procurement efficiently. However, procurersnt efforts improved overtime. Total project cost was 192 more thar the Rs 73.9 crores projected by theSAR. However, the physical programs for sites and services, slum improvement,and bus services were respectively 22X, 20X, and 55X larger than anticipated atthe time of appraisal (para. 39). There was an almost three year gap indisbursements compared to appraisal. forecasts. This stemmed from the delaysnoted above and the suspension of disbursements against the bus component whenthe Pallavan Transport Company was unable to meet its financial obligations underthe project (para. 40). Implementation was characterized throughout by amanagement team which was quite continuous, committed to the Project, and whichcollaborated well with the Bank Group.

iii. On the whole, the project achieved its physical and financialobjectives, but at only about half the pace anticipated in ths SAR. About 18,300plots for sites and services were completed, compared to 15,000 planned and thedemand for them has been about 10 times the number of plots marketed (para 43).About 60,000 households benefited from slum improvement, compared to 50,000

iii

planned and the number of areas effected also exceeded plans (para. 52). The buscompany procured 885 buses, while only 550 were planned. The bus company alsoefficiently implemented the terminals and depots elements of its component (para.;2). The small scale business sheds and machinery loans component was notsuccessful in meeting its aims. The storm drains component was still incompleteat the beginning of 1989 and some of the drains were already functioninginefficiently due to lack of maintenance (paras. 63-65). The project appears tohave had much less impact on municipal maintenance and services than planned.

iv. Several other positive outcomes of the project (paras. 78-82), however,are also of note:

Sectoral Rolicy. The Project had a major positive impact on attitudesto sites and services and slum improvement, confirming that the approach could besuccessfully used to tackle the shelter problem. The project success in thepublic sector also opened the way for experiments in private sites and serviceswhich were incorporated as a Guided Development component in the later Tamil NaduUrban Development Project.

Human resources develogment. Over the course of the project, a core ofseasoned and e-perienced staff were developed in the implementing agencies. As aresult, there is sufficient critical mass to provide a basis for the subsequentstate-wide project now being implemented.

Physical environment. The project improved the overall environment insites and services and slum areas and established that sites and services werenot 'planned slums" as had been argued a decade earlier.

Poverty and income distribution. A major objective of the shelterprogram was achieved: more than 70X of the beneficiaries of the shelter programare in the income group at or below the poverty level. Some selling out tohigher iucome groups and infiltration of higher income groups into the plotsreserved for lower income groups has occurred. On the whole, however, thephysical design and location planning approaches of the project seemed to haveworked effectively. Most project beneficiaries experienced substantial increasesin their real income and wealth as is evident from the amount of investment thattook place in project areas and the prices quoted for plots in scheme areas.

Institutions. Although some of the project agencies proved stubbornlyresistant to improvement, others steadily improved and reached levels ofperformance toward the end of MUDP II which sharply and positively contrastedwith their performance at the outset.

Rates of Return and Sustainability

v. The economic rates of return on the sites and services and slumimprovement components were easily achieved, since unit costs of investment inthese components were not much greater, or less than forecast, while market rentsfor serviced land in these components grew at a proportionately greater rate thancosts in a sellers' scarcity market. Reflecting the shortage of affordableserviced land in Madras, a rate of return in sites and services of more than 15Xper year is likely to be maintained (para. 83). The growth in vehicular traffic

iv

is generally greater than the growth in population on main arteries such as theMUDP II Inner Ring Road and the improved Madras-Tiruvellore High Road. Trafficgrowth is greater than earlier projections on sections of the Ring Road builtunder the first proiect and road capacity is being expanded under the Tamil NaduUrban Development Project. It may be expected that the same trend will befollowed on the MUDP II roads and the economic rate of return on these roads islikely to be maintained (para. 94X. Recent projections for the bus component inthe Tamil Nadu Urban Development Project indicate that rates of return projectedunder MUDP II are being realized. Staffing and wage issues, however, continue topose long-run risks to the bus company (paras. 85-87).

Lessons Learned

vi. The project demonstrated a number of key lessons (para. 101):

Bus Fare Revisions. In retrospect, IDA might have focused moreattention upon improvements in the process for the revision of fares. Theexisting process concentrated fare revision decisions with the state governmenta.d a Transport Commission, neither of which had adequate technical support forweighing the issues. In fact, in the final stage of MUDP II, the stategovernment created a Bus Expert Fare Committee. However, it has only advisorypowers and lacks statutory authority. As yet, therefore, the fare revisionprocess has not been rationalized and improved.

Public Shelter Programs. It is clear that the whole effort of publicshelter agencies must be directed towards meeting massive city shelter needs withthe limited resources available. Future projects implemented by a public agencyshould not contain a Bank-funded component with acceptable objectives, whilecontrary objectives are being pursued by the agency with its own funds.

Private Shelter SUDPl1. It is also evident the public sector by itselfcannot meet the shelter needs of the whole population in fast-growing cities.Constraints on management capacity, financial resources and land availabilitydictate that the private sector must be enlisted in the interests of enhancingthe supply of affordable service land, particularly to lower income groups andpossibly through programs such as the Guided Development approach of the TamilNadu Urban Development Project.

Municival Maintenance and Services. Municipalities own, operate andmaintain many of the facilities provided in shelter schemes. Long run4nvironmental improvements in shelter schemes depend on their capability. Futureprojects should address the whole system of municipal administration and financein a State and avoid piecemeal financing of projects in individualmunicipalities.

Performance Monitoring. Experience has shown that project performancemonitoring and implementation can be strengthened and made more efficient bycloser programming of the financial and operating programs of implementingagencies.

MADRAS URBAN DEVELOPMENT PROJECT II (CREDIT 1082-IN)

PROJECT COMPLETION REPORT

PART I. BANK PERSPECTIVE

Project Identity

Project Name t Madras Urban Development Project II (HUDP IT)Credit No. i 1082 - INRVP Unit : AsiaCountry s IndiaSector X Urban DevelopmentSub-sector t Shelter, including sites and services and slum improvement;

Urban roads and bus transport; Municipal solid waste andmaintenance services.

Background

1. In 1980, Tamil Nadu was one of India's most densely-populated,urbanized and industrialized states. Thirty two percent of the populationlived in urban areas, of which one-third were in Madras. The state's percapita income was among the lowest in India and 59S of the rural populationwere estimated to be below the absolute poverty line in the 19709. Ruralincome inequalities, stagnating rural incomes and a high rate of growth inlargely urban-based manufacturing and service sectors lead to high rates ofincreases in the state's urban population.

2. The Madras Metropolitan Area, with a 1979 population of about 4.8million, grew at a rate of SS/yr up to 1971. At the time MUDP II wasdeveloped, Madras was the fourth biggest and the fastest growing Indianmetropolitan area. It was also the trade, commercial and industrial center ofTamil Nadu and of South India. Investment in public services had failed tokeep pace with population growth of about 200,000 people per year.

3. Madras suffered serious service deficiencies, particularly in watersupply and shelter. A growing proportion of the population (about 25Z) livedin poorly-serviced, or un-serviced slum hutment areas. At least another25-352 of the population lived in older slums of the city or in un-authorizedpoorly-serviced settlements. Madras had one of the poorest water supply andsanitation systems of any major urban area. Municipal services were week,under-financed and poorly managed. For transport, most people relied on thepublic bus service operated by the Pallavan Transport Corporation (PTC), arelatively efficient organization, which nonetheless provided only a spartanservice on over-crowded buses for lack of adequate financial resources andpolicy support.

4. A substantial proportion of the legal supply of serviced land andhousing was provided by a state agency, the Tamil Nadu Housing Board (TNBB).

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Except for the modest sites and services program supported by IDA under thefirst Madras Urban Development Project (MUDP I). its program was concentratedin high cost units affordable only to higher income groups. This was alsotrue for the few units supplied by the private sector. Under MUDP I, theTamil Nadu Slum Clearance Board (TNSCB) programs had been substantiallyre-oriented towards in-situ slum improvement with the provision of tenure.Nonetheless, the legal supply of shelter by the public and private sectorscontinued to meet less than 50Z of the need, resulting in continued growth. ofslums of one kind or another.

5. The Government of Tamil Nadu (GTN) created the Madras MetropolitanDevelopment Authority (MMDA) in 1972 to coordinate the provision of servicesby local and state agencies within Madras. However, it tended to concentrateits efforts on physical planning and land use control, not on investmentprogramming and development planning.

6. In Madras, the Bank Group had supported two projects prior to MUDPII: a loan in 1958 for the development of the Port of Madras and a credit in1977 for the first Madras Urban Development Project (MUDP I). MUDP Isucceeded in initiating the implementation of replicable low-cost solutions toMadras' shelter and infrastructure problems and sought but did not succeed instrengthening metropolitan area investment planning and financial managementusing MMDA as the vehicle. MUDP I was essentially a single-city demonstrationproject for new urban management initiatives.

Project Objectives and Description

7. The objectives of MUDP II were: (i) to further develop and expandlow cost solutions to urban problems in Madras, initiated under MUDP I,particularly in the shelter sector; (ii) to support the re-orientation ofshelter and infrastructure investments and programs in the Madras MetropolitanArea to be more responsive to the needs of the urban poor; (iii) to expandthe capacity of the institutions providing shelter, infrastructure andtransport; (iv) to ensure repli-ability of project approaches by continuingfull cost recovery in sites and services and further increasing cost recoveryin slum improvement and other sectors; (v) to support more effectivemetr"politan planning and capital programming and budgeting.

8. Project components were:

(a) Sites and Services. Cons-ruction of serviced residential plots,core housing and community facilities and provision of buildingloans for about 15,000 primarily low income households, and servicedland, sheds and machinery loans for industrial and commercial uses,at 2 sites covering about 180 ha.

(b) Slum Improvement. Improvement of on and off-site infrastructure,provision of land tenure and community facilities for 50,000 slumhouseholds, plus home improvement loans for about 15,000 MUDP I and38,000 MUDP II households. Also, construction of about 12,750 meters

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of 5 arterial storm dr&ins and construction, repairs and de-siltingof feeder storm drains to benefit about 19,000 households.

(c) Transport. Provision of about 550 buses and depot and terminalimprovements for Pallavan Transport Corporation (PTC); constructionof 6 kilometers of the Inner Ring Road (IRR) and improvements to 14kilometers of the Madras-Tiruvellor Road.

(d) Solid Waste Management and Maintenance of Municipal Services.Provision of civil works and equipmcnt and consultancy services, forthe Madras Municipal Corporation (MMC) to improve its solid wastemanagement and maintenance of municipal services.

(e) Technical Assistance and Training. These were provided to theMadras Metropolitan Development Authority (MMDA). PTC, the SmallIndustry Development Corporation (SIDCO) and MMC for special studiesto identify priorities and prepare programs for medium and long termin-vestments and for in4titutional strengthening and training.particularly for MMDA.

Project Design and Organization

9. MUDP II had its antecedents firmly in the positive lessons andnegative experiences of MUDP I. It also aimed to increase the scale and scopeof the shelter program supported by the first project. Whereas MUDP I hadfocused on supply increases in IDA-funded projects, MUDP II placed the IDAschemes in the framework of the shelter problems and needs and programs forMadras as a whole. During the preparation and negotiation of MUDP II, IDA andGTN agreed to act on major weak points revealed during implementation of theMUDP I project. Chief among these were:

(a) Land Acquisition. It had been wrongly believed in MUDP I thatpublic land could be quickly transferred to the Tamil Nadu HousingBoard for sites and services. It took several years to effect thetransfer and delayed project implementation on these sites.Acquisition of private land for the Inner Ring Road was startedlate, took 3 times longer than the Staff Appraisal Report (SAR)schedule and was particularly delayed when squatters or buildingswere involved. Having this experience in mind, the appraisal teaminsisted as a condition of negotiations that land required for MUDPII sites and services be in the Housing Board's possession.

(b) Tenure for Slum Improvement Beneficiaries. MUDP I provided forbeneficiaries of slum improvement to be provided with secure tenure.However, by the time MUDP II was approaching appraisal, few tenureagre-.ents had been made and plot charges could not be collected.On Ir,s insistence, several thousand Lease-cum-sale tenureagreements with MUDP I beneficiaries were completed prior tonegotiations and the collections of plot charges was begun.

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(e) Fare Revisions. It was apparent as the appraisal of MUDP IIapproached, that a substantial increase in fares--long delayed byGTN--was needed to meet the financial oblectives of the bus companyunder MUDP II. As a condition of negotia_ions for MUDP IT, the stategovernment revised fares by 252 just prior to negotiations.Nonetheless, fare revisions soon proved to be the rock on which MUDP11 foundered during implementation.

(d) Improvements in Municipal Finance and Services. The MadrasMetropolitan Corporation refused to take over completed MUDP I sitesand services and slum Improvement areas for maintenance andservices, pleading lack of funds and claiming MUDP I infrastructurewas 'sub-standard'. The drawbacks of treatinb IDA-funded projectsas aspecial cases, which did not adhere to state and municipalplanning and building regulations began to emerge. Treating themaintenance and services problem as a revenue, noL a municipalplanning and building regulations problem, and being pessimisticabout property tax revenue increases, GTN implemented an urbansurcharge on the state sales tax. It promised to provide asubstantial and buoyant source of additional funds for the MunicipalCorporation and GTN also agreed at negotiations to increase theMunicipal Corporation's revenues and improve financial management(SAR page 40).

se) Focus on Expanding Serviced Land SuPply through Public Sector.During MUDP X, the Tamil Nadu Housing Board continued to spend about702 of its funds on a relatively small number of high cost units forhigher income groups and the deficits in the supply of affordableshelter for lower income groups accumulated. During MUDP IInegotiations, agreements were reached that the Housing Board'snon-IDA funded program would be modeled on the IDA-funded approach.However, these agreements were less forceful than the provisionssought by the appraisal mission. Also it was agreed that the TamilNadu Slum Clearance Board (TNSCB) would limit its programs for slumclearance and re-housing in multi-story units to Rs 3.75 crorealyras in MUDP I.

10. Innovations. Many of what had been important and contentiousinnovations in MUDP I had become accepted by the time of appraisal of MUDP II,and were re-incorporated in it. Examples of tested innovations weres

(a) IDA and GTN agreed on full cost recovery and no overall and/orinterest subsidy in sites and services, slum improvement or busoperations.

(b) Affordable planning and engineering standards, based on performancerequirements and costing less than normally-applicable municipalstandards, were accepted, although only for public sector schemes

(o) Differential pricing of plots for various income groups wasaccepted. It was also agreed that large proportions of low income

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beneficiaries could be accommodated in the MUDP low-rise, highdensity mixed income and mixed use layouts which were more suitableto incremental expansion and improvement than multi-storeyaccommodations favored by the Housing Board.

(d) It was agreed that long-term tenure would be provided to squatterhouseholds in slum bmprovement neighborhoods.

11. MUDP 1I also included some new innovations:

(a) A city strategy approach was introduced, which placed the supply ofshelter under the project in the context of the total supply fromall sources and its relations to shelter needs.

(b) Grants and loans for Home Improvement, not provided in MUDP I, wereintroduced for Slum Improvement Program beneficiaries of NUDP I andII.

(c) Medicare centers, run by non-governmental organizations, were fundedin sites and services and slum improvement schemes.

4d) A substantial storm drain component was included to complement sitesand services and slum improvement investments, as part of the systemof shelter environmental improvements.

(e) Slums on private land were also to be improved. They were a largeproportion of the unserviced slums in Madras and were in the vorstenvironmental condition, because unlike some slums on public land,they had not benefited from any other earlier non-IDA improvementprograms. Despite the SAR intention, specific agreements on privateslum improvement were not obtained at negotiations.

(fl In the final year of MUDP II, MMDA introduced semi-privatecourtyards within clusters of small low income plots. Thissignificant design change became the standard pattern in the TamilNadu Urban Project.

12. Conceptual Foundation. The understanding of the conceptualfoundations of project components at the time of appraisal was generally goodat all levels. However, GTM may not had adequate confidence in theneed of pursuing the city shelter strategy or the strengthened city planning,coordination and performance evaluation role which the project envisaged forthe Development Authority.

13. The higher level of the administration, in the Development Authorityand the key state government departments (Housing and Urban Development,Municipal Administration and Water Supply, and Transport) understood theproject component concepts well at the time of appraisal. While civil serviceadministrative practices did not provide for the same management andideological continuity as did the technical posts, this was counter-balanced

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by the continuity of technical staff in the implementation agencies and theDevelopment Authority.

Project Preparation

14. The bulk of project preparation was done by the implementingagencies, which interacted with Bank preparation missions, chiefly onquestions of objectives.

15. Sites and Services. All of the 15,000 MWDP sites and sert.ces plotswere to be developed on two relatively large sites. As in HUDP I, theDevelopment Authority prepared layouts and in consultation with the HousingBoard, determined plot prices. Preliminary engineering designs and costestimates for these were prepared for appraisal by the Housing Board, thesites and services implementing agency. The Housing Board and the DevelopmentAuthority essentially repeated the processes with which they had experience onover 10,000 plots developed under MUDP I.

16. Special attention was paid by preparation and appraisal missions tothe acquisition of land from private owners of these 2 sites. Prior tonegotiations IDA insisted on both sites being fully acquired by the HousingBoard as a condition of negotiation. It then relented and negotiated on thebasis that it was sufficient for acquisition to have reached the final stagejust beforf nanding over. This lead to trouble later.

17. Slum Improvement. The Slum Clearance Board identified specificslums for the first year program under the MUDP II Slum Improvement Programand prepared final designs, costs and layouts for prototype neighborhoods,following the program lending approach to the Slum Improvement Program whichhad worked relatively well in MUDP I. Physical improvements were to be on therelatively successful model of MUDP I.

l8. The Slum Improvement Program implementation plan aimed to use theMUDP I experience to improve the component's policy thrust by expanding theprogram to 50,000 households. To avoid MUDP I problems created byimplementing civil works before completing tenure agreements, the MUDP IIimplementation activity schedule provided that signing of Lease-cum-saleagreement by more than 70% of households in a neighborhood should precede thestart of civil works in a neighborhood.

19. In order to strengthen community development work on which theparticipation of slum households in the Slum Improvement Program and its costrecovery programs depended, the community development group which had beenattached to the Metropolitan Development Authority and working with the SlumClearance Board, was transferred to the Slum Clearance Board.

20. PTC. At appraisal, about a 25% increase on the existing level offares was projected to be needed to meet the bus company's financial andoperating objectives. Fare revision was made a condition of negotiationswhich the state government met. However, during negotiations, withoutinforming IDA, the state government rescinded 502 of the increase. The bus

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company's cash generation subsequently fell much below the SAR projections.As project implementation proceeded, this became the problem which eventuallyled to a one year suspension of disbursements on MUDP II starting in June1984.

21. In other components, objectives familiar to the implementingagencies from MUDP I as mentioned above were re-asserted. These included:

(a) minimizing costs by constructing projects in phases - such as theInner Ring Road - and maximizing the capacity of existing facilitieswherever possible through management measures, as in the case of theMadras-Tiruvellor High Road scheme;

(b) using design standards closely fitted to actual project performancerequirements;

(c) paying close attention to all users needs and particularly lowincome groups and designing roads for the movement of people ratherthan vehicles; and

(d) identifying final beneficiaries, particularly to cater to low incomeneeds.

22. Project Timing. The preparation and appraisal of MUDP II occurredat a time when in India there was a strong perception that slum inhabitantswere becoming a majority of the city population. At the time too, ther2 was agrowing perception that the old approaches - of bull-dozing slums andre-housing oustees in subsidized rental apartments - were un-workable. Therewas a good opening for the alternative in-situ improvement approach which IDAfavored. The importance of providing tenure to families in improved slumsalso was starting to be recognized. The timing of MUDP II was thereforepropitious.

23. Because the project implementation agencies for MUDP II wereessentially the same as in MUDP I, the agencies understood their functions andresponsibilities relatively well and were sufficiently committed to projectobjectives, even though agencies internal interests sometimes conflicted withBank-funded approaches.

Project Implementation

24. Overall Implementation. Viewed from the perspective of the projectobjectives described in paragraph 7, the sites and services and slumimprovement and even the roads and bus component have to be consideredsuccessful - despite delays in implementation and other problems mentionedbelow. In Madras, the Government of Tamil Nadu was the first state toimplement a full cycle of a large program of low-cost, unsubsidized shelterschemes, responsive to the needs of the poor ano minimum-cost traffic andtransport schemes which focused on moving people rather than vehicles in asystem providing priority to public transport.

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25. Implementation Delays. The project Was to be completed in 4.5years, but had to be extended twice for a total of 2 years beyond the originalclosing date. The physical completion took three years longer than the SARestimated. After effectiveness, which was four months after Board approvalproject implementation took off briskly using on the land initially availablefor sites and services and on the financial capacity thought to be availablefor bus procurement. Expenditures followed the SAR forecast with only a six-month lag for the first two years.

26. However, the acquisition of the remaining land for sites andservices took several years longer than expected and more than 50S of thecomponent was eventually implemented on satisfactory sites (at Manali,Madurvoyal and Mogapper West) that were agreed by IDA during implementation,but not identified at appraisal. Had IDA insisted on a substantial proportionof the land required for the sites and services component being acquired bythe Housing Board prior to negotiations (as it did for TNUDP), possibly someof the implementation delay might have been reduced.

27. The anticipated annual output of public sector plots and settlementon them harlly reached one-half of the SAR schedule until the upsurge at theend of MUDP II. While the main project implementing agency, the HousingBoard, steadily improved its construction and estates transactions management,it still could not normally adhere to schedules anticipated in the SAR. Theexpected public contribution to the overall Shelter Strategy, therefore wasnot achieved. Possibly the Housing Board's estates transactions managementand capability might have been given more attention during projectpreparation. Once the sluggishness of the estates management activityrevealed itself, GTN vigorously identified and pursued solutions to theproblem, still took more than two years before improvements were realized.

28. The construction of the Inner Ring Road took twice as long as hadbeen scheduled, due to both land acquisition and construction managementproblems. The improvement of the Madras-Tiruvellor High Road also took longerthan had been projected because of land acquisition delays. Arterial stormdrains construction was also delayed in critical sections, particularlybecause of difficulties in removing squatters on the alignment.

29. As in the case of sites and services scheme areas, insisting on asubstantial proportion of laud being acquired prior to negotiations and betterarrangements for planning and management of implementation could well haveimproved the performance of the agencies mentioned above.

30. The least successful aspects of the project were implemented byagencies who were newly-involved in MUDP II, whose involvement under MUDP Ihad resulted in little improvements in performance, or whose role in MUDP IIwas peripheral. Thus PWD, a new MUDP II implementing agency, implemented thearterial drains component as part of a much larger program of works in thestate and gave the MUDP work relatively low priority. The MetropolitanCorporation's lackluster performance in MUDP II reflected the underlying - andlong-unresolved - weaknesses of municipalities in a state where the municipal

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role in urban management was in limbo. The Slum Clearance Board continued toconsider itself primarily as a construction agency to whom cost recovery andtenure were of minor importanca.

31. By contrast, the major implementing agencies' experience under MUDPI stood them in good stead during the MUDP II implementation period. Therewere seldom problems over the objectives of individual project components,except in the case of PTC, which was hostage to State Government policies.Difficulties had to do more vith the management of the means of implementationrather than the project purposes.

32. Factors of Success. The factors that contributed most to thesuccesses of MUDP II weret

(a) the experience of the implementing agencies under MUDP II;

(b) the continuity of staff and technical management in the implementingagencies;

(C) using the implementing agencies of MUDP I to implement MUDP IIprovided a knowledgeable, experienced basis of technical personnelfor the project in the agencies; and,

sd) focussing responsibility for overall project management andcoordination in the MUDP I - experienced agency, the DevelopmentAuthority. PTC had a well-established tradition of promoting itsmanagers from within the technical cadre of the state bus transportcorporations. In the Housing Board, the same approach was followed.In the Housing Board, the Department of Highways and Rural Works andthe Slum Clearance Board, separate World Bank Divisions, headed bySuperintending Engineers, we'ere created to implement MUDP.

33. Because of the above factors, the major implementing agencies inTamil Nadu, under the MUDP II, were not troubled by the discontinuitiesresulting from staffing on delegation which weaken performance in otherstates. HMDA, which was responsible for coordinating project implementationby functional agencies, had very substantial continuity of personnel in thekey project functional areas: finance, physical planning, and engineeringdesign.

34. Constraining Factors. The factors that interfered most with theachievement of project objectives were:

(a) insufficient planning and advance action on land acquisition;

(b) inadequate focus during project preparation on the detailed factorsthat effect procurement efficieny: bid documents, contract slicingand packaging;

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(c) lack of GTN support for the financial objectives of the bus companyand the Slum Clearance Board program for land acquisition involvingresettlement of squatters and for the city shelter strategies;

(d) price and factor cost increases that were beyond the control of GOIor GTN, that sprang out of the OPEC oil price increases of 1980 andresulted, particularly for PTC, in un-anticipated cost increasesthat compounded the problems caused by inadequate and infrequentfare revisions; and

(e) IDA not insisting on agreements to include private slums in the SIPof MUDP II, so that in the end, no private slums were improved underthe project.

35. Anticipated Risks. The SAR identified the following as risks:

(a) poor collections performance and cost recovery in slum improvementdue to delays in providing tenure;

(b) weaknesses in the construction and implementation capacity of theHousing Board and the Slum Clearance Board; and

(c) estates transaction administration by the Housing Board which effectthe rate of occupation of sites by beneficiaries.

36. All of the above turned out to be problems during the implementationof MUDP II. The SAR was too sanguine about the effectiveness of the stepstaken during project preparation to offset the risks. To improve theirperformance, however, the implementing agencies took measures, in addition tothe ones initiated during project preparation. As the project progressedimprovements were registered in all the above areas.

37. Unforeseen Risks. Risks inadequately foreseen or explored in theSAR vere:

(a) The impact of delays and inadequacies in fare increases on the BusCompany's investment program. It was assumed that the 252 fareincrease required as a condition of negotiation would achieve andmaintain the financial and operational objectives set for PTC overthe main period of project implementation;

(b) Land acquisition difficulties in sites and services, in privateslums in private ownership and in road projects, about which the SARtoo optimistically believed adequate advance planning and action hadbeen taken; and

(c) Construction and estates management problems in sites and services.

38. Several risks which could not be foreseen were:

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(a) The impact of the OPEC oil price increase impact on PTC costs andfinancial condition.

(b) The effects of a single 550 bus procurement. IDA agreed toprocurement at an early stage of MUDP II of all of the 550 bussesfor procurement under OUDP I under one contract, even though thefare revision prior to negotiations was 502 of what the SAR hadprojected to be needed. PTC argued successfully in favor of thelower price which would be achieved on one large contract, withdelivery phased over about 1.5 years. The lowest evaluated bidprice was a bargain compared to prevailing market prices. But,this decision, in combination with fare revision delays, largeincreases in operating costs and a fall in ridership, due to puttinga large number of additional busses on the road in a short period,created a substantial extra burden of debt servicing and expandedPTC losses. This in turn, led to the failure of PTC to meetfinancial objectives for the bus component and eventually asuspension of MUDP II disbursements for one year.

39. Project Costs. Total project cost of Rs 87.8 crores was 192 morethan the Rs 73.9 crores (US$87.9) projected by the SAR, even though theimplemented physical programs for sites and services, slum improvement and busservices were respectively, 222, 202 and 55? larger than had been anticipatedat appraisal and the project took three more years to complete than originallyprojected.

Ta-be: _ m2anent Cmsts Esgmat Est Claimed (3s Lakhs)

Comp4nent Agec I C 0 completeI Claimed -

______________________ OrlniFA ctual Cost % Disbsmt %

A Skes and Servies TNHB 1901 2879 2860 32.9 1097 24.3TII _ 477 380 380 4.4 121 2.7

SubTota 27 329 3240 37.3 1217 1 7.0

E. Slum Improvement lNSCB 2587 2111 2108 24.2 839 18.6DOW 156 91 91 1.0 60 1.3OPHC 39 11 8 0.1 4 0.1

Sub Total 2782 2212 2206 25.4 903 20.0

Q Tanspoft: Roads DHFN 532 631 604 6.9 337 7.5Buose s r 1260 2205 2205 25.4 1723 38.2

SubTotI 1793 2836 2809 32.3 2060 45.7

D. SolidWaste M MC 308 295 267 3.1 155 3.4

E. Tech.A1s2is.&T a. MMDA 126 175 174 2.0 170 9,1

Grand Total 7387 8777 8696 100% 4505 100

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40. Disbursements. The one year suspension of the Credit flatteneddisbursements at a time when expenditures on the project were also constraineddue to the lack of land for the sites and services component. (See Chartbelow).

MUOP 2 DlsbumementsSAR Estimatoes va ctuate

45.0 Last debsmt:128840.0 >

35.0 SAResf AcWal30.0 _

US* nUon s25.0US$"duan20.0, dsbsmt 6/1184 Ata

15.0 dIDA einssdasbsmt Coing:10.0 5/15185 3-885.0 Original Closing:3.0 1.- i: ; o- - - i .

6/812/6/SI21/68 121618)112/ 6 6211 12/ 61 121 6/ 12/1681 2 L2 3 83 4 84 5 85 86 8B 87 87 88 8

Fiscal Years

Project Results

41. Overall. Viewed component by component, the project did on thewhole achieve its financial and physical objectives - but at about half therate envisaged in the SAR. However, the project did not achieve its strategicobjectives for the shelter sector, nor raise the consciousness of the policymakers about the importance of developing a comprehensive city shelterstrategy.

42. There was a reasonable, though not always consistent, level ofsupport for project component objectives from the state. However, during.project implementation, it proved difficult to mobilize consistent supportfrom the state for the broader policy and program objectives of the project.So the broader project objectives tended to be orphaned as projectimplementation proceeded, despite frequent attempts by supervision missions tore-direct the state's attention to them.

43. Sites and Services. 15,000 plots were to be constructed andoccupied. In. actuality about 18,300 were constructed, of which about 15,000are occupied and the remainder were still in course of being allotted andoccupied in the first half of 1989. As intended, 702 of the componentbeneficiaries alloted plots were in the 'Economically Weaker Sector' incomegroup, at or below the poverty line.

44. Originally estimated to cost Rs 19.0 crores, includingcontingencies, or Rs 12,700/household benefitted, Rs 28.6 crores was actually

I

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spent on the sites and services component at a cost of about Rs15,7371household.

45. While unit costs increased by about 25Z over the appraisal estimate,incomes during the project implementation period are estimated to haveincreased by a larger percentage. In addition, serviced land values for thehigher income and non-residential plots increased at a much higher rate thanconstruction costs. Accordingly, project affordability and cost recoveryobjectives were not adversely effected by cost escalation.

46. Sustained collections of plot charges at a rate of over 902 ofdemand, assured full recovery of costs - including off-site infrastructure -and was one of the most significant features of the sites and servicescomponent. The demand for all categories of plots has generally been tentimes the number of plots marketed.

47. Despite the delays in implementation, in the light of itsobjectives, the largest MUDP II component, sites and services, has to beregarded as a success.

48. It was anticipated that about as many households would receiveoptional Home Improvement Loans as were benefitted by the component. Almostall households took advantage of the option, which was mostly realized in theform of materials made available to beneficiaries by the Housing Board.

49. Private Land Development. GTN had no specific policy regarding thesignificant legal and illegal (unauthorized) shelter supply produced by theprivate sector. The MUDP rr SAR included the contribution of the privatesector in its supply and demand analysis and emphasized the need for the stategovernment and the Metropolitan Development Authority to pursue an overallshelter strategy in Madras, to which both public and private sectors wouldcontribute, so that the proportion of households living in slums would bereduced (para 2.03 SAR). However, no specific measures were agreed in theproject nor developed and implemented under MUDP II to guide the privatesector towards MUDP II's low income shelter objectives.

50. Small Scale Business Sheds and Machinery Loans. This sub-componentwas not particularly successful. About 200 plots, more than half as manysheds for small scale business (100) and machinery loans were proposed to befunded under MUDP II. However, only about 50 sheds were funded under theproject. At the outset, the responsibility for small scale business sheds andmachinery loans was with SIDCO. It had diffiLulty collecting loan charges.Part way through the project IDA agreed that the responsibility for theseefforts could be transfered to the Tamil Nadu Industrial InvestmentCorporation. It continued to have collections problems.

51. Originally estimated to cost about Rs 6.0 crores, includingcontingencies, about Rs 3.8 crores was actually spent on the the small scalebusiness and machinery loans component.

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52. Slum Improvement. Improvement of 50,000 households in 221 slumareas was projected and 60,000 households in 250 areas actually receivedimprovements. Although the quality of the works too often leaves something tobe desired, no doubt they have contributed to improving the environment insquatter areas.

53. It was anticipated that the number of tenure agreements would beabout the same as the number of households improved. In fact, only about23,500, or 40? of the households, obtained lease-cum-tenure and about 17,000housing improvement loans were completed, well below the anticipated number.

54. Lease-cum-tenure for Slum ImProvement Program Households. Issuanceof lease-cum-terure by the Slum Clearance Board and issuance of HomeImprovement Loans lagged behind improvement works. Unresolved problems inMUDP I, related to conditions of tenure on large plots occupied by squatters,were not resolved in MUDP II and came back to plague the Tamil Nadu UrbanProject. Households in Slum Improvement areas are unevenly benefited byimprovements, particularly on large plots.

55. When the Community Development Wing was detached from MMDA, it wasattached too low in the Slum Clearance Board's hierarchy. Overwhelmed by theengineering staff, its effectiveness was reduced, contributing to theweaknesnes in the lease-cum-tenure and home improvement loan programs andcollections performance.

56. Home Improvement Loans for Slum Improvement Households. Thoughinitially promising, the grant and loan program did not succeed in the end. Astudy of the loan program concluded that households faced Slum Clearance Boardprocedural complexities which outweighed the value of the relatively smallloans made available.

57. Originally the expenditure on the Slum Improvement component wasestimated to be Rs 28.8 Crores with contingencies, or Rs 5760/benefittedhousehold. The actual expenditure of Rs 22.1 Crores, or ks 3683lhousehold wasmuch lower than anticipated at appraisal, because of lower-than-anticipatedexpenditures on Home Improvement Loans (Rs 3.8 Crores vs about Rs 12.7 croresoriginally estimated), slum improvement and community facility works(pre-schools, and medicare centers).58. Collections of plot charges were poor up to about a year before theclosing of MUDP II. Charges that were a few percent of even the lowest slumhousehold income were certainly affordable. The problem traced to lack ofpolitical and administrative support for an adequate collections effort.

59. This was demonstrated when improvements in collections to greaterthan 702 of demand were insisted on by IDA as a condition of negotiation ofTNUDP (in 4/88). That was achieved by the Slum Clearance Board and maintainedthrough 1989, believing, as in sites and services, the prevailing view thatcharges cannot be collected from low income people.

60. The Slum Improvement Program undoubtedly improved the environmentand regularized tenure in once-squatter-slum areas for about 200,000 poor

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people - more than projected in the SAR. The results of tenure were alsopositive in the sense that many families tore down their old, thatchedstructures and replaced them with permanent brick or even reinforced-concretestructures. Water supply and sanitation standards improved with the SlumImprovement Program, although the Public Convenience (PC) sanitation solutionis unsatisfactory and remains to be substituted by a better one. Marketvalues of tenured land in the Slum Improvement Program areas rose sharplycompared to pre-project values.

61. On the negative side, there is evidence that particularly on largerplots, where there were rented houses, a significant proportion of originalmostly-low income inhabitants were evicted by original squatter occupiers ofplots (many of whom were also low income). The original occupiers wereenriched by the enhancement of values on newly-tenured service plots at theexpense of their evicted tenants, who presumably were left worse off thanbefore the program was implemented. An equitable policy remains to be evolvedregarding the disposition of larger plots under future Slum Improvement in theTamil Nadu Urban Project.

62. It is doubtful that the above problems could have been avoided.Most of the problems that emerged fall into the 'learning by doing" category.With hindsight it might have been anticipated that these problems would arisefrom the weak backing for some aspects of the Slum Improvement program.The problems mentioned above were also imbedded in the administrative cultureof the Slum Clearance Board, which is construction, not service-oriented. Itis unlikely that they could have been anticipated during project preparation.Requiring the CD Wing to be attached at a higher level in the TNSCB managementmight have improved the Home Improvement Loan program. But, the problems theCommunity Development Wing would face as a section of the Slum Clearance Boardwere also not anticipated during project preparation.

63. Storm Drains. The arterial storm drains construction program underthe Public Works Department's responsibility, dragged on through the wholeperiod of MUDP II and was obstructed chiefly by problems of land acquisitionand difficulties in ousting relatively small numbers of squatters on thedrains alignments. At the begisming of 1989, some drains were stillincomplete because a few squatters obstructed the acquisition of the right ofway.

64. A feeder storm drains program was implemented relatively rapidly bythe Madras Corporation. But supervision missions observed that soon aftercompletion, these were already functioning inefficiently due to lack of MadrasCorporation maintenance.

65. Because of delays, there were substantial cost over-runs of about802 in the Public Work Department's storm drainage projects, originallyestimated to cost about Rs 200 lakhs.

66. Part of the system is providing improved drainage to MUDP slum andsites and services areas and city sub-areas which flooded during the monsoon.The whole system funded under the project was not yet operational in 1989 due

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to the land acquisition and encroachment problems mentioned above. Were itnot for the obstruction caused by a few families, possibly during monsoonrains several years ago, flooding experienced in some areas of the city bymore than 20,000 families could have been reduced. Eventually the scheme willdeliver its benefits. but because of delays and as yet unresolved maintenanceproblems, implementation cannot be deemed a success.

67. Municipal Services and Maintenance. With project funds, the MadrasCorporation purchased solid waste management equipment, hydraulic ladders toservice electric lights, constructed a pilot solid waste transfer station,installed 100 water pumps and wells at public conveniences, and carried outwith technical assistance, studies of long-term strategies for solid wastecollection, disposal and maintenance of municipal services and municipalaccounting and management information systems. All of the procurement wasfraught with delays and supervision missions frequently found that there wasinadequate justification for the Madras Corporation's project proposals. Theconstruction and design of the pilot transfer station was weak. Little or nopractical action followed upon the recommendations in consultant studies ofsolid waste systems and maintenance. Little long terca benefit to maintenanceand services appears to have been obtained from the project's support for theMadras Corporation. Hot-ever, a basis for improvements was created in theconversion of MKC accounts from a cash to a cor.aercial system and thecomputerization of property tax records.

68. Both the Madras Corporation and the Madras Metropolitan Water Supplyand Santitation Board (Metrowater) balked however, at taking over theoperation and maintenance of project facilities because of lack of funds,disagreements over engineering standards - and in the case of Metrowater -project areas being outside their existing operational area.

69. To the extent that the Madras Corporation's problems were financial,IDA might have insisted on stronger state government commitments to enhancethe resources of the Madras Corporation. Advance planning and agreement withmunicipalities on engineering and planning standards could have been builtinto the implementation program more specifically--as has been done in theTamil Nadu Urban Development Project. The failure to improve the services andmaintenance programs of the Madras Corporation is linked to its unresolvedfinancial and managerial weakness and probably could not have been avoided.

70. The Madras Corporation adhered to the financial covenants of MUDPII. But it was constantly short of funds for maintenance and services andtherefore reluctant to take over these responsibilities in MUDP schemes. TheUrban Surcharge on State Sales Tax in Madras generated more than Rs 10 Croresrevenue/year when it was introduced and subsequetty revenues followed thesteady growth in sales tax revenues. The state government released only about2-3 Crores per year of urban surcharge on state sales tax revenues to theMadras Corporation and its potential was of limited use to the Corporation.There was no movement during MUDP II on property revaluation or tax increasesin the Corporation. The neighboring jurisdictions in Madras benefited fromthe state government allowing about a 100t increase in the property tax in1988, which had been frozen since 1976.

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71. On the whole, the municipal component of MUDP II was successful inimproving accounting and management information systems. There were alsoimprovements in MKC tax collections. However, a significant reform inmunicipal maintenance and services waits upon the attempts to improvemunicipalities finance, management and services under the Tamil Nadu UrbanDevelopment Project.

72. Buses. Procurement of about 550 busses was projected in the SAR.The actual number of busses procured was 885, following the amendment of theproject description. PTC also efficiently implemented the terminals anddepots originally anticipated. Expenditures on the PTC component were 75?higher than estimated at appraisal (Rs 12.6 Crores). Taking into account theextension of the project period and higher-than-anticipated inflation rates,unit costs were &bout the same as forecast in the SAR.

73. The bus company's financial performance was disastrous in the early19808, when the operating ratio soared to about 120 compared to a target of95. This, and the state government's prolonged reluctance to revise fares,led to the suspension of disbursements for one year in June 1984 on all ofMUDP II. Since the Credit had fully disbursed against 550 busses in theproject description and most other PTC works and equipment in the projectdescription, it was not possible for IDA to suspend only on the PTC component.Lacking funds for bus procurement. the bus company'z service standards fell.Overcrowding resulted. However, when fares were increased, PTC's financialfortunes reversed positively and PTC was able to afford the extra bussesprocured from MUDP II, while meeting agreed profitability and cash generationtargets. But it could not make up for the cash losses of earlier years andrestore service standards to desirable levels. By 1988, however, with farerevision once more too-long delayed, PTC was struggling to achieve the cashgeneration envisaged under MUDP II (and indeed TNUDP). In retrospect, itwould have been better to limit procurement to annual requirements (200-250buses) instead of agreeing upon a 550 bus procurement contract, while keepingthe operating performance and fare revision prospects under close observation.

74. Despite its up and downs, the component was quite successful.Because of the procurement of busses under the project, PTC was at least ableto run an efficient, relatively low cost operation and maintain its servicelevel, albeit at spartan levels involving over-crowding in the peak periods.PTC's productivity also Improved and the management introduced innovations(express services) which helped to sustain the financial performance.

75. Two major long-run problems remained unresolved. First there is thefare revision process. Late in MUDP II, in 1987, the state government createdan Expert Bus Fare Committee. The intention agreed with IDA was to provide anexpert forum for regularly rationalizing the process by which bus farerevisions and the performance obligations of the bus company were decided. Sofar this arrangement has been ineffectual. As an advisory body the Committeehas had little influence. By June 1989, the state government had even failedto extend the term of the Committee. The bus company's financial andoperating fortunes were once again unnecessarily hostage to the political

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process. With hindsight, it could be argued that the Committee should havebeen established as a Statutory Committee with powers to establish fares,which could only be over-ridden by GTN in extra-ordinary circumstances.

76. Second, there were wages. With c relatively young staff, wagearrangements which guarantee cost of living increases and also regular wageincreases based on longevity in the company, the Bus Company's wage bill hasrisen inexorably. Once about 252 of total costs, wages in 1989 were over 502of total costs. The annual increase in the wage bill outweighs any costreductions which the management may make in productivity.

77. MMDA Regional Investment Planning, Coordination and PerformanceEvaluation. There was no significant improvement in the Madras MetropolitanDevelopment Authority's overall urban management activities. The SARanticipated over-optimistically that as the Development Authority's capacityfor project coordination had been "run-in* during MUDP I, it would concentratemore effectively on broader regional planning and evaluation. However, itemerged that the scope for thius is mainly a function of the level ofgovernment interest in urban problem-, policies and objectives. Focused moreon rural than urban problems, the gov:enment's level of interest in theobjectives of MUDP II was limited. F.ore could have been done to strengthenthe Development Authority's overall u-han management function, and the TamilNadu Urban Project sought to effect im}.rovements. But it must be recognizedthat the scope is limited by the socio-political interest in the problems andprospects of urban development at any point in time.

Project Imracts

78. Sectoral Policy. The project had a major positive impact onattitudes to sites and services and slum improvement, confirming that theapproach could be successfully used to tackle the shelter problem. Theproject success in the public sector also opened the way for experiments inprivate sites and services which were incorporated as a Guided Developmentcomponent in the later Tamil Nadu Urban Project.

79. Human Resources Development. Over the course of the MUDP, a core ofseasoned and experienced staff were developed in the implementing agencies.There is a sufficient critical mass to provide a basis for the state-wideproject being implemented under TNUDP.

80. Physical Environment. The project undoubtedly improved the overallenvironment in sites and services and slum areas and established that sitesand serviceb were not "planned slums" as had been argued a decade earlier.

81. Poverty and Income Distribution. A manor objective of the shelterprogram was achieved: more than 70? of the beneficiaries of the shelterprogram are in the income group at or below the poverty level. Some sellingc-t to higher income groups and infiltration of higher income groups into theplots reserved for lower income groups has occurred. On the whole, thephysical design and location planning approaches of the project seemed to haveworked effectively. Most project beneficiaries experienced substantial

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increases in their real income and wealth as is evident from the amount ofinvestment that took place in project areas and the prices quoted for plots inscheme areas.

82. Institutional. Although some of the project agencies provedstubbornly resistant to improvement, others steadily improved and reachedlevels of performance toward the end of MUDP II which sharply and positivelycontrasted with the performance at the outset.

Project Sustainability and Rates of Return

83. Sites and Services and Slum Improvement. The economic rates ofreturn on the sites and services and slum improvement component were easilyachieved, since unit costs of investment in these components were not muchgreater, or less than ( in slum improvement) forecast, while market rents forserviced land in these components grew at a proportionately greater rate thancosts in a sellers scarcity market. Market rents, used as a proxy forbenefits for sites similar to those in sites and services and slumimprovement, have steadily grown at a higher rate than construction and othercosts. Reflecting the shortage of affordable serviced land in Madras, a highrate of return in sites and services (more than 15ZIyear) is likely to bemaintained. In the long run, were the growth in the Madras economy to slowdown, particularly because of shortages in essential services like water andelectricity, rents and rates of return on shelter investments would decline.Severe water shortages in the past decade appear to have as yet made noperceptible impact on land values.

84. Roads. On main arteries such as the MUDP II Inner Ring Road and theimproved Madras-Tiruvellor High Road, the growth in vehicular traffic isgenerally greater than the growth in population. On sections of the InnerRing Road built (under MUDP I) several years ago, traffic growth is greaterthan earlier projections and road capacity is being expanded under the TamilNadu Urban project. It may be expected that the same trend will be followedon the MUDP II roads and the economic rate of return on these roads is likelyto be maintained.

85. Buses. Recent projections for the bus component in the Tamil NaduUrban project indicate that rates of return projected under MUDP II are beingrealized and are likely to be maintained in the middle run.

86. Risks effecting the long run economic rate of return in the buscomponent are connected more with costs than uncertainties in benefits.Despite successful efforts to reduce its operating costs, the bus company hasbeen unable to come to grips so far with labor costs. Rising steadily at arate greater than all other costs and fares, labor costs are a persistentthreat to the financial and economic rate of return on the bus component.Were labor costs estimated in a falling economy at the opportunity cost oflabor, it is likely ti t the forecast rates of return in the bus componentwould not continue to be realized.

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87. The bus company needs both to reduce the manning ratio (per bus inservice) and to revise its wage contract to introduce an element of merit inthe structure and reduce the automatic increases in wages based on seniority.This is unlikely to happen unless there is a strong national lead of the samesort which the state also pursues. Thus there are relatively high long runrisks to the financial and economic rate of return in the PTC bus component.

Bank Performance

88. Overall, IDA performance on the project appears to have been good.However, it was difficult to supervise certain aspects of the project with theIDA budget and the state government management arrangements and informationsystems available. These were: the small scale business component; theeducation, health and nutrition programs being implemented in project-fundedfacilities; and the Home Tiprovement Loan component in slum improvement. Moreinput by IDA engineering staff would have contributed to maintaining a higherstandard of civil works implementation and improvements in the technology andstandards being applied in sanitation in particular.

89. Because contract sizes were generally quite small, a substantialproportion of contracts fell below the threshold for formal procurementreview. The resulting burden of procurement review on supervision staff waslighter than in similar projects of more recent date.

90. At the mid point of project implementation, a substantial amount ofstaff time was spent on issues connected with the lack of PTC fare revisionsand the management of a suspension of disbursements, following which, on GOI'srequest, MUDP II was not supervised for a year. Although suspending was anunpleasant and risky necessity, its outcome was successful in that fares wererevised, PTC's financial performance improved greatly and MUDP II as a wholeexperienced a strong finish. On the other hand, supervision of the PTCcomponent normally was not time consuming because of PTC management'scapability. In the later stages of 4UDP II also, a medium-term PTC financialand operating plan, prepared in the form of a computer model, was available.This further simplified the task of supervising the bus component.

91. There was sustained and beneficial continuity in the IDA'ssupervision of the project, which from identification through appraisal andcompletion was the responsibility of the same project officer.

Borrower's Performance

92. On the whole, the performance of the main MUDP II implementing andcoordinating agencies at the project implementation level was commendable. Asnoted earlier, there were established factors in the Tamil Nadu administrativearrangements which assured a relatively high level of continuity of technicalstaff in the coordinating agency, the Development Authority, and theimplementing agencies. For monitoring project implementation, the DevelopmentAuthority evolved a strong project performance monitoring and evaluationsystem. This was more effective for the shelter than for the transport

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components, possibly because the later came under the responsibility of adifferent state government department than the Development Authority. One ofthe noteworthy features of the state government's performance was its capacityto react to problems and identify and successfully implement improvements inimplementation arrangements.

93. Examples of the above were improvements in:

(a) the process for scrutinizing applications and allotting sites andservices plots;

(b) provisions for project audits;

(c) sites and service construction management through increases insupervisory staff;

(d) the collections of slum improvement charges, and;

(e) Housing Board management by creation of a managing director post inthe Board.

94. It proved persistently difficult, however, to maintain stategovernment continuity on the 'big ticket' program initiatives supported by theproject--for example, the pursuit of the city shelter strategies supported bythe project. This was recognized by key state government projectadministrators. On the basis of the problems and experience in MUDP II, thestate government created a high level Empowered Committee for the Tamil NaduUrban Developement Project.

IDA/Borrower Relationship

95. A strong and collegial relationship was maintained in the projectbetween IDA, GTN and GOI, despite the inevitable strains which resulted fromthe suspension of disbursements.

96. On the whole, the relatively successful history of the projectdemonstrates the advantages of clarity of purpose, persistently pursued in anatmosphere of tolerance and adequate mutual commitment by a relativelycontinuous group.

Consulting Services

97. Consultants, most'y of local origin, were employed on a variety ofactivities under the project. The performance was mixed. In some cases thework was of high quality and the operational outcome was positive. Examplesare the preparation of financial and operating plans for the bus company, theHousing Board and municipalities (which laid the base for the Municipal UrbanDevelopment Fund under TNUDP), the commercialization of the accounts of theHousing Board and the Corporation and the preparation of traffic and transportfeasibility studies. Foreign consultants implemented an excellent routerationalization computer-based study for PTC, unfortunately with little

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apparent benefit to PTC operations, or transfer of procedures. This waspartly because there was inadequate computing capacity in Madras and theanalysis had to be completed outside of India and partly because of theunavoidable inaccessibility of the consultants once the study was completed.

Contractors

98. Contractors performance on the numerous small civil workscontracts was, however, mediocre. This was as much a reflection of theweaknesses of bid document provisions and agencies' provisions for managingimplementation as it was of the capacity of the contractors. As the biddocuments and management of construction by agencies improved in the laterstages of MUDP II, so did the contractors performance. Their improvedperformance may also have been a function of the increasing size of contractand the capability of somewhat larger contractors to deliver contracts onschedule.

Project Documentation and Data

99. The MUDP II legal agreements posed no particular problems and wererealistic. However, as noted above, it might have been better to haveincluded understandings at negotiations to implement slum improvement onprivate land. In retrospect, it might also have been better to have built astronger basis, confirmed in a stronger covenant, to have committed theHousing Board to implementing all its programs in the form of the IDA-fundedsites and services model. The SAR provided a reasonable framework forimplementing the project and the data required for preparing the PCR wasavailable, at least for the main components. The appraisal cost estimatingprocedures could have been made more transparent and structured with a view tousing them effectively during implementation to re-forecast project costs anddisbursements. The project management information system within most agenciesand as integrated by the Development Authority, was adequate at the broadcomponent level. Weak areas were: reporting on broader shelter objectives;the agencies' contract information system; and project implementationscheduling. Major improvements, catalyzed by the wide-spread availability ofmicro-computers, were being introduced in all these areas in the waning daysof MUDP II.

Evaluation Summary and Lessons of Experience

100. The project was appraised at a time when the IDA-supported shelterapproaches of MUDP I were regarded as successful and there was also aheightened awareness of the magnitude of the slum problem and the need formore effective shelter supply programs. On balance, the financial andphysical implementation of all the project components experienced ups anddowns, the most noteworthy of which was the suspension of disbursementsbecause of prolonged delays in bus fare revisions. But in the end allcomponents were implemented successfully and delivered, or would soon deliver,the expected benefits - with the possible exception of the municipal servicesand maintenance component. The city shelter supply strategy approach, newlyincorporated in MUDP II, was not pursued successfully because of unanticipated

-23-

problems with land acquisition and sluggish construction management and, itmust be said, a lack of sufficient interest and attention. Mirroring this,and dissapointingly, there was no significant improvement in the overallmanagement of urban investments and programs by MMDA, which lacked theessential political support and interest required to make a go of thisresponsibility.

101. The main lessons of the project were:

(a) Bus Fare Revisions. 'DA might have focused more attention uponimprovements in the process for fare revision. The existing processconcentrated fare revision decisions with GTN and a TransportCommission, neither of which had adequate technical capacity forweighing the issues. In the final stage of MUDP II, GTN created aBus Expert Fare Committee. However, it has only advisory powers andlacks statutory authority and the fare revision process has not yetbeen rationalized and improved.

(b) Public Shelter Programs. Once it is accepted that Bank-supportedprojects have passed beyond the demonstration stage and that theBank's strategy is to support more effective urban programs as awhole, it is clear that in Bank-supported urban shelter programs,the whole effort of public shelter agencies should be directedtowards meeting massive city shelter needs with the limitedresources available. Future projects should not contain aBank-funded shelter component with acceptable objectives implementedby a public agency, while contrary objectives are being pursued bythe same agency with its own funds.

(c) Private Shelter Supply. It is also evident that the public sector,no matter how efficient, cannot by itself meet the shelter needs ofeven the lower income population in fast-growing cities.Constraints on management capacity, financial resources and landavailability dictate that the private sector must be enlisted in theinterests of enhancing the supply of affordable serviced land,particularly to lower income groups.

(d) Municipal Maintenance and Services. Municipalities own, operate andmaintain many of the facilities provided in shelter schemes. Longrun environmental improvements in shelter schemes depend on theircapability. Yet municipalities are generally weak, their function inthe urban development system is undetermined and their problems aresystemic. Future projects should address the whole system ofmunicipal administration and finance in a state and avoid piecemealfinancing of projects in individual municipalities.

(e) Planning and Coordination of Urban Development. The record showsthat Bank projects allocate high priority to strengthening urbanmanagement and using resources more equitably and efficiently. Theexperience is that the aim has been difficult to achieve.Nevertheless, future projects must continue to strive to identify

-24-

and support hardy and durable institutional arrangements for urbanplanning, that are more closely linked to cultural and politicalinterests and reality.

(f) Performance Monitoring. Experience has shown that projectperformance monitoring and implementation can be strengthened andmade more efficient by closer prograsming of implementing agencies'financial and operating programs.

- 25 -

INDIA

MADRAS URBAN DEVELOPMENT PROJECT It

PROJECT COMPLETION REOT

PART II BORROW'S PERSPECTIVE

- 26 -

PROJET CROPLTO(P.C. R )

for

LMDRAS URiDAN DEVELOPEMENT. PROJECT - JLI

cxswgzed bALP ,M.Dviiano 9MMDA.

- 27 -

BALKGROUNIls

India is primarily an agricultural country with

about 80% of Its people living in rural areaso The total

urban population was estimated at 159 million in mid 1981.

Due to large migration the urban population has oben growing

at higher annusi r;eo (3*3%) than the general population(2.2%).

Nearly 4.3 million per year are being added to uzoan ases

creating demand for shelter, infrastructure services and

employment. About 50% of urban population is concentrated

in more than 135 medium sized cities with population between

1000ooo and 1,000,000, According to IDA estastee, the absolute

urban poverty level income was about be57/capita/month In 191'

In various Indian states. About 47% of Urban households had

Income below this level.

Tamil Nedu sth a population in 1988 of about 50

million, growing at Mabout 2% per annum ia the third most

denaely populated stats after Kerala and West Bengal and the

most urbanised state in IndiS.

The net dewestic product (h.10634 cr. 1984/85)

which was fifth highest in India in 1976/77, sliped to 7th

sank in 1981/82. Real per capita income also practically

stagnated from 1971-81, putting Tamil Nadu among poorest states.

The madras estropolitan Area had 1981 metropolitan

popula.ion of about 4.57 million of which 69% were in Madras

City* About one third of Statels Urban Population and 10% of O*M

Stats's population live in the MtA which covers an area of

about 1170 km0. From 1961-71 it hes the highest annual populstion

growth rate of all major metropoaitan contres in Indin, due

- 28 -

largely to migration from poot stagnant rural areas. In 1976/77 total

per capita public investment in the M.lA was about Fb*O while that of

the State was eS5o However annual public investmer.t in the MMA are

currently only about one-third of the State-Wide average.

The main objective of MUDP It was to further develop and

expand low cost solutions to Urban problems in Madras initiated in

MUIDP I particularly in the shelter sector. The project was also

intended to support the continued re-orientation of shelter and

infrastructure investments and progremmes in iMAA making them mor8

responsibato the urban poore

SITES AND SERVICES Agenciess TNHB

TIIC

Construction of serviced residential plots core housing

and community facilities and provision of shelter loans for about

18264 primarily low income households and services lands, sheds and

machinery loans for industrial and commercial use at two sites,

covering a total area of 251,83 ha,

The cost of the project at appraisal bo*19eO1 crores

has been revised to Rs28.8 croreNs

- 29

ACH1IEVNENT

~~~~~£xten sasa >"1 £ tEQ£1,ln Hnit Las

(R.in million)1. Mogappaiz (Cast) 74.13 5062 3418 U1.14 (82.14)

20 riogappaix (West) 73M00 5555 3930 05.06

3, Hadusavoyal 26.70 2048 1344 33.00

4, manali.I 40.00 2947 1989 47,39

5* 1anali-IZ 38.00 2652 2058 39.49

Total 251.83 16264 12739 281.90

IAM- Wm!RScheme Trgetd WMt Agctusi Late.9A.= ~~~of ScOACoietio

i. Mogappasi (Cast) Dace1984 June 1968

2. togappair (West) Dec.1914 Sept' 1988

3. Madutrvoyal Dec.1984 June 1988

Oxigiall schedule

4, Manali Phase I Dept. 1986 Septd619860

5. fianali Phgas 28 Sept.1987 Septe1988**

* Allotments over*

4* Advertisement to be rleaesed after the decision taken on Pricing.

It could be sen from the table# that about 18300 plots

have been developed in 5 sitse in an extent of 251,83 ho. at a cCOt

of b.e28.0 crazes.

The main problems encounterd wave

1) Land Acquisition

- 30 -

2) multi-sector La-ordination

3) Procedu:el delays

4) Taking over of assets was islayed due to

the projects being out of metrowatar*s

operational juxisdictiono

SNaLL S6ALE BUSINE2SS

Under small scale uusiness indust;ial shads were

proposed in two places only, as indicated belows

Prooosed met

I4ogappair (E) 42 25

,4ogappair (W) 80 25

122 50

In the smalL scale business the tolowing wers the

problem encountered viz.

1l Lack of unterprenership

20 Da1Sy ln starting of units due to non-availability of electzricitye

The original coat of appraisal was 0h4T? lakhs The

d.oe was restricted to h,380 lakhe for the physical targets

psogramed before the close of credite

IF FgILThe taxgets progamme befts the close of credit was

fully achieved by 30.9l88 and R,.380 lakhs has been incurred

under this sub-component as per schedule,

- 31 -

11. SLUMA UMENTA Agencises TNS1;PWD

Improvements to on and oa site infzsetructure

provision of land twnure home tImprovement loans and community

facilities for 50000 alum households plus home Improvement loans

for house holds In sluespa Improved under MUDP I at the cost of

1625.9 croreewhich subsequently revised Into Ib.21.1 crOzea.

NUDP- I No,of House frcilitisa L.C.So HeIeL Amount :Dlsslums holds provided Execu- bonea sanc- bursedImproved bane. td. fici- tioned

fitted aries WL lakhe

50000 221 49.755 Roed,povementO"HNG drainage, I

Water supply, 0sewerage Istreet I 23,471 169925 504.726 304.160light. etc* 0

10000 UHH§ 29 10,523 -do= D

_ ca e <a a - - _ a a am a ab _ a a o a a _m a a _

The completion date as per appraisal was DegO1984 and the

actual completion was June 1988.

lo It has been brought out that a nooof families who are

given title, after confiment, sell their plots to some others and

again settle n some othor slum.

2. the MLiDV-tX d.volopmento reveals that, the DonfticlAa

ties do not like to have comunity Pe.C Unit* Instesd 0 they need

- 32 -

andividual ALIAV latrine which costs Ri. 1450/- (at 19189). This

must be taken for consideration* The bsnsficia*ive do not iind

paying for this.

3. HIL has not picked up because

a) Inadequate income for payment of instalment,

b) Role of NIL in shelter improvement process

is limited.

c) 6'enrasl belief of house holds is that the

loan will be written off over the time.

4. SSAINT&NC Of &SSETSp

Corporation of Madras is reluctant to take over the lower

standard aaseto, since it will involve a higher maintenance

expenditure.

- tTERIAL RAIS, Agenegs PWD

Under MUDP II S arterial drains were taken up for

improvement. They ares

S1. sdmn. Tech. ExpenditureNo. Sanction Sanctiona aa aa a- --- ao_ a _ Q _ 0 0 w a - _ _ - - - - - -

1 m Nambalam Nandanam Drain _ R;,79,80 10.361(lakh.)

2. Seligramem Drain

3. Dejunct Viugambakkam a |e,44*962 30.841drain (lakhs)

4. Arumobakka,n Drain ,4 A k D96.801 Ri.216.90 167.261

5. VirugambAkkam Drain (lakhe)

_ C. a _. a _, _ a _ a a a a a a a a a a a a a a a _ a a a a a a a

- 33 -

These drains are to collect the storm water from the

surrounding areas to: disposal thus preventing tlooding.

Work are pending in the some stretches of the 4rumbakkam -

Virugembakkam drain and mambalam - Nandanam drain due to land

acquisition proble.. so

1e Court stays

2. Land Acquisition problems*

3. Dense settlement pattern,

uO I8UMegBla Agenciae s PTC

Provision of 885 buses and depot Impro%oente for PTC9

construction of 6 kuas of IRR and general improvement of 14 kms. of

Madras Thiruvallux Road.

ACHIELEMENTs

l. Construction of IRR from 1107.km to 17.5. km,

2. Improvement to MTH Road.

3, Procurement of 555 buses e 300 buses + 30 buss.e

The IRR is now available for GST RoAd (0/0 k,m) to sTUn Road

(17/5 kme) the original cost was Rs.532.10 lakh, and cost at completion

was iz.630.66 lakhso, Bues have been procured in full. More over 330

buses over and above 555 bUwes have been procured,

TIME FRAM£:

The time for completion as per appraisal for Road projects

wa March 1984, and the actual completion is Septo88e The time for

completion as per Appxaissl for Bug projects wes March 1984 and wee

completed in the soe period it selfe

The orig$nal cost of the bus component was h.1260.40 lakhoo

- 34 -

The cost of completion is fto2285975 lakho.

1l The shifting of a spur line by ICF could not be done In

time because of contractural problaom

2. A email lMm) stretch of the road could not be laid

because of raw water conduits running across the alignment0 Hence

minor bridges had to be constructed in order to make IRR operational

Howeve, diversion have been meae to make IRR operationale,

3e SO>LD WASTh ANAGC T _AR dAITNASCE o_ MUNICJ& S 8

Provision of civil works and equipment to tMC " improve

its olad waste management and maintenance of municipal services

end consualtancy services withthe inst.altion of system foufthe

review of organisational, technical and financial aspects of these

service at the cost of Vb.108/- lekhs.

1. Procurement of equipment

2. Construction of I trensfer station and I u*UAh

weigh bridle and I conveyor.

3. 8 vehicle depots.

4. Procurement of 30 numbers of g5rmovers

5. Procurement of 20 numbers of 5/14 HPofi treiller

mounted pumps.

6e Procurment of 3 numbers of Hydrocon type conveyors

To 100 numbers of oubmaxhible pumps

8B 1S Hydralic ladderso

The completion dete as per appraisal was Oct.1983 and the

actual completion is Sop9t.1988

- 35 -

zRaMUL.

1e It was found difficult to procure Some of the Items

es there were ony very few suppliers for such machinery*

20 The procedural formalities in MC were too complicated

and ongdrawn which results in delays.

Ee TCHNIUL ASASITANCE s

Special studies for MJ4DA, PTC# SIDS, TIVHNB TNSCI end NC

to identify priorities end prepare programmes for msdiu and long

team investments and for Institutional strengthening end training

particuRarly for MMDA.

The following twelve studies have been conducteds

9. Bank loan for small entreprenures

2. Job demand and training needs

3. Employment generation in MMA

4. Infrastructure level in non-city areas in MMA

S. follow up on modified accounting system for ML

6, Route rationalisatiom study programme

7, Irensportation study

8. Solid Waste management

9g Evaluation of Municipal maintenance services.

10. Property toa study

11* TNHB accounting system Rationalisation Lonsultency

12. Coupute:tLstion of MC acciunts.

rurthe:g workshops and eeminarswe conducted in India covering

over 1000 perticipantoi

59 people were trained outside Inais.

- 36 -

The t4ue fot complation Go per appraisal wss Sept.'64 and the

actual compLation date is June 1988.

ANNEX

MADRAS URBAN DEYELOPMENT PROJECT-11

IDA LRDIT NO. 1a2 IN

STATgS Of FINANCIAL PROGRESS AnD REIMBURSEMENT CLAIM AS ON 31212a'88--- ~ as rn rn rn o=c I .~~ m ininrnCDn ---- ob ------ ininrn rn nr rn --s1o PoJect Component Agency Cost of completion CUmOeXpz. Cuu.CIaI,No* - _ _ _ - as on lodged asoriginal Current 31.12.88 an date1.e 20 3, 4., 4bo 5, 6._ o _ _ _ w e Om* _ _ _* o cm _ _ o _ - _- _ C. - _ _ _ e r _ _ -- _ _ _ _ _ _ g_o _ _ _ o _ _ _ _

A, Sites and Services TN11 1900.93 2879.09 2860.21 1096.57TIIC 477.13 380.00 380.00 120.80so Sum Improvement TNSLIS 2587.30 2110.91 2107.67 838.76DSV 156.34 90.59 90.59 59.56DPHL 38.50 10056 7068 4v22C. Transport DHRW 532.10 638061 603.78 337.08PTC 1260.40 2204,91 2204.91 1722.70Dio boMd ;:aste Management NC 308500 295.25 267.20 154.62to Technical Assistance NMDA 126000 175.00 173.65 170.45

Total 7386.70 8776.97 8695,69 4504.78__r__ in________nn _ -. **_____i n.__*_in__*ni_ m ra .m _ r i n a m a a co

To be confirmed by agencis.

ANEU

SECOND tp UARS IRlN DELOPMNENI J. CEREDI ND.lO2aI-JNj

SAMms of marm cvewnanta fag~ the ae:ter endgd 3112.9.8

a a a_ a a _ _ a _ _ a a _ a _ a a C a a a a a - a a - a a -- - a a a - a * - - a a - a O - a a a

Si0ction Statue I OCrginel Revised Type 2 Description of covenants

date date

l1o 20 3e 4. So 60

a a a a a a a a a a a a a a a a a a a a a a a aa a a a aaa a a a a a a

2002 OK 2*5 Temil Nadu to employ consultants to Technical

Assistance and Training.

3o02A Not 04.01.62 3.8 Tamil Nadu Housing Board to limit its annual

compl6d Investment in Housing as specified

(55% maximum)

3.028 OK 04.01.82 4.1 Tamil ladu to construct housing to meet physical

standards agreed by IDA.

3.03 OK 3.6 Tamil Nadu Slum Clearance Board to limit Annual

expenditure of slum clearance-cumatenement

progeamem as specified.

3.04 OK 4.6 Sitsa/Servicess Criteria tems and cunditions

satisfactoty to IuA,

3.05 OK 3,1 Tamil Nadu to reccver slum improvement costs and

assess charges eatiteactozy to IDA.

e .2oa

s2s

Uuia 2. 3. 4. 58 6.

3,06a Ox 3.6 Rewvnue ?Xom AgXeSUen6ts eaopat A to bO depositga inSites and bervicee nevolving fund.

3.06a OK 3.8 hevenue from agreements report i to be deposited inslum Improvement Revolving Fund.

3.06 OK upto fy 6.2 Audit accounts/reports due to IDA not latter than196 6alT & 10 months after and each fiscal year.ty '87-'860

30 9A. Not complied 3.5 I PTCts current assets the current liabilities rtioampthw 1to be maintained at 1,5tt1

3.098 OK 3.8 PTC's operating costs not be exceed 95% of operating °coevnueO

3.09L Ox 3.62 No more long-team debt unless real debt servicecovezage aomet 1.5 times.

3*10A. OK 3O6 Corporation to Increase Its sevenues as specifiedbb atleest 8% annually.

''.30.,

s3a

10 2. 30 4.4 5. 6.

a a a -a a - a- aa - - S- a -- - - a a I - a a at a a at a a - a a a a - a a a a

3,11G OK 3,6 Unit 3,31e86 Corporationts debt service payments

in any FY not to exceed 20% of revenues,

3010C OK 12.31 01 3.8 Corporation to furnish IDA with Corporation's

proposals for Improving property tax collectione

a a a a a- -a -- a - a a aa aa aa a a a - a #a a a a a a a a a - a - a a a a a a

zJ/ OK LOVE(tUNT COriPLIED WITH

OKI COVENANT COvPLIEDI WITH NOW BUT WAS ttEVISED IN PAST

SOON LOMPLIANCE EXPELTED IN A REAb0NABLY SHCRT TIisE

NYUI NOT YET DUE

UJLET PRO.,OSED *OR DELETION AS NO LONGER RELEVANT

REVS NEEDS REVISION IN AGREEMENT WITH BORROWER TO REFLECT CHANGED

CIRCUMSTANCES.

ACT NEEDS ISE Of FORMAL REMEDIES TO BFkING ABOUT COMPLIANCE

UNK STATUS OF COVENANT UNKNOWN.

2,/ INDICATES TYPE OR COVENANT*

- 41 -

MADRAS URBAN DEV.ELOM9NT PROJECT II

IDA CERDIT NOa1g82-IN

,STATUS OF DIBURSMENTj AS DE 31-82129a8

SDR

Total value of the credit 32,600oOo.O

Total disbursement as on 31.8.88 32 g0 18s442e9 1

Balanc credit to be availed 581 557.09

RuPees equivalent of the balance

credit (at the rate of b.18073p

per SDR) Ib.108 9920564. 3 0p.

(fb.1089 92 lakhs).

Claims 6E the pipeline RO160.06 lakhs)

(Application No,467-476)e

- 42 - &TIuKQTA$

t ,_.

4'- 4*m _..

nRW¢Wot£~ ~ ~ ~~~~~~~~~~~~~$T.

b_ S(YI ES

ARPOWESOIDR

IA v~~~~~~~~~~~~~~~~~~~~~~~~~~A

LEGE O1ND*R

RX~~~~~~~~~~~~~~~~~~~$T ' *',""^^t""k,kW

s~~~~~~~~~~~~~~~~~~~~6Yi jX ,.YU Af

'PEA"bui

rEALA PTomEI

s.~~~~~~~N 06_vlu

MADORAS METROPOLITAN AREA AND THE. *,

LOCAT1ON OF MAJOR PROJECT COMPONENTS. NO? TO SCALE

- 43 -

INDTA

MADRAS URBAi DEVELOPMENT PROJISCT II

PROJECT COMPLETION REPORT

PART III STATISTICAL IOM TION

- 44 -

1. Related Bank Loans or Credits

Credit No. : 687-IN

title : Madras Urban Development I Project

Year of ADnroval : 1977

Pu=pOne : To develop and promote low-cost solutions of Madras'problems in the sectors of shelter, employment, watersupply, sewerage and transport, and particularly to makeinvestments responsive to the needs of the urban poor; toensure replicability, by introducing full cost recoveryfor key investments for which costs have traditionallynot been fully recovered; and to strengthen metropolitanplanning and capital programming and budgeting.

status : The credit was closed on December 31, 1982. Physicalcomponents of the project was completed in June 1984.

Comments : A Project Performance Audit Report (Report No. 6330 datedJune 30, 1986 is available from the Asia InformationCenter.

2. Project Timetable

Planned Revised Actual

Identification June 1978 June 1978Preparation Mission Oct. 15, 1978 Oct. 15, 1978Appraisal Mission Oct. 8, 1979 Oct. 8, 1979Credit Negotiations Nov. 10, 1980 Nov. 10, 1980Board Approval Dec. 16, 1980 Dec. 16, 1980Credit Signing Jan. 14, 1981 Jan. 14, 1981Credit Effectiveness April 14, 1981 March 2, 1981Credit Closing March 31, 1986 March 31, 1988 March 31, 1988Credit Completion June 30, 1985 Dec. 31, 1987 Dec. 31, 1987

I

- 45 -

3. CGrdit Disbursemnts

- (in US$ million)

Actual as %IDA FY Quarter Ending SAR Estimate Actual of Estimate

1981 June 1981 0.3 0.0 0

1982 September 1981 1.1 0.0 0December 1981 2.6 0.0 0March 1982 4.5 0.0 0June 1982 6.6 2.57 38

1983 September 1982 9.1 5.59 61December 1982 11.8 7.76 65March 1983 14.8 12.28 82June 1983 18.0 12.28 68

1984 September 1983 21.2 12.96 61December 1983 24.6 13.51 54March 1984 28.1 14.08 50June 1984 31.5 14.2 45

1985 September 1984 34.9 14.23 40December 1984 37.7 14.25 37March 1985 39.3 14.25 36June 1985 40.5 18.33 45

1986 September 1985 41.5 18.73 45December 1985 42.0 18.76 44March 1986 42.0 19.98 47June 1986 42.0 21.68 51

1987 September 1986 42.0 22.74 54December 1986 42.0 25.19 59March 1987 42.0 26.87 63June 1987 42.0 28.21 67

1988 September 1987 42.0 28.58 68December 1987 42.0 29.53 70March 1988 42.0 33.44 79June 1988 42.0 36.57 87

1989 September 1988 42.0 37.61 89December 1988 42.0 42.00 100

Date of Final Disbursement: October 3, 1988

- 46 -

4. Project Implementation

Indicators Appraisal Estimate Actual (or PCR Estimate).......... .......................... ..... ............ ._. . ............................................. ......

SITES AND SERVICES - Economic rate return At least 28%.estimated at 288.

- Provide affordable shelter 18,300 were provided, of whielfor 14,900 households. 15,000 occupied in 1989.

- Small-scale business program About one-half the targettedto support at least 400,000 number.jobs and serve about 204 newand expanding businesses.

- Provide health and nutri- Target was exceededtional services to 52,000children and about half asmany nursing and expectantoters.

SLUM IMPR EMT - Economic rate of return About 25-30%.estimated at 13%.

- Bsnefit 50,000 households, 60,000 were benefited, mostlymostly with incomes below with incomes below urbanthe urban poverty threshold. poverty threshold.

- Reduce the backlog of Not achieved; the backloghouseholds in unserviced is more than 100 of theslums to about 10% of the population.MRA population by 1991.

TRANSPORT - Bus component to improve Additional buses and servicesservices for the population, were provided. Overcrowdingreduce extreme overcrowding was not reduced due to short-and provide buses to extend falls in cash generation.services into new sites andservices areas.

SOLID WASTE - Benefit households in hutment Services are belg provided,FMNAGEKENT AMD areas, Including 80,000 mostly but the standard isMAINTERANCE poor households scarcely inadequate.

servlced by the Madras Corp.

- Improve efficiency and reduce Not achieved.costs, thereby benefitingother households in NMA.

- 47 -

S. groiect Costs and Financing

A. Priojet CoLs(US$ million)

Items Appraisal Estimate Actual

Equipment and Materials -ICB 9.6 13.37Equipment and Materials - Other 3.3 2.88Civil Works 42.7 39.18Shelter and Home Improvement Loans

and Small Business Loans 30.8 10.01Technical Assistance and Training 1.S 1.49

Totals 87.9 66.93

B. Project Financing(US$ million)

Source Expenditure Categories Planned Actual

IDA Equipment and Materials -ICB 8.80 13.37Equipment and Materials - Other 2.10 1.58Civil Works 19.50 21.55Shelter and Home Improvement Loans

and Small Business Loans 6.90 4.01Technical Assistance and Training 1.40 1.49Unallocated 3.3Q 0.00

Subtotal 42.00 42.00

DOMESTIC Subtotal 45,90 24.93

TOTAL 87.90 66.93

- 43 -

6. Status of Covenants

ProjectAgreent DaIInw forSection Subject Complance Status

2.02 Tamil Nadu to employ consultants for TechaLcal Assistance OKand Training.

3 02A Tamil Nadu Rousing Board to lLmit its annual livestment in Aprll 1, 1982 RChousing, other than for the economically weaker sections, tonot more than 552 of its total inestment Ln housing nd plotdevelopmet ln MM.

3.028 Tamil Nadu 8ousing Board to construct housing under its WA April 1, 1982 RCprogram ln accordance vith physical standards mutually acceptableto the Association and Tamll Nadu.

3.03 Tamil Nadu Slum Cleariag Board to limLt lts annual expenditure on OKits slum clearanc-cvn-tenemont program during AprlI 1, 1981 toMarch 31, 1986 to not more than Re 37,500,000.

3. 04 Samll Nadu to ensure that all torws and condLtiom Ln respect of the OKsites and sertvices to be developed under Part A of the project shallbe satisfactory to IDA.

3.05 Tamll Nadu to recover slum improvemet costs end assess charges OKsatisfactory to DA.

3. 06A Revenue from Agreements re. Part A of the project to be deposlted OKin Sites and Services Revolvng Fund.

3.06B Revenue from agreements re. Part B of the project to be deposited OKin Slum Improvement Revolving Fund.

3.08 IMplementing AgencLes to furnish ZDA wlth audlted accounts and OKfinancLal statements not later than 10 mth after the end of eachfLseal year.

3.09A PTC's current assets to current liabilities ratio to be maintained OKat 1.5:1.

3.09B PIC's operating costs not to exceed 951 of operating revenue. RC

3.09C PTC not to incur a long-ter debt unless real debt servlce OKcoverage is at least 1.5 times the maiimm debt service requirements.

3. 10A Corporation to lncrease lts revenues by at lest 82 annually. OK

3.10B Corporation to ensure that, until March 31, 1986, its debt servLce OKpayments ln any fiscal year shall not exceed 202 of Lts revenues.

3.10C Corporation to furnish IDA vlth CorporatLon's proposals for achieving Dec. 31, 1981 OKimprovemnts ln collection of property taxes withln its jurisdlction.

OK - Covenant complied with.NC - Covenant not complied wlth.

- 49 -

7. Status pi Qoen=an

Ptoject

Secton subject CoiLo1 Statu

2.02 TaSm Medi to alspiy consultan for Technical Assistance 0Rand Training.

3.02A Tail meusIbdu tSard to limt its annal inestmnt in April 11 1.92 1 Cbaouig, other then for the economically waker sections, tonot core than 552 of its total invetmet ia hosing atd plotdevelopmnt in WA.

3.02B Tamil Madu Mousing Board to construct housing under Its IOU Apil 11982 NCptroegrtan accordane with physical stndard wntually accptableto the Association and Tamil Nadu.

3 03 .0 l Rna ShUM Clearing Doard to limit its eanuel espenditure on CaLts alum cloarune-cum2-tenaent program during Aprtl. 1, 1091 tohatch 31. 1986 to not mme than Is 57,500,000.

3.04 TamLl Nadu to ensure that e11 terms and conditons in respect of the cmsites nd services to be developed under Part A of tho project shallbe satisfactory to 1DA.

3.05 Tamil Meda to recover slum 1zprxowmnt costs and asseos cbarges amsatisfactory to SDA.

3.06A Revenue froe Asreemets re. Part A of the project to bo deposited amin Site* and Servloes Revolviug Fund.

3.063 Revenue frm agreements re. Part 3 of the project to be dopeslted OBin slum Imprv2 oent evolving Fund.

5.08 AIplementi Agencies to furnish IDA with audted accounts an amfilal statemnts not later than 10 msnthe after the en of chfiscal year.

3.09A PTC's current assets to current liabilitie ratio to bo mnintaind amat l.sl.

5.093 PTC's operating costs not to exceed 95 of operating revenue. IC

.09C PTC not to Inur aW long-ter debt unless real debt servlce cmcoverage is at leat 1.5 lSst the meximm debt serviee requiremets.

3.10A Corporation to icease its revenues by at leat SX anually. OlR

3.10B Corporation to ensure tbat, until March 31, 1984, its debt service Ompayments n any fiscal year shall not eoceed 202 of lts revenes.

.1OC Corporation to furnLsh IDA with Corporation's proposals for achliving De. 31. 1961 0Cimprovements in collectln of property tarce within its JurTidiction.

m * Covensut comlied with.SC Covenant not coMlieod with.

- 50 -

7. Use of Bank Resourcs

A. taf = CZ

Actual No. of Stafweku

!hzou pprasa 1 .......................... 47.8Appraisal throtgh Doard 4pprwa ................ . . 30.6Ekuurd A4pproval throubRl Iffectslvoeoe *...... ........ 0.5sup.visioa ............................... 1*LA

Total ............................... 185.5

a. 114im

go . of Dae" Speciausitin Perfoeco Ratis types ofUhnlhlu4ai marea = umeldg JIU IS Ifiatma a' ai

Oct. 1978 5 1s 3M,FAB,NI,APatrch 1979 7 12 8C=,A,fllSAP

July 1979 6 15 ICMItA,EO,A?

AVpslal throughBo&4d kauoval,

Oct. 1979 7 15 20,1EA,llE,APMarch 1980 2 12 IK.1DAug. 1960 2 12 awlIA,

may 1981 4 14 EM,FMA,AP 2NOv. 1981 5 14 IW,1A,AP 1March 1982 1 3 1 0July 1982 5 16 mU,A,AP 1 O,FAprll 1983 s 10 8CI,FA 2 o,FDec. 1983 3 14 WCN1,Ba,AP 2 F,0April 1985 1 8 5CR 1 0Aug. 1985 2 21 =CR,=a 2 MDec. 1965 1 11 ICR 2 SMay 1986 1 12 DCI 1 TOct. 1964 5 14 zCw,F3,DI 2 Smarch 1987 5 16 =CI,FNA,=,AP 2 POct. 1988 2 S ZCI,A 2 0

UI ECU - Economists VIA aFlancial Analysts XGR - Esiner; AP l ArchitectPla ra'I 1 - Problem-fro or ulnr problems 2 - Moderate problems 3 Major ProblemIt F Fia=l;s 1 a Manageomt; T Tecl_icalS P F tolitIcals 0 - Others