ADB $150 Million Financing Facility to Help India Improve Urban Infrastructure

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending a $150 million multitranche financing facility to help India’s National Capital Region (NCR) accelerate plans to build urban infrastructure.

ADB’s Board of Directors approved the India National Capital Region Urban Infrastructure Financing Facility, which will provide funds in two or more tranches. It will extend long-term finance for improved urban services, while helping to encourage private investor interest, and support for a regional rather than city-centric approach to development.

India’s economy has been growing at one of the fastest rates in the world in recent years, fuelled by its booming cities, but municipal governments have struggled to keep pace with the demand for services because of financing and capacity constraints. In the NCR, which incorporates Delhi and subregions of three states, the population is expected to almost double to 64 million by 2021 from 37 million now, and the NCR Planning Board has notified the Regional Plan 2021 that it has identified investment needs in transport, power, water and solid waste totaling about $43 billion.

The financing facility will allow the NCR to accelerate its planned investments by providing long-tenure funds. It will identify bankable projects, extend capacity-building assistance for sub-borrowers of the funds to design and execute high-quality infrastructure, and help attract private investors and public-private-partnerships into the sector. The impacts will be improved health and economic well-being for millions of urban residents.

Infrastructure planning in India’s cities is often narrowly focused but the NCR Planning Board’s Regional Plan seeks to take a broader approach, providing more comprehensive and environmentally-friendly development that can reduce negative aspects of urbanization such as pollution, slums and traffic jams.

“A regional approach is more proactive, enabling systematic and inclusive urbanization and sustainable growth and this is the basis of the NCR Planning Board’s business plan and one of the primary motivations for the new financing facility,” said Sekhar Bonu, Principal Urban Development Specialist in ADB’s South Asia Department, noting that a strengthening and transformation of the Planning Board will help it to become a model for other state-level urban sector institutions to emulate.

The first tranche loan of $78 million will have a 25-year term, including a 5-year grace period, and an annual interest rate determined in accordance with ADB’s LIBOR-based lending facility. An additional $50 million will be provided by the NCR Planning Board for targeted investments. The Planning Board is the executing agency for the investment program, which is expected to be completed by June 2017.