Strategic Business Plan

National Capital Region Planning Board
Strategic Business Plan

“Transforming NCRPB in the emerging regional development paradigm”
ASIAN DEVELOPMENT BANK

TA 7055-IND: Capacity Development of National Capital Region Planning Board
(NCRPB), Package 1 (Components A and C)
Submitted By:
Infrastructure Professionals Enterprises (P) Ltd, India
In association with
Tamil Nadu Urban Infrastructure Financial Services Ltd, India

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Foreward
The business plan delineates the transformation of NCRPB from a planning and advisory
body to an entity which plays a key role in driving economic growth in the region through
promoting investments in iconic projects.
NCRPB currently plays an important role in building infrastructure and bridging financing
gaps by driving reforms and the increased focus now is on efficaciously mainstreaming the
dual functions of planning and financing by developing effective projects to maximize
efficiency in outputs. This report on ‘Business Plan for NCRPB’ has been developed in the
context of the changing landscape for infrastructure planning, development and financing in
the NCR region. This report draws from the Diagnostic Study submitted as part of the
Inception Report as well as the Human Resource Plan and the Financing Plan submitted to
Asian Development Bank under this TA. This Business Plan addresses issues related to
resource raising as well as implementation issues particularly those relating to organizational
structure and human resources. It aims to provide a reasonably clear understanding of
where NCRPB is headed in the future and also outlines parameters and structure of systems
that would be required for operating effectively and efficiently – especially, at the scale
proposed and also for the kind of financial products and processes envisaged.
The Business Plan alludes to strengthening the capacity for (i) project development, and (ii)
Monitoring of Project Implementation. It also suggests putting in place GIS and ERP
systems. NCRPB therefore must have the ability to sustain these systems over the years.
Business Plan also suggests measures for strengthening capacity of NCRPB staff and its
implementing agencies especially for monitoring of project preparation, project appraisal and
structuring. Capacity development is required also in planning and financing wings of the
NCRPB
This report has been structured following a highly disciplined approach and a series of
intensive consultations, detailed analysis and refinement and describes all critical internal
and external aspects and strategies to guide NCRPB in all its endevours. It is envisaged to
be an effective decision making tool that objectively develops and evaluates NCRPB’s
tactical and strategic plans. It is also recommended that the readers refer to the Financial
Management Manual; Human Resource Gap Analysis and Management Plan, Project
Appraisal Manual, PPP Toolkits, Treasury Manual and Financing Plan among others to gain
an in depth understanding of the organisation. This Business Plan should not be viewed as a
project information memorandum for lenders, but a strategic document to shape the vision of
NCRPB and an essential guide for the management to communicate the values, structure,
objectives and future plans of NCRPB.
This report is the outcome of effort put in by a number of individuals. We wish to record
our special thanks to Dr Noor Mohammad, Member Secretary, NCRPB for sharing his
vision. We would also like to thank Rabindra Kumar Karna, Project Director, ADB TA and
Director (Administration and Finance); and Rajeev Malhotra, Chief Regional Planner for
their cooperation and advisory support. We further express our gratitude to the entire
NCRPB staff for their patience and information sharing.
We would also like to thank Mr. Sekhar Bonu, Senior Urban Development Specialist, ADB
under whose support and guidance this ADB Technical Assistance could achieve its
logical conclusion.

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ACRONYMS
ADB : Asian Development Bank

AMC : Asset Management Company
BOT : Build Operate Transfer
CPHEEO : Central Public Health and Environment Engineering Organisation
CWSRF : Clean Water State Revolving Funds
C&AG : Comptroller & Auditor General of India
CBS : Core Banking Solution
DDA : Delhi Development Authority
DMRC : Delhi Metro Rail Corporation
DFID : Department for International Development
DPR : Detailed Project Report
DWSRF : Drinking Water State Revolving fund
ERP : Enterprise Resource Planning
ETF : Extended Term Financing
FAO : Finance and Accounts Officer
FIRR : Financial internal rate of return
FNPV : Financial net present value
FEICOM : Fonds Spécial d’Equipement et d’Intervention Intercommunale
GIS : Geographical Information System
GOD : Government of Delhi
GOI : Government of India
HUDCO : Housing and Urban Development Corporation
HDFC : Housing Development Finance Corporation
HR : Human Resource
IUIML : IL&FS Urban Infrastructure Managers Limited
IUIML : IL&FS Urban Infrastructure Managers Limited
IAs : Implementing Agencies
IIFCL : India Infrastructure Finance Company Ltd
IFFCO : Indian Farmers Fertiliser Co-operative Limited
IOC : Indian Oil Corporation
IDFC : Infrastructure Development Finance Company
IL&FS : Infrastructure Leasing and Financial Services Ltd
ICRA : Investment Information and Credit Rating Agency of India Limited
JBIC : Japan Bank for International Cooperation
JNNURM : Jawaharlal Nehru National Urban Renewal Mission
KfW : Kreditanstalt für Wiederaufbau
KRIBHCO : Krishak Bharati Cooperative Limited
LPCD : Litres Per Capita Daily
LGIDF : Local Government Infrastructure Development Fund
LGUGC : Local Government Unit Guarantee Corporation
MIS : Management Information System
MW : Mega Watt

Business Plan for NCRPB P a g e | iii
MOU : Memorandum of Understanding

MCD : Municipal Corporation Of Delhi
MDF : Municipal Development Fund
MUFIS : Municipal Finance Company of the Czech Republic
MIA : Municipal Infrastructure Agency
NABARD : National Bank for Agriculture and Rural Development
NBCC : National Buildings Construction Corporation Ltd
NCR : National Capital Region
NCRPB : National Capital Region Planning Board
NRSC : National Remote Sensing Centre,
NUIS : National Urban Information System
NCRPCC : NCR Planning and Coordination Cells
NPA : Non Performing Assets
NGO : Non-Government Organisation
O&M : Operation and Maintenance
PFC : Power Finance Corporation Ltd.
PDF : Project Development Facility
PMC : Project Management and Coordination
PMIS : Project Management Information System
PMU : Project Management Unit
PSMG : Project Sanctioning and Monitoring Group
PPP : Public Private Partnership
RP2021 : Regional Plan 2021
RDBMS : Relational Database Management System
REC : Rural Electrification Corporation
SDWA : Safe Drinking Water Act
SWM : Solid Waste Management
SPV : Special Purpose Vehicle
SRF : State Revolving Funds
TNUDF : Tamil Nadu Urban Development Fund
TA : Technical Assistance
UFW : Unaccounted for Water
UNIX : UNiplexed Information Computing System
UIDSSMT : Urban Infrastructure Development Scheme for Small and Medium Towns
ULB : Urban Local Bodies
WB : World Bank

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Table of Contents
FOREWARD.......................................................................................................................................................I
ACRONYMS......................................................................................................................................................II
EXECUTIVE SUMMARY .....................................................................................................................................2
1 NATIONAL CAPITAL REGION PLANNING BOARD (NCRPB)- AN OVERVIEW ...............................................4
1.1 NEED FOR A NATIONAL CAPITAL REGION AND THE PLANNING BOARD................................................................... 4
1.2 NATIONAL CAPITAL REGION PLANNING BOARD- ORGANISATIONAL MANDATE ....................................................... 4
1.3 NCRPB CURRENT ROLE IN URBAN DEVELOPMENT OF NCR ................................................................................. 5
1.4 STRENGTH, WEAKNESS, OPPORTUNITIES, THREAT (SWOT) ANALYSIS .................................................................. 5
1.5 NCRPB’S ROAD MAP ................................................................................................................................. 6
2 BUSINESS ENVIRONMENT ANALYSIS .......................................................................................................7
2.1 SOLID WASTE MANAGEMENT....................................................................................................................... 7
2.2 SEWERAGE................................................................................................................................................ 8
2.3 WATER SECTOR ......................................................................................................................................... 8
2.4 TRANSPORTATION ...................................................................................................................................... 9
2.5 POWER .................................................................................................................................................. 10
3 PRODUCT AND SERVICES PORTFOLIO AT NCRPB ...................................................................................11
3.1 FINANCIAL HISTORY AND ANALYSIS .............................................................................................................. 11
3.2 ASSET QUALITY AND LENDING PORTFOLIO: ................................................................................................... 12
3.3 ISSUES IMPACTING CURRENT OPERATIONS AND REQUIRED COUNTER INTERVENTIONS ........................................... 13
4 BUSINESS STRATEGY..............................................................................................................................15
4.1 PROPOSED PRODUCT STRATEGY .................................................................................................................. 15
4.2 PROPOSED PRODUCT STABLE...................................................................................................................... 15
4.3 EVOLVING PRODUCT STRATEGY................................................................................................................... 16
5 FINANCING PLAN...................................................................................................................................17
5.1 MULTILATERAL SOURCES OF FINANCE .......................................................................................................... 17
5.2 BILATERAL SOURCES OF FINANCE ................................................................................................................ 17
5.3 GRANT-IN-AID ........................................................................................................................................ 17
5.4 OTHER SOURCES OF FINANCE ..................................................................................................................... 17
5.5 ANALYSIS OF VARIOUS BORROWING PROGRAMS ............................................................................................ 18
5.6 RISK SSESSMENT & MITIGATION ................................................................................................................. 19
6 MANAGEMENT AND ORGANIZATION....................................................................................................22
6.1 EXISTING ORGANIZATIONAL STRUCTURE ....................................................................................................... 22
6.2 HUMAN RESOURCE GAP ............................................................................................................................ 23
6.3 STRENGTHENING THE PROJECT MANAGEMENT AND COORDINATION .................................................................. 25
6.4 PROJECT MANAGEMENT UNIT FOR THE PROJECT DEVELOPMENT FACILITY ........................................................... 25
7 OPERATIONAL PLAN ..............................................................................................................................26
7.1 SHORT TERM STRATEGY ............................................................................................................................ 26
7.2 MEDIUM TERM PLAN ............................................................................................................................... 27
7.3 LONG TERM STRATEGY .............................................................................................................................. 28
8 IMPLEMENTING THE ROAD MAP ...........................................................................................................30
ANNEX I: SETTING UP A PROJECT DEVELOPMENT FACILITY ............................................................................................. 32
ANNEX II: NCR PLANNING AND COORDINATION ......................................................................................................... 38
ANNEX III: BEST PRACTICES IN FINANCIAL INTERMEDIATION .......................................................................................... 42

Executive Summary
The National Capital Region Board (NCRPB) was set up with the view to decongest Delhi
and reduce the existing pressures on the capital’s critical infrastructure. NCRPB was
envisaged to play a vital role in developing essential civic amenities and also act as a nodal
agency to plan for and direct various state governments and agencies to ensure a
homogeneous regional development in the NCR, for a more sustainable development of the
capital city. The underlying objective was to develop Delhi and surrounding counter magnet
areas, i.e. the identified National Capital Region that would have the potential to absorb and
cater to the growing population.
Over the years, NCRPB has intervened across a wide spectrum of economic activity and
infrastructure in the region and has played a vital role in building critical infrastructure such
as Roads, Solid Waste Management, Water and Sanitation, Drainage and Power. NCRPB
has the mandate to foster economic growth in the National Capital Region through
development of industrial, social and economic infrastructure. In addition, NCRPB is also
entrusted with the mandate to ensure rural development in the region through interventions
in areas of micro-entrepreneurship, allied agro-economic activities, vocational skill up-
gradation and provision of urban amenities in rural areas.
In line with the changing macro economic situations and present business opportunities,
NCRPB is now looking at further strengthening its role in driving economic growth in the
region. Given the strong government support and legal statutes enshrined in the NCRPB
Act; committed leadership and a highly competent and professional staff with a strong
knowledge base about the NCR, NCRPB is in a position to effectively foster balanced
development. Furthermore, with a well-managed and large fund for supporting infrastructure
investments, NCRPB has a track record of 23 years in enabling projects to be financed in NCR
it is commendable that NCRPB has such a huge loan portfolio with no delinquency. In addition to
this, the NCRPB Act enacted by Parliament also provides for immense powers to NCRPB
putting it at an extremely strong position not only to undertake the traditional role of planning and
financing, but also to leverage its position to make the most of the changing landscapes and
huge opportunities in the emerging infrastructure sectors.
Moreover, NCRPB should fully take advantage of the fact that NCRPB is a Central
government organisation which provides it with a competitive edge as compared to other
financial intermediaries. In addition to this, the NCRPB bonds also enjoy AAA Ratings from
Credit Rating Agencies. It should explore alternate ways to attract borrowers and go beyond
its traditional scope of work to build and strengthen its position in all emerging and upcoming
areas in the developmental sphere.
The organisation is in the process of a total revamp wherein there is a paradigm shift from
the traditional practices towards adopting more modernized tools and mechanisms to
increase efficiency and effectiveness in its operations. The outdated and traditional methods
in day to day operations are now being critically analysed and NCRPB is looking at adopting
state-of-art technologies for improved loan management, automation of project monitoring
activities, and better e-governance. To facilitate its ability to ‘think-and-act’ on a fast-tracked
basis, NCRPB is also in the process of updating data and information through use of latest
modern techniques such as Tally, GIS, MIS, and Remote Sensing and is gradually moving
towards adopting ERP systems across the organisation.
This business plan not only identifies potential business opportunities for infrastructure, but also
suggests robust and innovative strategies to implement the road map for pioneering
interventions. The plan emphasizes on a “thinking out of the box” approach wherein NCRPB

would make an everlasting impact on the socio, economic and political canvass of the NCR.
The subsequent chapters not only detail the current paradigm of NCRPB, but also provide a
reasonably clear understanding of where NCRPB is headed in the future and outline
parameters and structure of systems that would be required for operating effectively and
efficiently – especially, at the scale proposed and also for the kind of financial products and
processes envisaged. They focus on understanding the overall business environment,
evaluate the existing business opportunities and suggest corresponding strategies such as
diversifying the resource base by borrowing from multilateral and bilateral agencies,
commercial banks and accessing the capital markets. It is also recommended that NCRPB
expand the product portfolio to include innovative fund and non fund based products. These
initiatives along with other recommendations such as undertaking project development
activities and appraising projects rigorously from the perspective of economic sustainability
and financial viability. The business plan also recommends the use of Public Private
Partnerships (PPP) frameworks wherever feasible and could also provide the initial seed
capital for project development/preparation.
These initiatives would go a long way in facilitating the evolution of NCRPB from a planning
body also providing subsidized loans to a few government projects to a major catalyst in the
development of the NCR region.

1 National Capital Region Planning Board (NCRPB)- An Overview

1.1 Need for a National Capital Region and the Planning Board
From being a small town in 1901 with a population
of 0.4 million, the Population Census 2001 noted The total population of Delhi
Delhi as the third most populated city in India, accounts for 1.34% of the All-India
after Mumbai and Kolkata. With vibrant trade and Population whereas in area, it is
commerce along with excellent opportunities of only 0.05% of total area of country.
employment in the new paradigm of Globalisation
and Liberalisation, the National Capital Territory (Source: Census of India 2001)
(NCT), has attracted thousands of people from all
over the country in search for better opportunities and standard of living. The Economic
Survey of Delhi 2008-09 estimates that of the total increase in population of 4.66 lacs in
2007, migration accounted for more than half at 2.45 lacs. Furthermore, as compared to the
all India level population density of 324 persons per sq. km, the population density of Delhi
was estimated as 9340 persons per sq. km, the highest among all States/UTs in the country.
This not only has led to increasing congestion and shortages of civic amenities, but also put
extreme pressure on the existing essential infrastructure such as water supply and
sanitation, sewerage, roads, power, housing etc.
Thus, given the limited resources to cater to needs of the over-bustling population, and the
increased population pressures with growing Urbanisation, Government of India introduced
the concept of National Capital Region (NCR) covering Delhi and its adjacent areas and set
up National Capital Region Planning Board (NCRPB)1 to ensure a homogeneous regional
development in the NCR, including development of counter-magnets to Delhi to allow a more
sustainable development of the capital city. The National Capital Region (NCR), covers
33,578 square kilometers spanning the National Capital Territory of Delhi; 8 districts in
Haryana namely, Faridabad, Gurgaon, Rohtak, Sonepat, Rewari, Jhajjar, Mewat and
Panipat ; Alwar district in Rajasthan, and 5 districts Uttar Pradesh namely Meerut,
Ghaziabad, Gautam Buddha Nagar, Bulandshahr and Baghpat.
1.2 National Capital Region Planning Board- Organisational Mandate
Vision
Develop the National Capital and its surrounding areas as a region of global excellence
with Delhi-centric emphasis to disperse/reduce pressure on the Capital’s infrastructure
Since its inception in 1985, NCRPB has been involved in planning as well as providing
financial assistance to State Governments, to State Governments having a counter magnet
area and the local authorities, urban development authorities, State Industrial Development
Corporations (SIDCs), housing boards, state government departments such as Public Works
Department (PWD) or Public Health Engineering Department (PHED) and such other
1
NCRPB was first conceived in accordance with the first Master Plan for Delhi (1961-81), which
envisaged development of Delhi in its regional context and recommended creating a statutory
National Capital Region Planning Board and preparing a Regional Plan for the NCR. Subsequently,
the Parliament enacted the National National Capital Region Planning Board Act, 1985 that provided
for constitution of the NCRPB with a mandate to prepare the Regional Plan and perform other
functions incidental to the implementation of the Regional Plan to channelise the flow and direction of
economic growth along more balanced and spatially oriented paths.

authorities responsible for implementing the sub-Regional Plans and project plans or for
developing the counter magnet area for financing infrastructure projects in the NCR towards
achievement of the balanced growth vision propagated by the Regional Plan 2021. The
Board has already extended funding support to numerous agencies for development works
within the National Capital Territory (NCT) of Delhi, Central National Capital Region (CNCR),
Counter Magnet Areas (CMAs) and Highway Corridor Zones (HCZ) as part of achievements
of its vision. The board has therefore defined its mission as:
To contribute to improvement in urban quality of life in the National Capital Region by
facilitating efficient urban infrastructure asset creation and provision of urban
services through innovative project development, independent appraisal &
sustainable financing.
1.3 NCRPB current role in urban development of NCR

Over the years, NCRPB has intervened
across a wide spectrum of economic activity
and infrastructure in the region and has NCRPB has been largely successful in
played a vital role in building critical achieving its vision – development of
infrastructure such as Roads, Solid Waste counter-magnets like Faridabad,
Gurgaon, North Okhla Industrial
Management, Water and Sanitation,
Drainage and Power. NCRPB has the Development Area (NOIDA),
mandate to foster economic growth in the Ghaziabad, Alwar were envisioned
National Capital Region through under the regional plan. These
development of industrial, social and destinations are some of the most
economic infrastructure. This entails attractive economic opportunity
facilitating investments in creation of destinations for Indian and foreign
infrastructure in industrial parks/townships, investors.
social infrastructure such as health,
education, heritage and tourism, housing &
shelter, environmental infrastructure. In addition, NCRPB is also entrusted with the mandate
to ensure rural development in the region through interventions in areas of micro-
entrepreneurship, allied agro-economic activities, vocational skill up-gradation and provision
of urban amenities in rural areas.
In line with the changing macro economic situations and present business opportunities,
NCRPB is now looking at further strengthening its role in driving economic growth in the
region. The NCRPB Act in acted by Parliament also provides for immense powers to NCRPB
putting it at an extremely strong position not only to undertake the traditional role of planning and
financing, but also to leverage its position to make the most of the changing landscapes and
huge opportunities in the emerging infrastructure sectors.
1.4 Strength, Weakness, Opportunities, Threat (SWOT) analysis

The SWOT analysis indicates that the full
potential of NCRPB still needs to be realized. NCRPB is expected to support Rs.
Converting a hierarchy of plans into 15,000 crore of projects under the
programmes, activities and into bankable Eleventh Five Year Plan ending in
projects constitutes an extremely complex 2012.
task. On the financing side, there is limited
project origination activity and little leveraging of NCRPBs financial resources. Enhancing
the scope and mandate of the revolving fund represents an ongoing challenge.
Notwithstanding the current limitations, given the strong and committed management backed

by the Government of India; NCRPBs presence as a National Capital Region planning and
financing body presents many opportunities.
It is in this context that NCRPB is looking at new and innovative means to increase efficiency
and effectiveness in its operations. The outdated and traditional methods in day to day
operations are now being critically analysed and NCRPB is looking at adopting state-of-art
technologies for improved loan management, automation of activities, and better e-
governance. While NCRPB does not face any critical capacity constraints for its present-day
operations, given the fast growing pace of NCRPB, there is an envisaged need for building
capacity as it looks at further improving its performance. To facilitate its ability to ‘think-and-
act’ on a fast-track basis, NCRPB is also in the process of updating data and information
through use of latest modern techniques in GIS, MIS and Remote Sensing and is gradually
moving towards adopting the ERP systems.
In addition to the above initiatives in modernisation and internal capacity building, it is also
recognised that NCRPB needs to “think out of the box” and develop new and innovative
strategies to leverage resources and diversify its product portfolio. NCRPB should fully take
advantage of the fact that NCRPB is a central government organisation which provides it
with a competitive edge as compared to other financial intermediaries. In addition to this, the
NCRPB bonds also enjoy AAA Ratings from Credit Rating Agencies. It should explore alternate
ways to attract borrowers and go beyond its traditional scope of work to build and strengthen
its position in all emerging and upcoming areas in the developmental sphere. NCRPB is now
looking towards raising capital from alternative sources such as commercial banks apart
from leveraging bond issues as well as exploring alternate credit enhancement avenues
including state/regional guarantee mechanisms, escrow of urban local bodies (ULBs), and
other implementing agencies revenues, debt service reserve funds, etc., for future funding
requirement.
1.5 NCRPB’s Road Map
It is well established that given a strong government support and legal basis; committed
leadership and a highly competent and professional staff with a strong knowledge base
about the NCR, NCRPB is in a position to effectively foster balanced development.
Furthermore, with a well-managed NCRPB Fund (Corpus) for promoting infrastructure
development, NCRPB has a track record of 23 years in enabling projects to be developed and
financed in NCR along with a huge loan portfolio with no delinquency. The Act of Parliament
provides for powers to NCRPB for its regional planning role and there is a gradual move to
further “provide teeth” to the agency to direct and monitor corresponding state agencies to
effectively implement the regional planning process. Thus, NCRPB is in a extremely strong
position not only to undertake the traditional role of planning and financing, but also to leverage
its position to make the most of the changing landscapes and huge opportunities in the emerging
infrastructure sectors.
The subsequent sections focus on understanding the overall business landscape, evaluate
the existing business opportunities and suggest corresponding strategies to facilitate
NCRPB evolve from a pure market lender to a catalyst in development of the NCR region.
The next chapter details the existing business environment and opportunities in critical
infrastructure sectors such as Water Supply and Sanitation, Transportation, and Power.

2 Business Environment Analysis

Creation of world class infrastructure
serves as the backbone for any economy 90000 11th Plan
and is identified as a pre requisite for a 80000 12th Plan
sustained and balanced development. 70000 13th Plan
However, the developing economies still 60000 Total
grapple with a huge gap in both the 50000
quantity and quality of infrastructure 40000
services. The Government of India has 30000
estimated in its 11th Five Year Plan that 20000
Rs. 20,000 billion at 2006-07 prices 10000
(equivalent to US $400 billion at Rs. 50 0
per USD) is required to bridge the Water Sewerage Solid Power Power T&D Roads Bus Rail
Waste Generation Systems Systems
infrastructure gap. The infrastructure gap
in NCR alone has been estimated at Rs
3,00,000 crore in the Regional Plan upto Figure 1: Demand for infrastructure in NCR across five
2021. NCRPB is expected to support Rs. year plans. Source: NCRPB Regional Plan 2021
15,000 crore of projects under the Eleventh Five Year Plan ending in 2012.
Based on research and diagnostic analysis, NCRPB is envisaged to play a major role in the
core infrastructure sectors such as Solid Waste Management, Water Supply, Drainage,
Transportation and Power. The following sections discuss NCR investment requirements,
opportunities and NCRPB intervention strategies across these core infrastructure sectors.
2.1 Solid Waste Management
Solid waste management (SWM) is the
responsibility of local bodies in the
region. The nature of services to be
provided in this sector commence from
primary collection of waste to treatment
and scientific disposal of the waste. In
practice, few local bodies in the country
are providing the entire spectrum of
services particularly management of
sanitary landfills. The NCRPB Regional
Plan 2021 envisages total investment Figure 2: Sub Region Wise Investment Requirements in Urban
requirement of Rs. 1362 crore for
collection, transportation and disposal of
solid waste. The investment NCRPB can not only facilitate setting of
requirements for SWM are not huge and regional sanitary landfills through
ULBs do receive some funding support appropriate arrangements but also
through the central and state finance facilitate appropriate utilization of private
commissions as well as Government of sector skill-sets in solid waste
India schemes such as JNNURM and management projects by creating
UIDSSMT. The investment for SWM in appropriate institutional structures such as
the 10th plan is estimated to be Rs. SPVs for managing regional treatment and
544.73 crores, for 11th plan Rs. 340.45 disposal facilities with appropriate forms of
crores while for the 12th and 13th plan, private sector participation in collection,
the investment requirement is projected transportation, treatment and disposal of
to be Rs. 272.36 crores and Rs. 202.27 waste.
crores respectively. Figure 2 summarises
the sub region wise total investment requirement in urban areas for SWM out of a total
investment requirement of 1,361.81 crores:

The main problem in the case of solid waste management is managerial and operational
inefficiencies within the local bodies. Furthermore, post Supreme Court judgment regarding
Municipal Solid Waste Rules 2000, there is regulatory pressure on all urban local bodies to
create scientifically managed sanitary landfill facilities. Many ULBs are unable to address the
issue of land procurement and associated initial investments which are beyond their financial
capacity. Gujarat, Tamil-Nadu, Kerala, Karnataka and few other states are experimenting
with shared regional landfill facilities and PPP models to leverage private resources.
2.2 Sewerage
In the case of sewerage, the coverage varies widely. In Central NCR the coverage is about
80% whereas in some areas of UP and Rajasthan there is no sewerage facility. The
estimated investment requirement for sewerage in this region according to the NCRPB
Regional Plan is around Rs. 8321 crore till 2021. To meet the estimated 6,935 mld sewage
generation, Regional Plan 2021 estimates total investment requirement to be Rs. 3,467.47
crores for laying of sewerage system and Rs. 4,854.46 crores for treatment of waste water.
Sub region wise and plan wise fund requirements are summarised in the following graphs:
Figure 3: Region Wise Investment Requirement for Sewage Figure 4: Plan Wise Fund Requirement for Sewage
There is a lack of integrated planning in

storm water drainage and unrestricted NCRPB can help the local bodies in
sewage continues to flow in most of the developing the treatment facilities by
drains in the region and ultimately falls into involving technology providers. This
the rivers Ganga and Yamuna having approach would support access to the latest
serious implications. Chocking of drains technologies and result in sustainable
due to encroachment by slum dwellers, operations and maintenance for the
blockage due to dumping of solid waste commissioned sewerage treatment plants.
and resultant flooding due to reduced
carrying capacity further underline the need to adopt an integrated regional approach for
improvement of internal and regional drainage system.
2.3 Water Sector
The Regional Plan 2021 estimates the total investment requirements to match the estimated
demand of 11,984 mld by the year 2021 to be about Rs. 5,992.15 crores for
production/augmentation of water and Rs.7,190.57 crores for strengthening/expansion of
distribution system/network. The following figures gives the sub region wise funding needs
as well as plan wise requirements:

In the case of water supply, Delhi has water supply of 225 LPCD as against the CPHEEO
norm of 135 LPCD, whereas in other parts of NCR the supply ranges between 25 LPCD to
145 LPCD. Supply of water in Rajasthan is very poor. It is to be noted that there is huge loss
of water in this region. The unaccounted for water (UFW) in this region varies between 30%
and 50%.
Figure 5: Sub Region Wise Investment Requirement for Figure 6: Plan wise fund Requirement for Drinking Water
Drinking Water
In order to increase operational efficiencies, NCRPB can support management contracts for
achieving reduction in UFW and improvement in operations and maintenance through long-term
O&M contracts. NCRPB can also facilitate award of projects on a BOT basis whereby the
operator constructs the facility, arranges financing for 20% of capital cost and meets operations
and maintenance cost for the defined concession period. NCRPB can look at providing both
project development assistance and financial assistance in the form of credit enhancements(take-
out financing) to backstop annuities, whereby NRPB agrees to pay the annuities in case the state
government/implementing agency is unable to honour financial commitments towards annuity
payments under the concession agreement.
2.4 Transportation
Delhi being the hub for the northern part of the country, various measures such as
construction of expressways, ring roads, rapid transit systems, widening of district and
highway roads and improvement of rail networks are being adopted. In the Regional Plan,
NCRPB has proposed the implementation of transport projects in two phases and has
estimated investment requirements in the first phase at Rs. 21,830 crore. This excludes the
investment requirements for rail networks and national highways. Similarly in Phase II,
projects like Ghaziabad – Meerut expressway, and grid-roads are identified. It will be easier
for NCRPB to demonstrate success in transport sector since India’s ability to roll-out projects
In case of transportation networks, NCRPB has already identified projects for further development
under the transport functional plan. It is recommended that NCRPB conduct feasibility studies on
various project proposals and short list a shelf of transport projects. For the identified transport
projects, NCRPB can provide project development assistance through its project development
facility and explore the possibility of implementing these projects under Public Private
Partnerships Frameworks. NCRPB can also provide the seed capital for setting up SPV/SPVs to
implementing these projects. NCRPB can also appoint transaction advisors and oversee the
process of selection of private sector partners for these projects wherever feasible.

Business Plan for NCRPB P a g e | 10
has been relatively impressive in transportation sector. A functional plan for transport sector
has been prepared by NCRPB and critical projects are in the process of being identified.
2.5 Power
In the case of power, the Regional Plan 2021 estimated that generation capacity would have
to be augmented by about 50,000 MW with concomitant investments in transmission and
distribution networks. The Regional Plan 2021 estimates power requirements in the region to
be 23,345 MW by the year 2021. The total investment requirements estimated in the
Regional Plan for power generation is Rs. 93,380 crore and for transmission and distribution
is Rs. 58,000 crore. The block year wise fund requirement for the region is captured in the
following table:
Figure 7: Plan wise fund Requirement for Power
Even after factoring in the proposed investments by central sector utilities like National
Thermal Power Corporation and Power Grid Corporation as well as those by state utilities,
there is likely to be a significant shortfall in both generation and transmission capacities.
NCRPB can facilitate private sector participation by playing a role similar to that of PFC for Ultra
Mega Power Projects; identify a few projects for further development; and explore co-financing of
projects. In addition, NCRPB can explore the possibility of facilitating entry of other
government/quasi public sector players in the area of power generation for NCR such as IFFCO,
KRIBHCO, NBCC, IOC, NCRPB can facilitate project development through the MoU route with
these players and provide funding support for project preparation, assistance in land acquisition
and limited co-financing for debt during financial closure.
NCRPB can also assume project development risks for smaller power projects including combined
captive power projects, whereby it facilitates DPR preparation, seek clearances, fuel linkages and
finances land acquisition in a project SPV (owned by respective state government). The fully
developed project can then be competitively bid to the private sector, which can assume financing,
construction and operations & maintenance risks. NCRPB can explore joint development of
combined captive power projects with PTC India Limited, which has raised funds abroad for
investments in the power sector, including assets such as purchase of coal blocks internationally.
Conclusion: The demand for investment assistance is huge as is evident from the snapshot
presented above. However, there is a significant gap between the investment requirements
identified in the Regional Plans and the actual implementation through projects financed and
supported by NCRPB. The following chapter outlines the role of NCRPB as a financial
intermediary and discuss the current NCRPB portfolio, underlying financials, fund
deployment processes, as well as key challenges and proposed remedies.

3 Product and Services Portfolio at NCRPB

The previous chapter identified the present business opportunities in the infrastructure sector
as well as the potential areas of intervention by NCRPB. In line with the same, the following
sections outline the role of NCRPB as a financial intermediary and discuss the current
NCRPB portfolio, underlying financials, fund deployment processes, as well as key
challenges and proposed remedies.
As discussed earlier, NCRPB provides assistance to a wide range of developments in the

region and complements traditional budgetary sources such as Central and State
Governments plans. In addition, public sector agencies such as HUDCO, PFC, REC are
other sources for financial assistance for the projects financed by NCRPB in different
sectors. The comparative advantage however rests with NCRPB due to its ability of offer
cheaper loans (through cross subsidization by grant funds). In addition to this, The NCRPB
bonds have been rated AAA by CRISIL (subsidiary of Standard & Poor’s) and AAA (SO) by
FITCH Ratings. NCRPB has also received LAAA rating from ICRA for its proposed bond
issue. However, NCRPB remains a marginal player in the market due to its relatively smaller
resource base vis-à-vis these institutions and thus this plan outlines an aggressive business
development strategy for NCRPB to fully exploit its advantageous position.
3.1 Financial History and Analysis

Sources of Financing: The Government of India (GoI), through the Ministry of Urban
Development, provides grants to NCRPB as Plan funds, to carry out its functions under the
NCRPB Act. GoI also provides grants (Non-Plan funds) for salaries and other administrative
expenses of the Board. Additionally, Government of NCT of Delhi contributes to the NCRPB
Fund. Major internal resources consist of accruals from interest on loans released. NCRPB
augments its resources by issuing bonds.
The figure below summarises the financing and fund deployment process at NCRPB:
Contributions from MOUD and

Bond Issues Government of Delhi
NCRPB Fund
(Raised through Loan & Grant Contributions)
25% of project costs

75% of project costs
State Govt Departments
Infrastructure Projects
State PSUs / Utilities / ULBs
Figure 8: Fund Deployment Process at NCRPB

The overall resource position of NCRPB for the last five fiscal years is summarized in the
following table.
Table 1: Resource Position of NCRPB
Sources of Funds FY04 FY05 FY06 FY07 FY08

Owned Funds 1117.82 1251.63 1400.13 1565.10 1822.90
Market Borrowings 597.70 387.15 387.15 0.00 200.00
Total 1715.52 1638.78 1787.28 1565.10 2022.90
Grants by Governments: Of the total grants of Rs.1125.37 crore received till March 2008
(excluding those for administrative expenses), 73% (Rs.824.62 crore) were provided by GoI,
and 27% (Rs.300.75 crore) by Government of NCT of Delhi.
Internal Accruals: Despite a low rate of interest charged, the Board has added a substantial
amount to its owned funds through internal accruals i.e. the interest paid by borrowing States
and their agencies. In the last five years, the net internal accruals after tax amounted to
Rs.313.48 crore, equivalent to 60% of the grants received.
Growth of Own Funds: Own funds increased by about Rs.838.97 crores – an impressive
85% in last five years with CAGR of 13.1%. The average year-on-year growth in owned
funds was 13%.
Table 2: Owned Funds of NCRPB (Rs. In crores)
Fiscal Year FY04 FY05 FY06 FY07 FY08

Total Own Funds at end of Year 1117.82 1251.63 1400.13 1565.10 1822.90
Increase during the year 133.89 133.81 148.51 164.97 257.80
% Increase over previous year 13.61 11.97 11.87 11.78 16.47
Borrowings: NCRBP started borrowing from the market in 1996-97 with a line of credit from
HUDCO for Rs.60 crore. In 1998-99, NCRPB had to raise debt from the market to bridge the
resource gap for loan disbursements. The bonds issued till 2001-02 was of 7-year tenure;
redeemed after five years. NCRPB had not raised any debt after 2001-02 till February 2008,
when Rs.200 crore debt was raised with a coupon rate of 8.98% p.a. (payable half yearly)
and tenure of 10 years with a call/put option after 7 years. The instrument was rated
AAA/Stable by CRISIL and AAA (ind) (SO) by Fitch Rating Services.
3.2 Asset Quality and Lending Portfolio:

The total number of projects financed by NCRPB is about 214 out of which 111 projects are
completed and the balance is under implementation. While the total loans sanctioned by
NCRPB till FY 2008 is Rs.5,299 crores, the total loans outstanding in the books of NCRPB
stood at Rs.1,062 crores. This has increased to Rs.1, 771 crores by the end of FY 2007-08.
There are about 24 borrowing agencies as on date with NCRPB. About 62% of the loans
sanctioned2 by NCRPB have been disbursed by the Board as on 31st March 2008. The
adjacent graph indicates the State-wise amount of sanctions and releases by the Board.
2
It is to be noticed that loan sanctions are made by the PSMG. The PSMG, however, does not meet
periodically. They meet as and when there are adequate project proposals to be placed or based on
the cash flow availability of the Board.

Further, the average loan releases for on-going projects are about 55% and that of the
completed projects is about 88%.
As evident, the maximum loans have been sanctioned and released to Haryana that has
been pro-active in terms of posing project to the board, and thus there is a need to support
and encourage other states to address this skew.
NCRPB has being effectively carrying out its proposed functions and there is now a need to
further strengthen its position as a financial intermediary. The existing guidelines on eligible
sectors, agencies and lending terms and conditions are well documented, but given the new
roles and strategies identified in this plan, a new project appraisal manual has been
prepared. The NCR cells also need to be strengthened to perform their due diligence
function and NCRPB also would also need to look at effective third party monitoring.
S u b R eg io n w is e C u m u la tive L o an S a n ctio n e d a nd L o a n R e le a se d b y N C R P B till

d a te
4 00 0 35 4 7
3 50 0
3 00 0
Rs. in Crores
2 50 0 1 96 8
2 00 0
1 50 0
92 8
1 00 0 64 3
31 7 310
234 31 0 96
50 0 75 101 10 1
0
Ha ry an a UP [i nc lu din g R a ja s th a n NCT -D e lh i C M A – P a tia la C M A – G wa li or
[ in c lu din g C MA - Ko ta ] [ inc lu din g in P u n ja b in M P
C MA - Ko ta ] C MA - Ko ta ]
Figure 9: Sub Region Wise Cumulative loan Sanctioned and Loan Released by NCRPB till date
L o a n sa n cti o n ed L oa n re le a s ed b y NC R PB
3.3 Issues Impacting Current Operations and Required Counter Interventions
3.3.1 Keeping NCRPB Mission Relevant
The means to achieving the NCRPB mission go beyond formulating Regional Plans and
providing loans through a limited fund. In the fast changing macroeconomic environment,
NCRPB can promote economic growth by a series of interventions aimed at removing critical
infrastructure bottlenecks and enhancing quality of life in the region by improving access to
basic civic services to both urban and rural areas.
3.3.2 Lack of Sub Regional Plans
Besides lack of capacity, the absence of any legal requirement for the States to prepare sub
regional plans within any prescribed time along with reluctance of the states to produce such
plans are viewed as possible reasons for lack of plans. Furthermore, the Board is not in a
position to effectively promote and co-ordinate development in the region according to Plan
because of involvement of more than one state. As the States are constitutionally
autonomous entities, the Board created under an Act of the Parliament is constrained in
using its overriding powers. The situation is further exacerbated by the fact that land
constitutes a State subject.
Thus, a three-pronged approach would be undertaken with regard to continued planning in

the NCR. Firstly, the Ministry of Urban Development would be encouraged to urge the States

to fulfill their statutory requirements to produce Sub-Regional and Master Plans for their
area. The NCRPB would be prepared to assist in any agreed plan making strategy to the
best of their capabilities. Secondly, and in any event, the NCRPB would continue with its
preparation of Functional Plans for key sectors i.e. Transportation, Drainage and Water. A
Protection Functional Plan is also a major requirement to delineate areas that should not be
developed rather than just identifying areas that should be developed. Thirdly, preparation of
a Protection Plan would provide an opportunity to commence work on the preparation of an
NCR-wide digital spatial database which would also input to an overall National Urban
Information System (NUIS).
3.3.3 Need for Long-tenor Funds

There is a need to provide long tenor funds to implement infrastructure projects since such
projects are long gestation where stable cash flows are seen 5-7 years after the project
award. The financing currently available in the market is often short-term and has frequent
interest rate resets. This results in interest rate risk and liquidity risk in case the project
promoters are not able to refinance the loans at the same terms. The maximum tenor
available in the Indian market is 15 years with 2-3 year resets. Thus, NCRPB could facilitate
availability of long tenor funds and emerge as a leader in this segment.
3.3.4 Proactive Approach in Leveraging the Fund

The major problem lies in the mismatch between resource mobilisation and deployment with
certain periods where NCRPB has unable to deploy its funds and other periods wherein
resources have been a constraint. This would require NCRPB to follow a more proactive
approach and also look for alternative and innovative means to deploy its available
resources.
One area of concern could be the absence of well structured and bankable projects.
Typically, Government agencies do not have the requisite technical and financial resources
to prepare detailed project reports. Further, government agencies neither have the capacity
nor the resources – financial and managerial, to support project development for capital
intensive infrastructure projects. In such a scenario, NCRPB could effectively use a portion
of the available grants for undertaking project development activities thereby ensuring a
pipeline of projects to be financed.
Furthermore, NCRPB could leverage its funds using innovative strategies as well as
flexibility in product offerings by following differentiated project structuring and lending
strategies. For instance, for projects with shorter payback periods, products of shorter tenor
should be offered vis-à-vis the typical loan product of NCRPB. New products offerings
should therefore be made by NCRPB to ensure that flexibility is available in tailoring
repayments to the cash-flows of the projects. The following chapter addresses this in detail.

4 Business Strategy
NCRPB needs to go beyond formulating Regional Plans and providing loans through a
limited fund. In the fast changing macroeconomic environment, NCRPB can promote
economic growth by a series of interventions aimed at removing critical infrastructure
bottlenecks and enhancing quality of life in the region by improving access to basic civic
services to both urban and rural areas. NCRPB needs to transform itself into an institution
which not only has the vision for planned development of NCR but possesses the means to
provide the entire spectrum of infrastructure development and financial services to translate
the vision into reality.
4.1 Proposed Product Strategy

As discussed in the previous section, it is imperative that NCRPB enhances its existing
product portfolio to offer a comprehensive range of products to projects developed in the
region. NCRPB should experiment beyond the traditional model where projects are
conceived and implemented by Governments and its agencies. As part of this strategy,
NCRPB could explore development of projects in Public Private Partnership (PPP)
frameworks wherein NCRPB would provide the initial seed capital for project
development/preparation. As these projects move further in the project cycle and access
finances from the market, NCRPB should recover these investments from the successful
developers by factoring the project development costs into overall project costs, which may
then be returned to NCRPB at a small premium. NCRPB can also explore providing
assistance to State Governments for meeting their share of investments to these projects.
4.2 Proposed Product Stable
In line with the proposed strategy delineated earlier, NCRPB should expand its product
offerings to include:
a. Fund based products such as debt, quasi equity such as subordinated debt,
whereby NCRPB is. In addition to financing products, assistance in the nature of soft
grants or seed capital can be provided for identified projects.
b. Non-fund based products such as credit enhancements in form of guarantees.
4.2.1 Fund based products

Loan Product: The loan facility would remain as the mainstay for NCRPB. However, loans
should be provided with varying tenors and interest rates linked to underlying project cash-
flows. For instance, commercially viable power projects may be financed with relatively
shorter loan tenors as compared to sewerage or water supply projects which may require
loan tenors of 20-25 years. Long tenor funds may be concessionary in nature depending
upon the requirement of such projects.
Variants of Loan Product: In addition to the loan product for varying maturities and interest
rates, its variants such as subordinated debt can be provided to projects. Such products can
be deployed for allocating higher levels of risk in projects implemented in PPP mode.
Typically, NCRPB can provide a subordinated loan to projects in the construction phase,
whereby NCRPB agrees to subordinate its rights to those of other lenders, and agrees to get
repaid after senior lenders dues are settled. As a subordinate lender, NCRPB would get
higher interest rates to compensate it for assuming higher level of risks. These loans can
subsequently be refinanced by bank loans as the project enters operational phase and cash
flows stabilizes. This would enable the financial markets to price risks appropriately
depending upon the stage of project implementation and may facilitate takeout financing by
other lenders with wider liability profile. This product should typically be put in practice

gradually as NCRPB gains in experience with deployment of loan product with varying
tenors and interest rates. For deployment of this product, NCRPB needs to engage in
extensive consultations with the lender community and enhance their confidence in the
credit quality of projects prepared/supported by NCRPB.
Technical Assistance in the form of Soft Loan/Grants: Technical assistance as a product
should be made available by NCRPB. This should be deployed for (i) preparation of sub-
regional/functional and city development plans, (ii) preparation of detailed project reports
compliant with NCRPB appraisal criteria and those of multilateral lenders such as ADB, (iii)
undertaking project monitoring and supervision of projects (iv) any other as may be deemed
appropriate by NCRPB.
Equity/Quasi Equity Products: Currently, NCRPB may not be in a position to take equity
exposures in projects. To begin with, NCRPB as part of ongoing initiative to prepare
transportation functional plan for NCR may identify institutional, implementation and
financing mechanisms for critical projects. Some of these initiatives may be domiciled in
Special Purpose Vehicles (SPV) in which NCRPB can provide the initial capital for project
preparation. This seed capital can then divested in favour of selected private sector
developer or Government agency which is identified for implementation.
4.2.2 Non-Fund Based Product

Credit Enhancement Product: NCRPB should provide full and partial guarantees to debt
issuances, pooled finance structures (under the Pooled Finance Development Fund scheme
of Government of India) as well as project SPVs floated by the borrowers. This would
therefore enable more project sponsors and projects to access the capital markets for
funding. Credit enhancement can be provided either on the strength of NCRPB’s own credit
rating of AAA or NCRPB can act as an intermediary through whom the credit enhancement
products can be distributed to projects in the region. For instance, Asian Development Bank
(ADB) offers partial credit guarantees as a credit enhancement product. NCRPB can explore
avenues for availing these enhancements for project developed/supported by NCRPB
wherein the credit risk vests with ADB. On the other hand NCRPB can itself provide
guarantee as a credit enhancement product for projects supported by borrowers. Such
guarantees would be within prudential limits set by the rating agencies without any dilution in
its present credit rating.
4.3 Evolving Product Strategy
The product strategy suggested above is indicative and would need to be evolved as
NCRPB assumes a prominent facilitating role for supporting projects in the region. New
products including hybrid structures (viz. combination of various products) could then be
explored based on NCRPB’s experience of diversifying its traditional product portfolio.
In line with the product strategy suggested above, there exists a need for preparing an
accompanying resource mobilisation strategy. The following section identifies other potential
sources of finance to supplement the available grants from government. NCRPB should go
beyond the traditional methods and approach various multilateral and bilateral agencies as
well as commercial banks to augment its resource base.

5 Financing Plan
In view of the role envisaged for NCRPB, it is imperative that NCRPB diversify its resources
base to include other sources of financing to supplement the available grants of government.
The proposed plan looks at diversifying sources of financing to include multilateral agencies,
bilateral agencies, domestic capital markets and commercial banks.
5.1 Multilateral Sources of Finance

In the current economic situation, it would be prudent to approach multilaterals for long tenor
lines of credit which would be priced competitively in comparison to domestic sources of
credit. NCRPB should not only approach ADB, but also other multilateral agencies such as
the World Bank.
(a) It has been assumed that Asian Development Bank will provide $800 million line of credit
to NCRPB with a maturity of 25 years, principal moratorium of 5 years and semi annual
repayments. The expected date of effectiveness of the loan as 2010. The pricing for this
source of finance has been assumed at all-inclusive 8.00% p.a. Front end-fees and other
financing charges have been assumed at 0.20% payable upfront. It has been assumed that
Government of India would waive the guarantee fee against the credit line to NCRPB. (b)
We suggest that NCRPB also approach the World Bank for a line of credit with an expected
effective date of 2011. Terms and conditions for this assistance are expected to be similar to
that of Asian Development Bank. In the current economic situation, it would be prudent to
approach multilaterals for long tenor lines of credit which would be priced competitively in
comparison to domestic sources of credit.
5.2 Bilateral Sources of Finance
It is suggested that NCRPB initiate dialogue with bilateral agencies such as JICA, KfW and
DFID. While JICA and KfW can be tapped for accessing credit lines for specific sectors
(JICA could be approached for projects in the transportation sectors, KfW could provide
assistance for water and sewerage projects) dialogue with DFID should be initiated for
seeking grant assistance for supporting/developing projects meeting social objectives such
as in-situ slum housing.
5.3 Grant-in-Aid
It is expected that NCRPB would continue to receive annual allocations from Ministry of
Urban Development and Government of Delhi. These allocations are assumed to continue at
present levels.
5.4 Other Sources of Finance
Domestic sources could be accessed such as commercial banks for seeking short-medium
term lines of credit in order to meet temporary liquidity requirements. It is felt that domestic
banks particularly those with whom NCRPB has banking relationships could be approached
for providing fund based assistance.
Similarly, development authorities with surplus cash such as Delhi Development Authority
could be approached to park their surpluses with NCRPB Fund.
While international sources of borrowing seem limited in the present global situation, it would
be useful to continue tapping domestic capital markets with bond issues. It is suggested that
NCRPB seek umbrella tax exemptions for its annual bond program.
NCRPB may also explore feasibility of floating municipal bonds (under Pooled Finance
Scheme) for on-lending to municipal projects.

In addition to exploring alternate sources of financing, NCRPB needs to look at its loan
pricing strategy and move from a single rate to multiple rates and tenors depending upon
sector and project viability. In addition to this, it is also recommended that NCRPB
discontinue the present practice of providing incentives on debt servicing.
5.5 Analysis of Various Borrowing Programs
While the need for leveraging the NCRPB corpus is well recognised, there is a need to make
a realistic assessment of the extent of leveraging that is feasible.Scenario Analysis has been
undertaken for different borrowing programs. A number of assumptions for various sources
of financing have been made such as:
I. It is expected that NCRPB would continue to receive annual allocations from Ministry
of Urban Development and Government of Delhi. These allocations are assumed to
continue at present levels.
II. It has been assumed that landed costs of borrowings from multilateral sources would
be 200-250 basis points lower than domestic financing sources. For base case
scenario, the borrowing is largely expected from multilateral institutions for which the
cost has been assumed at 8.00%. p.a.
III. The average on-lending rates have been assumed at 9.00% p.a. for new sanctions.
The interest rates on historic loan portfolio have been assumed to continue at terms
sanctioned earlier.
IV. A technical assistance facility for preparation of master plans and city development
plans, detailed project reports, environment and social reviews and project
management consultancy has been assumed at 0.50% of new sanctions each year.
V. Manpower costs for both NCRPB as well as NCR cells are assumed to increase by
40% next year in light of pay commission recommendations. Subsequently, an
annual growth rate of 5% each year is assumed.
VI. It is also assumed that a large part of borrowing would happen in earlier years.
Based on these assumptions, 2 scenarios of borrowings have been discussed below:
5.5.1 Scenario 1
Borrowing from various other
sources in addition to
multilateral sources through
incremental borrowings (Rs
210000 Lakhs). Such
additional borrowings have
been assumed for domestic
sources of finance – loans and
bond (taxable) issues and a
KfW credit. The total resources
raised from borrowings and
grants will be Rs 1130000
lakhs. The income and
expenditure trends for this
scenario is in adjacent graph. Figure 10: Projected Income and expenditure profile of NCRPB under
scenario 1
Cumulative internal accruals

for this scenario are Rs 7988 Lakhs. The above graph indicates that it may be prudent to
stagger borrowings so that income earned continues to be in excess of expenditure and
cash flow mismatch is avoided.
Any addiitonal borrowings will result in operational losses for NCRPB. This would then
necessitate the need for addiitonal grants to lower the costs of overall borrowings for
NCRPB.
5.5.2 Scenario 2
Resources raising from debt
and grants to an aggregate of
Rs 1500000 lakhs. This
includes grants and soft loans
of Rs 270000 lakhs – an
addition of Rs 150000 lakhs
incl. Rs 10000 lakhs of soft
loans . Borrowings of Rs
1230000 lakhs have been
assumed (Rs 100000 lakhs as
domestic loans, $ 200 mn from
KfW and Rs 230000 lakhs as
Figure 11: Projected Income and expenditure profile of NCRPB under scenario 2
bonds, apart from the multi-
lateral borrowings from ADB
and World Bank assumed earlier)
Cumulative internal accruals for this scenario are losses of Rs 48369 Lakhs. Clearly, this
level of gearing is not sustainable with assumed levels of grants -Rs 80000 Lakhs from
MOUD, Rs 40000 Lakhs from Government of Delhi and a $ 100 million – Rs 50000 Lakhs as
grants from DFID or other sources.
This implies that NCRPB ambition of supporting Rs 15000 crores of projects under the
Eleventh Five Year Plan with current pattern of providing 75% of project costs in the form of
loans is extremely ambitious but not entirely realistic. Clearly, NCRPB’s ability to support
incremental borrowings on a sustainable basis is linked to quantum of grants and ability to
garner low cost sources of finance. This strategy needs to be reworked ensuring higher
returns on the loan portfolio and lower levels of non-performing assets in case the objectives
set out have to be met. Alternatively, NCRPB can restrict its borrowings to sustainable levels
and support additional projects through co-financing and leveraging through Public-Private-
Partnership models as discussed earlier in this note.
These scenarios are indicative and the implementation strategy for the financing plan would
evolve through consultations with key stakeholders. However, the above scenarios may face
a number of risks and hence, the following sections not only reviews these risks, but also
suggest mitigation strategies.
5.6 Risk ssessment & Mitigation
Numerous risks have been assumed to be associated with implementing an aggressive
financial strategy. Some of these may include:
Demand Risk
The Business Plan assumes that availability of long term funding with appropriate technical
assistance would drive investments in NCR region. If the project pipeline is not robust, it may
lead to under deployment of the resources available with the fund, with concomitant
implications for investments in the region. In order to mitigate this risk, it is important for

NCRPB to identify projects for development in consultation with stakeholders such as State
Governments and Line Ministries so that the likelihood of project implementation is high. As
part of this strategy, we have recommended that NCRPB support the formulation of City
Development Plans for major urban centres in the region so that project investment can be
prioritised in consultation with stakeholders.
Credit Risk
In case NCRPB decides to pursue an aggressive investment strategy based on a large scale
borrowing program, it is important to ensure credit quality remains at acceptable levels, or
NCRPB would be saddled with higher levels of NPAs. Therefore, it is important to put in
place a suitable appraisal and credit risk management systems, as envisaged under this
Business Plan either through outsourcing or through hiring additional staff. Further,
adherence to strict appraisal norms and choice of appropriate credit enhancements will
mitigate the risks of non-performing assets.
Interest Rate Risk
Despite best efforts of the NCRPB to keep its pricing competitive, there may be a situation
where excess liquidity results in predatory pricing by number of other financial
intermediaries. NCRPB should attempt to have a diversified resource base and a low
blended cost of resources. There is a need to move away from the present fixed interest
rate regime to a more flexible market-responsive on-lending regime.
Government Guarantee as Credit Enhancement
In the past, NCRPB has financed projects based on credit support from the state
governments in the form of guarantees. In the present situation, the fiscal constraints faced
by state governments would make it increasingly difficult for them to provide guarantees to
NCRPBs borrowers. NCRPB needs to alter its current paradigm of lending to infrastructure
projects based on credit enhancements from state governments to that of inherent credit
fundamentals of borrowers and cash flows of projects.
Varying Financial Risk Appetite across States
In the recent past, implementing agencies from Haryana have been proactive in seeking
NCRPB assistance leading to credit concentration in NCRPBs loan portfolio. In this context,
NCRPB has already initiated dialogue with other State Governments in the region. NCRPB
needs to work closely with State Governments to assess the investment requirements.
NCRPB would also have to use innovative loan structures with interest rates and tenures
linked to improvement in financial profile of borrowers. The willingness and ability of NCRPB
to take calculated risks, invest/support distressed assets and provide continued support for a
pragmatic reform program to improve credit fundamentals is what will drive demand for
NCRPBs resources
Foreign Exchange Risk
The fund corpus of NCRPB envisages a sizable proportion of corpus as loan from
multilaterals and bilateral agencies. Since the loan would be denominated in foreign
currencies (United States dollars, Euro, Japanese Yen) the costs associated with managing
the foreign exchange volatility may be sizable. NCRPB needs to develop treasury
management skills. Therefore it is important to implement the suggestions given in the
treasury management manual and hire a Joint Director Finace with necessary expertise in
dealing with foreign exchange and treasury management functions. Mitigating foreign

exchange risk can be undertaken by entering into 5-10 year rolling hedging options available
in the country today.
Asset-Liability Management Risk
While liabilities for the fund are largely long-tenor, their deployment would vary from 5-20
years. In such as scenario, asset-liability management would pose a challenge to NCRPB.
The strategy should be to ensure its corpus is fully committed at all times. NCRPB should
attempt to match the maturity profile of assets with its liability profile. The current practice is
to lend for a tenor of 10 years based in similar tenors of its bond issues. Such practice
should be continued for the overall resource pool as well as outlined in the product strategy.

6 Management and Organization

This Business Plan outlines future direction of NCRPB and would therefore impact its
functions and hence the human resource needs. This chapter details the minimum required
human resource base in line with the anticipated growth in the scale and scope of NCRPB
activities for a more pro active and substantial role in the balanced development of the NCR.
Furthermore, it addresses the need to strengthen the Project Management and Coordination
Unit that functions as the mainspring of NCRPB. The business plan emphasises minimal
recruitment which is also in line with the Fiscal Responsibility and Budget Management
regime as well as the recommendations of the sixth pay commission. Hiring of additional
staff is not encouraged; as a result, the chapter outlines the alternative of outsourcing for
essential professional services.
6.1 Existing Organizational Structure
The existing organizational structure at NCRPB is quite simple with two wings viz. the
planning wing and the Administration and Finance wing to carry out the various functions. In
addition to this, the Project Management and Coordination (PMC) unit headed by the
Assistant Director constitutes an important organ of the Board and has to function as the
mainspring of NCRPB. The chart below describes the existing organisational structure at
NCRPB:
Chairman
Member Secretary
Director Chief Regional

Planner
Dy Director Asst. Director Finance & Joint Director Joint Director

Accounts
(Regional
.Planning, Envt
Asst, Director Asst. Director
Dy Asst.
Director Director
Asst. Asst. Asst. Director Asst. Director

Director Director Planning Draughts
Figure 11: Existing Organisational Structure at NCRPB

6.2 Human Resource Gap

Human resource gap in the NCRPB needs to be analysed also by keeping in view (i) the
lags in its existing organisational structure and (ii) the anticipated growth in its activities and
lending to the implementing agencies. An in depth analysis of the existing organisational
structure, HR processes and procedures and other recommendations is provided in a
separate Human Resource Manual. In view of these, NCRPB needs to have an altogether a
new organisational structure. The proposed structure is guided by gaps and limitations in the
existing structure as also the anticipated expansion in the volume of business of the Board.
6.2.1 Minimal Recruitment

Recruitment of additional staff is advisable for acquiring bare minimal in-house expertise in
the specialities that are to be outsourced. An in-house availability of expertise would enable
the Board in vetting of the outputs procured through outsourcing. A detailed analysis has
been provided separately in the Human Resource Management Plan.
In short, staffing implications entails that NCRPB would need additional 11 staff as
mentioned below:
Planning: • Deputy Director, Water Supply & PMC: • Joint Director Projects
Sanitation • Deputy Director, DPR
• Deputy Director, Road & Transport • Deputy Director, Project Appraisal
• Deputy Director, Power • Deputy Director, Monitoring & Evaluation
Finance: • Joint Director, Finance IT: • Assistant Director
• Deputy Director, Internal Audit
Law: • Law Officer
These positions depicted are the minimum In the new scenario, hiring any
number required for NCRPB to embark on an additional support staff is not
ambitious growth trajectory as suggested in this encouraged. Re-deployment of
Business Plan. The choice of recruiting personnel existing support staff, skill up-
on a permanent basis for a few positions gradation and implementation of
suggested above, hiring employees on a contract some of improvements suggested
basis for some other positions, and outsourcing in terms of IT solutions will
part of the functions such as internal audit, legal obviate the need for recruitment
services and the PMU for the project development at these levels.
facility vests with NCRPB management. In
addition to the above, a number of initiatives to
strengthen the NCR cells have also been recommended (For detailed recommendations,
refer Annex-II).
6.2.2 Outsourcing of Professional Skills

In the contemporary concern for right sizing of government and the Fiscal Responsibility and
Budget Management (FRBM) regime, creation of new posts at the scale required could be
quite complex and even difficult. This report therefore suggests outsourcing of the required
expertise and specialities in performance of the required functions, barring the ones that
would be critically needed for providing continuity in performance of organisational functions
and vetting of inputs to be received through outsourcing. An alternative organisational
structure is accordingly suggested with minimal staff many of whom could be outsourced
thus leading to enhanced efficiency and effectiveness in plan implementation. This would not

only confirm to the FRBM regime, but would also be in line with the recommendations of the
Sixth Central Pay Commission for introduction of contractual appointments for selected
posts, particularly those requiring high professional skills.
Chairman
Member Secretary
Law Officer /Legal Chief Regional Audit Firm

Firm Director Planner
Finance & Joint Director

Asst. Accounts Project (Regional
Dy Director Director Development Joint Director
Officer .Planning,
Facility Envt & Land
Use)
Asst, Director Asst. Director

Dy Asst.
Director Director
Asst. Asst. Asst. Asst.

Director Director Director Director
Planning Draughts
Figure 12: Proposed Organisational structure at NCRPB

6.3 Strengthening the Project Management and Coordination

The implementation process for implementation of a plan entails that the Plan must be
disaggregated into Programmes. Programmes must be broken into Activities and finally, the
Activities must be converted into Projects. PMC has to play a pivotal role in this chain of
activities. Thus, PMC must perform a much more pro-active role in promoting project
planning and development. PMC would need to augment the number of projects rather than
just receiving them from the constituent states and the NCT of Delhi. Other responsibilities to
be discharged by PMC include scrutiny of projects received from the NCR to ascertain if the
projects have all the required documents, they are structured in a manner required for
making it bankable, and getting projects appraised by the national level institutions that are
out sourced by the NCRPB for project appraisal. PMC is also required to monitor progress of
projects, compile reports and update the data base, submit periodical reports and project
related information as and when required, and organise field visits for the projects. Both in
terms of number and the volume of work required to be performed by it, PMC requires
substantial strengthening.
6.4 Project Management unit for the Project Development Facility
As discussed earlier, NCRPB would need to strengthen its PMC functions that are the
weakest at the moment. In view of the existing resource constraints, it is suggested that the
current Project Monitoring and Coordination function be merged with the recommended
project development facility. Details of the required staff have been given in the annex. PMU
will fill the existing void with regard to PMC.
However, a PMU is not and should not be treated as a substitute for innate organisational
strength and a sustainable institutional capacity. Hence the process for creation of the
positions suggested above would need to be started by the NCRPB so that by the time the
contractual tenure of the PMU functionaries comes to an end, the internal institutional
capability would have been procured and put in place. Internal skills in the areas suggested
above both in planning section and PMC will internalise the much needed project appraisal
process that is outsourced at the moment.

7 Operational Plan
The huge demand for investments in NCR for critical infrastructure as well as product and
financial strategy delineated in the earlier chapters would require a well defined roadmap for
evolving the NCRPB Fund from a simple revolving fund providing vanilla loans to an
intermediary which has the ability to provide the entire gamut of financial product for
infrastructure in the region. A detailed analysis of Indian experience as well as International
Best Practices in financial intermediation through similar structures is presented in Annex (?)
In order to transform itself, NCRPB needs to prepare a phased roadmap for the next decade.
In order to diversify its funding sources and offer longer tenor loans NCRPB has already
approached ADB through Department of Economic Affairs for USD 800 million loan, of which
the first tranche is likely to be around USD 300
million. The strategy as presented in the figure is Ongoing Initiatives for MIS and
detailed in the following paragraphs. Financial Management Systems at
NCRPB
7.1 Short Term Strategy • Adoption of latest guidelines for income
recognition, asset classification and
provisioning used by banks in the
Till 2010, the ongoing technical assistance from country from April, 2009
ADB would provide NCRPB with a shelf of projects • Complete Migration to computerised
aggregating to a cost of $ 130 million. Besides, accounting system using latest “Tally 9
measures for strengthening capacity of NCRPB Release 2.14” version of standard
staff and its implementing agencies on aspects accounting software available
• Business process re-engineering (BPR),
relating to monitoring project preparation, project using best and good practices, to
appraisal and structuring, improving operational rationalise processes and better
efficiencies in its planning and financing integrate/streamline work flow.
departments through Business Process Re- • A flexible web based ERP that integrates
engineering (BPR) and designing specifications for and automates (re-engineered)
processes and systems.
tools such as Enterprise Resource Planning (ERP) • Implementation of GIS to facilitate
and Geographical Information Systems (GIS) will regional planning and project
be undertaken in this period. identification.
7.1.1 Operationalizing the Project

Development/Technical Assistance Facility (PDF)
As pointed out earlier, the key deterrent to flow of investments is the absence of well
structured and bankable projects. In this context, it is recommended that NCRPB set up a
Project Development Facility (PDF) to finance project preparation activities3 for complex yet
innovative projects.
The PDF would primarily be used to assist State Governments in the NCR region as well as
counter magnet areas, and the local authorities, urban development authorities, housing
boards and such other arms of the State Government responsible for implementing the sub-
Regional Plans and project plans or for developing the counter magnet area. The focus
would be on developing credible infrastructure projects including those that attract private
sector financing through PPP models, and particularly capture social priority sectors such as
3
Typically, an infrastructure project entails 3-5% of project costs towards project preparation and
development.

water and sanitation. Processes and Procedures for of setting up and operationalising this
PDF as well as the corresponding Terms of Reference have been detailed in Annex-I
Over time, this assistance would facilitate structuring of viable projects by incorporating
Public Private Partnership (PPP) frameworks and addressing economic, environment and
social concern in such a manner that the projects meet the needs of multilateral agencies as
well as regulators.
7.1.2 Diversifying Resource Base
NCRPB should explore raising resources through tax-free bonds to reduce financing costs
and lines of credit from commercial banks to tide over temporary mismatches. Other sources
such as borrowings from development authorities (Delhi Development Authority) should be
explored. This would facilitate in enhancing the resource base of NCRPB prior to availing the
long-tenor lines of credit from multilateral and bilateral institutions.
7.2 Medium Term Plan
Multilateral Bond Issues Contributions from MOUD and

(ADB & WB Line of Credit) (Taxable & Tax-free) Government of Delhi
NCRPB Fund
State Government Dept. PROJECT DEVELOPMENT Loans

FACILITY (Short, medium & long tenor)
State PSUs / Utilities

/Urban Local Bodies
INFRASTRUCTURE PROJECTS
Figure 13: Medium Term Strategy for NCRPB (Phase-II) Signifies new initiatives
From 2010 till 2012, NCRPB would take forward the following engagements from the short
term:
7.2.1 Completing on-going initiatives

• Set up the project development facility and sanction assistance for development
of a few yet ‘iconic’ projects in the region
• Implement the ERP and GIS systems designed in the earlier phase
• Sanction assistance to projects appraised under the framework developed under
the ADB TA
• Complete loan negotiations with Asian Development Bank for proposed line of
credit. Sanction assistance to a few projects under this credit

7.2.2 New initiatives

• Supplement NCRPB resources by sourcing long-tenor funds from other
multilaterals such as World Bank.
• Resources from bilateral agencies such as KfW, JBIC and DFID to be tied up.
• Diversify the lending product offerings by providing a range of products identified
nder the business plan (short, medium and long term debt).
• Memorandum of Understanding (MOU) with other lenders such as PFC, HUDCO,
IDFC, IL&FS and REC for co-financing projects in the region.
NCRPB should provide services towards project supervision post financial closure during the
construction phase of projects. Such services may include appointment of an independent
(‘lenders’) engineer and an auditor for ensuring that the project implementation is
progressing in accordance with the agreed work-plan. This service may be provided as part
of terms & conditions agreed upon at the time of execution of loan documents.
7.3 Long Term Strategy
In the long term say beyond 2012 (co-terminus with commencement of twelfth five year
plan), NCRPB would strengthen its position as a catalyst for investments in infrastructure
sector in the region. NCRPB would evolve from a pure-play lender to an intermediary which
can conceptualise, develop, structure and finance a wide gamut of infrastructure projects in
the region.
Multilateral Bond Issues Contributions from MOUD

(ADB & WB Line of Credit) (Taxable & Tax-free) and Government of Delhi
Bilateral
(KfW, DFID & JBIC) NCRPB
PPP
PDF Fund based Non- Fund based
State Govt Dept.
State PSUs / Utilities

/Urban Local Bodies INFRASTRUCTURE PROJECTS
Figure 14: Long Term Strategy for NCRPB (Phase-II)

New initiatives
Completing on-going and new initiatives
a. Commence co-financing with other institutions for projects
b. Provide fund (sub-ordinate debt for PPP projects, credit enhancements through debt
service reserve accounts) and non-fund based (Partial / Full Credit Guarantees)
products. Non fund based offerings could be made either on the basis of existing credit
strength or providing back-to-back guarantees from private sector financing windows of
multilateral / bilateral agencies.

7.3.1 ‘Iconic’ Projects
a. In this phase, we expect NCRPB to undertake financial closure for a few iconic projects
developed by it in the earlier phase. The development models for such projects could
range from PPP frameworks to conventional modes of implementation.
b. Such iconic project would typically be large projects having inter-state jurisdictions where
NCRPB’s role as a nodal agency would be to set-up dedicated Special Purpose Vehicles
(SPV) and arrange seed-capital from key stakeholders. We envisage the role to be akin
to Power Finance Corporation (PFC) in the case of Ultra Mega Power Projects where
project preparation, land acquisition and clearances were arranged by PFC for a project
domiciled in a dedicated SPV. PFC then offered equity stake in the SPV to a
competitively procured developer at par for the project.
c. If it is found that the project is not amenable to implementation under a PPP framework,
NCRPB could facilitate implementation in the conventional public sector mode. Projects
could be implemented in frameworks similar to that of Delhi Metro Rail Corporation
(DMRC).

8 Implementing the Road Map
NCRPB is in transition phase wherein it is in the process of transforming itself completely from
a mere planning and financing entity to an organisation which plats a catalyst role in the
growth and development of the NCR Region. To ensure that NCRPB is able to effectively
perform the various demanding and competing roles envisaged for it in this plan, it is essential
that NCRPB follow an extremely disciplined and “change driven approach” with extreme
flexibility to continuously adapt to rapidly changing business environments and needs. This
business plan has not only identified various areas and opportunities wherein NCRPB could
possibly intervene, but has also demarked the requisite strategies to facilitate the much needed
transformation.
The success of the envisaged role lies in effectively accomplishing the underlying initiatives in
a phased manner. The operational plan has detailed the short term (till 2010), medium term
(2010-2012) and long term approaches (beyond 2012) after a thorough analysis and detailed
consultations and it is vital that the time lines are adhered to.
As pointed our earlier, in view of the gaps in the existing organisational structure as well as the
anticipated volume of business of NCRPB, the suggested staff positions need to be filled up on
a priority basis. Keeping in mind the of the concern for right sizing of government and Fiscal
responsibility and Budget Management Act as well as the recommendations of the Sixth Pay
Commission, outsourcing and minimal recruitment are suggested to strengthen the internal
institutional capacity and thereby build a strong organisational base.
Furthermore, in a rapidly changing macro economic environment, despite being highly

competent and committed, the importance of regular in house training of NCRPB staff can not
be over emphasised. It is well established that such regular trainings in the form of seminars,
workshops and study tours for human resource development would not only add an additional
dimension to the overall functioning to the organisation, but also lead to incorporating national
and international best practices for ensuring a growth fostering environment.
NCRPB is already in the process of Business Process Re- Engineering by moving towards
adopting a complete modernised structure with state of art technology and techniques for
greater efficiency and effectiveness. NCRPB is currently migrating to tools such as the latest
version of Tally software, MIS, GIS, and Remote Sensing and it is expected that a flexible web
based ERP system across the organisation would soon be in place. These initiatives would be
extremely essential to develop an integrated knowledge platform at NCRPB to facilitate quick
and effective decision making.
The increased focus now needs to be on “out of the box” thinking and a pro active approach to
develop innovative mechanisms to exploit the available spectrum of opportunities. NCRPB
should go beyond the traditional sources of finance in the form of government grants and
explore alternative financing such as funds from multilateral and bilateral agencies such as the
ADB, World Bank, KfW, JBIC and DFID. It could also consider enhanced level of borrowing
from the capital market.It could also enter into some sort of MoU with other players such as
PFC, HUDCO and IDFC for co- fianancing. The product portfolio needs to be diversified to
include a range of fund based products including debt for PPP projects and non fund based
products such as credit guarantees. Other options could include providing long tenor funds for
infrastructure projects.
In addition to adopting these strategies for resource mobilisation, it is also imperative that
NCRPB practice extreme prudence in the present lending practices. The Project Appraisal

Manual has outlined a number of best practices which could be followed for effective financial
intermediation. The Financial Management Manual also suggests standard accounting
practices and procedures which could be looked into to strengthen the financial management
in the organisation. This once again highlights the need for undertaking internal training and
capacity building initiatives. Given the extremely committed management and a motivated and
change driven staff, this could be easily accomplished.
A unique model suggested in this business plan is conceptualising and operationalizing a

revolving project development facility. It is proposed that NCRPB support project preparation
activities such as conducting feasibility studies, preparing detailed project reports, and
structuring PPP projects to foster demand for financial assistance and thus ensure a pipeline of
well structured and bankable projects. The required team for this could be outsourced and
mobilised at the earliest and it is recommended that the internal staff be continuously involved
in all activities of this facility, not only to guide the direction and monitor the progress, but also
to build internal professional capacity, thereby eliminating the need for further external
recruitment.
The importance of Public Private Partnerships (PPP) in infrastructure is recognised world over.
PPP in India is still at a nascent stage with immense potential and opportunities. ADB is
already supporting a number of ministries in developing the capacity to prepare, evaluate and
appraise PPP in infrastructure in conformity with international best practices and improving
progress monitoring through comprehensive databases. NCRPB should fully explore
possibilities of not only financing, but also structuring large PPP projects in the core
infrastructure sectors of Water Supply and Sanitation, SWM, and Roads. NCRPB could also
consider undertaking financial closure of a few iconic projects having inter-state jurisdictions
wherein NCRPB’s role as a nodal agency would be to set-up dedicated Special Purpose
Vehicles (SPV) and arrange seed-capital from key stakeholders.
Thus, as NCRPB embarks on an aggressive strategy to transform itself, it is vital that it

undertake the proposed reforms to create an enabling environment for change. However, the
strategies outlined in this plan are a necessary but not a sufficient condition to ensure
progression on the stipulated growth path. For NCRPB to achieve its vision, it is equally
important that both, the management and staff of the board have a sense of ownership to the
organisation and are continuously motivated to ensure effectiveness and success all its
endeavours.

APPENDIX
Annex I: Setting up a Project Development Facility
Background
1. As discussed in the previous sections, in order to achieve its mission of promoting

growth in the NCR through balanced regional development; NCRPB needs to go beyond its
current role of formulating Regional Plans and providing plain vanilla loans. In the rapidly
changing macro economic environment, NCRPB can promote economic growth via a series
of interventions aimed at removing critical infrastructure bottlenecks and enhancing quality of
life in the region by improving access to basic civic services to both urban and rural areas.
NCRPB needs to transform itself into an institution which not only has the vision for planned
development of NCR but possesses the means to provide the entire spectrum of
infrastructure development and financial services to translate the vision into reality.
2. However, the inability of implementing agencies to plan projects has led to a

paradoxical situation wherein NCRPB is unable to optimally utilize its funds in a certain
period while facing a liquidity crunch in another. Specifically, significant costs of project
preparation and development (usually about 3-5% of total project cost) are identified as a
major bottleneck for preparation of bankable infrastructure projects and hence, there is a
need for a dedicated fund which would act as a catalyst to close the gap between the
available public and private financial resources and vast infrastructure needs that can be
translated into viable projects with real potential for achieving financial closure.
Need for a Project Development Facility
3. The key deterrent to the smooth flow of investments is an inadequate shelf of well
structured and bankable projects. This is primarily because the government agencies lack
the capacity and resources– both technical and financial to support project development for
capital intensive infrastructure projects. Land development projects, commercially attractive
power generation projects, traditional urban infrastructure projects as well as other complex
yet innovative projects requires a differentiated project development and lending strategies.
4. In line with the above, it is imperative that NCRPB

go beyond its traditional model and enhance its existing It is envisaged that in the long
product portfolio to offer a wide and comprehensive range run, NCRPB would
of products including exploring development of projects in strengthen its position as a
the Public Private Partnership (PPP) frameworks. In this catalyst for investments in
respect, it is proposed that NCRPB set up a Project infrastructure and evolve from
Development Facility (PDF), primarily to finance project a pure-play lender to an
intermediary capable of
preparation activities for complex yet innovative projects.
conceptualizing, developing,
Activities supported by the PDF include conducting structuring and financing a
feasibility studies, preparing detailed project reports, and wide gamut of infrastructure
structuring PPP projects by hiring transaction advisors projects in the region.
etc. The availability of this technical assistance would
prove to be an important driver to foster to demand for loan
assistance.
Aims and Objectives of the Project Development Facility
5. Many of the projects currently posed to NCRPB lack the desired level of due
diligence and detail. They also do not comply with the environmental and social safeguard
requirements of multilateral and bilateral agencies.

• The purpose of the fund is to support studies, concept development, demonstration

pilots etc. to meet the overall objective of increasing quality and quantity of credible
and innovative projects. In addition the PDF can be used to support hiring of
resources for project supervision and monitoring.
• The PDF would primarily be used to assist State Governments in the NCR region as
well as counter magnet areas, and the local authorities, urban development
authorities, housing boards and such other arms of the State Government
responsible for implementing the sub-Regional Plans and project plans or for
developing the counter magnet area. The focus would be on developing credible
infrastructure projects including those that attract private sector financing through
PPP models, and particularly capture social priority sectors such as water and
sanitation.
Structure and Management of the Project Development Facility
Sources of Finance
6. In the short term, efforts would be expended in conceptualizing a PDF to provide

technical assistance to NCRPB for achieving the objectives of the Regional Plan 2021. This
would be done through providing assistance to states and implementing agencies for
preparation of functional and master plans, project development support for projects
identified through Regional and Functional Plans and city development plans. It would also
support screening of eligible projects for implementation under PPP frameworks before
taking up further project preparation. The initial corpus for the facility would be Rs. 50 Crores
for which an initial contribution of Rs. 25 crores ($5mn) would be from NCRPB and the
balance from donor agencies including ADB. Figure 1: Procedures for PDF
Overtime the funds can be enhanced by

Provisions created from the NCRPB Fund partly
financed through lapsed incentives offered to
borrowers.
Sourcing technical assistance grants from
multilateral and bilateral agencies.
Replenishment / reimbursement under prevailing
Government of India or State Government
schemes such as JNNURM, UIDSSMT and India
Project Development Fund.
7. The assistance for project development can be

factored as part of project costs, which would then get
funded at the time of financial closure, which can then be
recovered by NCRPB from the borrowers. This would
ensure that the limits for providing technical assistance
would be available for new projects identified
subsequently.
8. Over time, this assistance would facilitate

structuring of viable projects by incorporating Public
Private Partnership (PPP) frameworks and addressing
economic, environment and social concern in such a manner that the projects meet the
needs of multilateral agencies as well as regulators.

Activities
9. The funds would be primarily deployed for (i) preparation of detailed project reports
compliant with NCRPB appraisal criteria and those of multilateral lenders such as ADB, (ii)
undertaking project monitoring and supervision of projects (iii) any other as may be deemed
appropriate by NCRPB including preparation of City Development Plans for identification and
prioritization of suitable projects.
Process and Procedures
10. The creation of a Project Development Facility will need to be approved by the
NCRPB which can delegate oversight of the fund to the existing PSMG I at NCRPB which
will approve subproject preparation and monitor the progress of the fund.
11. Figure no. 1 illustrates the procedures to be followed for such a fund.
12. The implementing agency can approach the PDF for technical assistance, and the
PDF manager would then prepare an appraisal note for the approval of the committee. The
broad parameters which need to be checked are compliance with Regional Plan 2021,
project name, cost estimates, background and scope of work to the consultants.
13. After approval, NCRPB shall proceed with identification of consultants in line with
ADB’s procurement guidelines. Detailed terms of reference shall be provided to the
consultant, as part of the tender documents4.
14. A pre-bid meeting shall be conducted to clarify queries from consultants on various
issues in the terms of reference given to them. The consultants shall be selected based on
bidding procedures ranging from a least cost selection, quality based selection, and/or, a
combination of both5.
15. In order to ensure that views of the implementing agency

on the concepts and designs are being incorporated, constant
It is believed that this PDF would
review at various stages is required. Therefore, a review
lead to acceleration in
committee should be constituted consisting of representatives Infrastructure development
of all stake holders of the sub-project. The committee should through preparing quality
consist of: feasibility studies and an open
and transparent bidding process
• Chairman of the Municipal Council / Committee or a for selection of consultants, based
Head/CEOs of implementing agencies; on the ADB’s procurement
guidelines.
• Representatives of the respective ULB / Departments
/ Statutory Board;
• Engineers/Planners of the respective ULB / Departments / Statutory Board;
• Technical Sanctioning Authority of the project; and
4
Guidelines for PDF, model appraisal note, Sample council resolution, RFP, ToR documents etc have been provided in the
Annex of the project appraisal manual)
5
A Least Cost Selection (LCS) is where consultants are selected on the least financial cost, whereas Quality based Selection
(QBS) is the method of selecting consultants purely on quality only without giving any weightage to financial aspects. There is
a method which provides weight for both, viz., the Quality and Cost Based Selection (QCBS), which provides weight for both
quality of the proposals and financial costs.

• Representative from NCRPB.
16. The role of the NCRPB representative is to ensure that all appraisal requirements are
being met at the time of preparation of the sub-project.
Approach and Methodology
17. In the incumbent stage, NCRPB would require initial handholding and capacity
building to manage and operate the fund. Over the years the fund would evolve as an
independent and integral component in establishing well structured PPP projects in the
region.
18. It is proposed that the NCRPB PDF would be managed by a Project Management
Unit (PMU). NCRPB needs to decide whether the PMU managing the PDF is attached toi
the Finance wing or the Planning wing. Also, the choice between using external consultants
and internal resources needs to be made by NCRPB. The desired staff for operationalising
the project development facility as well as the detailed terms of reference has been given in
the subsequesnt chapters on Human Resource Planning.
Implementation Options for PMU
19. The following options are proposed for implementing the PMU
1. Outsourcing Option: The staff mentioned above could be procured using the
savings of this ADB TA for a period of 1 year after which NCRPB can procure
another set of consultants on similar lines based on the experience of the 1st year of
operations of the PMU. The Consultants from existing TA could prepare the ToR for
procuring the next set of consultants for a longer period, say 3 years.
2. Inhouse Staff: In this option it is suggested that the ADB TA is used for providing
initial handholding support for setting up the PDF. In the interim, NCRPB may
redeploy existing staff or hire additional staff for the positions mentioned above. In
this case the operations of the PMU would be completely transferred to the in house
staff at the end of the TA.
Key Deliverables and Outcomes
20. It is envisaged that this PDF would lead to acceleration in project pipeline at NCRPB
through preparation of quality projects using an open and transparent bidding process for
selection of consultants, based on the ADB’s procurement guidelines.
21. The expected outcome of this facility would be:
Operationalising the PDF by putting in place the necessary mechanisms

Identification of a few iconic projects for further development
Identification of a panel of technical experts in different areas to support NCRPB
Development of internal procedures for procurement based on ADB Procurement
Manual
22. In line with the stratergies detailed in this business plan including the setting up of a
project development facility, the following section discusses the proposed financing plan for
diverse and innovative potential sources of financing for infrastructure projects to accelerate
the flow of projects to NCRPB for funding and draws up financial projections for NCRPB
under different segments.

Detailed Terms of Reference
1. Team Leader / Head of PMU (International): This role would be similar to the
existing Team Leader of the current TA and in addition to the current responsibilities
would also include supervision in overall design and establishment of the PDF.
2. Project Development and Contract Specialist (National): S/he would be a Senior

Civil Engineer with a basic degree of BE in Civil Engineering and minimum 10 years’
experience (preferably in managing civil works) at a managerial level. S/he would
primarily be responsible for providing strong leadership in conceiving the projects,
augmenting the project pipelines by working closely with partner states and NCR
cells manage the Project Development Fund as well as procure consultants. The
scope of work includes:
Expedite the process of project development and structuring
Advice participating states and NCR cells on project development, project
structuring and project management
Ensure project appraisal (technical, financial, economic, environmental, social
and institutional)
Present the appraised projects before the project sanctioning group
Operate and manage the PDF
Procure consultants for project development
Monitor the implementation of projects and take corrective action for timely
implementation.
3. Financial Modeling Expert/Project Structuring Expert (National)

Conduct financial analysis of projects using financial tools such as FIRR,
FNPV etc.
Identifying feasibility and viability of projects based on financial tools
Identifying financial costs and benefits
Conducting past financial analysis of finances of implementing agencies
Calculation of cost of capital
Preparation of financial improvement action plan, if required
Based on the analysis, identify projects to be implemented through PPP or
any other suitable model.
Give inputs to the technical advisor/planner on Terms of Reference for
financial consultants procured through the PDF
Training NCRPB staff and Financial economist in developing financial models
for projects
Oversee financial structuring of PPP and other projects for which DPRs are
prepared through the PDF
Review financial assessment of implementing agencies prepared by financial
economist
Carry out financial appraisal of all projects posed to NCRPB for financial
assistance with support from financial economist
In addition to the core team above, there would be two Management Support Positions:
4. Infrastructure Planning Specialist, Technical (National)
The expert should be an Engineer/planner with minimum 7 years experience. The terms
of reference would include, but not be limited to the following tasks:
Draft Terms of Reference for consultants to be procured through the PDF in
consultation with the project structuring expert;
Work with Project Development and Contract Specialist in developing

projects;
Assist contract specialist in preparing the Terms of Reference for project
monitoring and supervision consultants sourced through the PDF
5. Financial Economist- Support (National)
Young and dynamic person with an appropriate qualification in economics or finance i.e.
a Masters in Economics/MBA Finance; s/he who is self motivated with an ability to learn
quickly. The tasks to be undertaken would include:
Carry out financial appraisal of projects posed to NCRPB

Carry out periodic financial assessment of implementing agencies
Develop financial models for structuring various projects
Preparation of training materials for training NCRPB staff in project
development structuring and appraisal

Annex II: NCR Planning and Coordination
Functions of the NCR Cells: With a view to put in place an organisational mechanism for
planning and monitoring of plan implementation, NCRPB has created NCR Planning and
Coordination Cells (NCRPCC) in the constituent states and in the NCT of Delhi. NCR Cells
are required to discharge the following responsibilities:
• Preparation of Sub-Regional Plan;

• Preparation of Master Plan for urban centres falling in the NCR;
• Assistance to the implementing agencies in preparation of projects and schemes and
forwarding them to the NCRPB for financing and monitoring of projects; and
• Feed back to the NCRPB in matters relating to planning, development of projects.
The NCRPB is committed to give financial assistance to the Cells. Even the preparation of
Master Plans has not yet made much headway. Even when the Master Plans are prepared
in the constituent states, these are neither approved by the NCRPB nor is the Board
consulted on this by the constituent states. The Cells have not been paying any role in
promoting development of projects that forms part of its responsibilities. Also the NCR Cells
are not accountable to the Board in any manner even though. Salaries of the functionaries in
the Cells are paid by the NCRPB along with office equipments and office expenses. This
constitutes one of the conspicuous gaps in the existing system.
Composition of NCR Cells:
The analysis of composition of the NCRPCCs, their staffing and vacant positions reveals
three things as mentioned below:
Staffing of the NCRPCCs lacks uniformity in the composition of staff as different

types of professional, research and administrative staff are presently sanctioned
in different Cells;
Staffing does not have any correlation with the number of districts and the
physical areas carved out of the three constituent States and the NCT of Delhi;
and
A very large number of sanctioned positions, some of them key positions in
nature, are lying vacant.
The analysis has further revealed that:
NCR Cells are not playing an active role in planning and development of NCR;
Even though Regional Plan 2021 was approved in 2005, the NCR Cells have not
yet succeeded in preparation of (i) Sub-Regional Plans, (ii) Master Plans, and (iii)
Project Plans;
They do not offer any assistance to the implementing agencies in project
development;
The very nomenclature of these Cells is misplaced as they hardly have any role
in monitoring of projects under implementation. In fact their role in project
implementation is minimal;
They hardly give any feedback to the NCR in matters relating to planning and
development; staffing of these Cells is quite imbalanced and not uniform;
As the staff belongs to the State Governments concerned that are Constitutionally
autonomous levels of Government, the Cells are not at all formally accountable to the

NCRPB. In view of the above, NCRPB would need to devise mechanisms to make them
more proactive. The Board should also have some semblance of uniformity in staffing of
these Cells.
Transforming the Role of NCR Cells
In order to enable the NCR Cells play a more pro-active role, power of approval would need
to be given to these Cells. As these Cells do not have any say in ensuring compliance of the
development initiatives in the NCR with the Regional Plan (despite a legal provision that no
development shall be made in the region which is inconsistent with the Regional Plan) the Cells
have become inactive, helpless spectators and passive. They need to be armed with the
power to approve; they should have the authority to approve any development initiative
within the NCR on the basis of its conformity with the Regional Plan. This will go a long way
in giving much needed teeth to the NCR Cells for playing a pro-active role. Power of
approval will also impart prestige and glamour to the positions in the NCR Cells that would
be instrumental in attracting the civil servants of high calibre for posting as the head of these
Cells. In the present situation, there is reluctance to join the NCR Cells as the head.
Staffing Mix
Every Cell should have a uniform staffing mix. This, in addition to the civil servant mentioned
above, should consist of the positions mentioned in the following table:

The Table shows that the number of staff in the NCR Cells will marginally decrease from the
existing 86 sanctioned positions to 80. Simultaneously, with this staffing mix, functions
entrusted to the Cells as well will have to be modified as suggested below:
• Approve any development initiative by public, private and any other agency in the
NCR part of the state/NCT of Delhi for ensuring its conformity and compliance with
the Regional Plan;
• Suggest to the NCRPB for its approval of any change required in the land use in the
region;
• Preparation of Sub-Regional Plan;
• Preparation of Master Plan for urban centres falling in the NCR;
• Project Planning and Assistance to the implementing agencies in preparation of
projects and schemes;
• Monitor project development by the implementing agencies for augmenting the
number of projects;
• Forward the projects developed to the NCRPB for financing of projects;
• Monitor project implementation for ensuring effective and efficient implementation;
and
• Give feed back to the NCRPB in matters relating to planning and development of
projects.
Streamlining Functioning of NCR Planning and Monitoring Cells
NCRPB would need to streamline the functioning of the NCR Cells by introducing new
management systems. This could be done by requiring the NCR Cells to prepare annual
work plan in the form of an action plan in the spheres of planning, project planning, and
project development by disaggregating the Regional Plan proposals for their respective
areas forming part of the NCR. Once this is done, it should form the basis for review of
actual performance of the NCR Cells. Deviation from the planned activities could be taken

up with the concerned states through periodical review meetings. NCRPB will have to take
review meetings with the NCR Cells on a quarterly basis. In order to promote accountability
of the NCR Cells, it would be advisable for the NCRPB to have an MoU with the state
governments concerned (including the NCT of Delhi). The MoU will specify the activities to
be performed by the NCR Cells. It will be advisable also to have a practice of rewarding the
NCR Cells on the basis of performance. For this the NCRPB could independently assess the
performance on an annual basis against the action plan prepared by them. Award of best
performance in a function consisting of all the members of the staff of NCR Cells, besides
motivating them, will also promote a collegial relationships amongst them.

Annex III: Best Practices in Financial Intermediation
Indian Experience
In India, there are a host of specialized financial institutions providing a range of products to
the infrastructure sector such as IL&FS & IDFC which are structured as private sector
intermediaries; IIFCL – backed by Government of India and sectoral public sector financial
entities such as HUDCO (urban), REC (rural electrification), PFC (power), NABARD
(agriculture and rural development). These are corporate entities established in accordance
with the provisions of The Companies Act, 1956 unlike NCRPB which has been established
under an Act of Parliament. Some of the intermediaries mentioned above have set-up
dedicated debt funds under different implementation models. The successful example of
such intervention in the infrastructure sector has been in urban sub-sector with Tamil-Nadu
Urban Development Fund (TNUDF).
Tamil Nadu Urban Development Fund

A strategic initiative of the World Bank along with the Government of Tamil Nadu, IL&FS, ICICI and
HDFC, this fund has been operational for more than a decade assisting core sectors such as water
and waste water treatment, solid waste management, roads as well as revenue generating
enterprises, wholesale markets and bus stands.
Pooled Municipal Debt Obligation Facility : A recent initiative (2006) in the urban sector
has been pooling of financial resources by 12 leading commercial banks and institutions in
India led by IDBI, IL&FS, IIFCL and Canara Bank to provide term loans to projects in the
urban sector. These loans are provided for a tenor of 13 years with a three year moratorium.
This arrangement is a syndicated consortium credit lending in a Facility-Asset Management
Company (AMC) format. The AMC for this Facility is a dedicated manager – IL&FS Urban
Infrastructure Managers Limited (IUIML), a subsidiary of Private Equity firm (IL&FS
Investment Managers Limited) which has ADB, IFC and Indian Financial Institutions as its
investors. This Facility intended for municipal projects and projects developed by private
sector are operational and has mobilized $ 700 million of credit lines for on-lending to
projects.
International Municipal Development Funds
In various countries, the governments have experimented with catalysing investment flows
through Municipal Development Funds (MDFs). The institutional structure of MDFs has
evinced a mixed result where funds were on-lent at stricter terms as in the case of Thai
MDF. It has worked in the case of Tamil Nadu Urban Development Fund (TNUDF) in India,
where TNUDF has been able to perform its intermediation role effectively. The MDFs in
Brazil showed impressive loan repayment performance initially, but failed to attract direct
private lenders due to a high degree of perceived commercial and political risks. The
successful Columbian and the Czech MDFs have led to development of a multi-tier
municipal finance systems in these countries.
With support of the European Agency for Reconstruction, the Government of Serbia
established the Municipal Infrastructure Agency (MIA), to assist municipalities with
preparation of bankable projects and establish a credit market for municipal infrastructure
finance. Other municipal development funds include the Fonds Spécial d’Equipement et
d’Intervention Intercommunale (FEICOM) in Cameroon, which functions as the key
mechanism for generating and allocating revenues among local authorities and assists
councils in implementing major projects such as roads, water and electricity with a primary

focus on utilities and urban development. The Local Government Infrastructure Development
Fund (LGIDF) in the Philippines focused exclusively on activity implementation, but did not
address the issue of generating sustainable capital market debt. Similarly, Local
Government Unit Guarantee Corporation (LGUGC) in Indonesia is primarily involved in
providing insurance to municipal investors; it also determines the creditworthiness of projects
besides injecting liquidity in the municipal bond market via cheaper alternatives.
Territorial Financing Institution of Columbia, FINDETER is a market-oriented MDF that
Municipal Finance Company of the Czech Republic (MUFIS)

MUFIS was designed to accelerate commercial bank lending to municipalities wherein it borrows
long term funds from the external market which it on- lends at fixed rate terms for a period of 8 to
10 years to commercial banks for municipal lending. The commercial banks undertake individual
loan appraisals and collateralize their loans either with municipally owned property or access to
municipal deposit accounts. The municipalities develop projects, the commercial banks conduct
credit and risk analysis and the MUFIS primarily provides long term funds and thus its limited
functions enables it to act rapidly. Overall a two tier market has emerged wherein larger cities
raise funds primarily from bond issues and the intermediate sized and small cities meet their
financing needs from commercial banks with or without MUFIS support. Also there is a zero
interest lending in this market for environmentally sensitive municipal projects from the state
environmental fund. (Source: Using Municipal Development Funds to Build Municipal Credit
Markets, George E. Peterson, World Bank, 1996)
operates as a rediscount facility for commercial bank lending to the municipal sector besides
supplementing the banks' project appraisal capacity to improve the technical quality of their
lending. It also has a poverty alleviation mandate and gives special attention to institutionally
weak and small towns and investments in essential services primarily in water and
sanitation. It primarily acts as refinancing facility for municipal loans wherein it assists
municipalities on technical specifications, costs and budget analysis and financial feasibility
of projects along with identification of a commercial bank willing to finance the project after
conducting its own credit and risk analysis.
State Revolving Funds (SRF) in USA:- The key revolving fund programmes include the
Clean Water State Revolving Funds (CWSRF) pioneered in 1988 and providing more than
$5 billion annually to fund projects in the core areas of water quality protection for
wastewater treatment, non point source pollution control, and watershed and estuary
management. This joint federal/state funded SRF programme is designed with the objective
to meet the goals of the Federal Clean Water Act .The program receives funds primarily from
US EPA federal capitalization grants, state bond measures, sale of revenue bonds and
repayment of outstanding financial arrangements. It is estimated that while the market rates
have averaged 4.6%, the CWSRF rates have averaged 2.2% leading to a 20% savings in
project costs. The SRF bond sector is the only sector in the U.S. municipal market to
achieve a AAA median rating from a major bond rating agency The SRF finances projects
for a maximum of twenty years but can offer financing for a longer term i.e. Extended Term
Financing (ETF) in certain cases.
On similar lines, the Drinking Water State Revolving fund (DWSRF) was established via the
Safe Drinking Water Act (SDWA), 1996 to finance infrastructure improvements in drinking
water systems providing funds to small and disadvantaged communities as well as to
programs for pollution prevention to ensure safe drinking water. The Act (SDWA) requires
that EPA allots grants to each state based on the state’s proportional share of the total
needs reported in the most recent ‘Drinking Water Infrastructure Needs Survey’ with the

minimum proportional share being one percent of funds available for allotment to all of the
states. The Act also provides funding for Indian Tribes and Alaskan Native Villages,
monitoring of unregulated contaminants, and operator certification reimbursements. Loans
made under the program usually carry an interest rate varying between 0% and the market
rate with a repayment period of upto 20 years.6
There is a general consensus that one way to increase private funding to the local
Municipal Development Fund of Georgia, established in 1997, is a sound self sustainable

financial institution operating as a revolving fund with the primary objective of strengthening
institutional and financial capacity of local governments, improving the primary economic and
social services for the local communities, developing renewable energy sources, restoring
irrigation and drainage systems, and mobilizing finances from international donor agencies,
financial institutions etc to enable the local governments undertake investments in the municipal
infrastructure. It is also involved in the management optimization and introduction of international
best practices in local self governments which lack access to management expertise and the
capital markets. Over the years, the fund has invested in roads, water supply and sanitation,
rehabilitation of public facilities, urban transport infrastructure, sanitation and SWM, electricity
etc. (Source: Municipal Development Fund of Georgia, Victor Metreveli)
governments is through specialized commercially viable and well capitalized financial

intermediaries that are capable of mobilizing long term debt from the capital markets
independently for providing adequate finances to the local governments. Such financial
intermediaries could evolve through different stages wherein in the first stage they would act
as an instrument to channelise budgetary resource transfers in a systematic manner; then
move on to the second stage where they would help strengthen the local government’s
creditworthiness by improved budgeting, auditing and accounting standards for transparent
information to the stakeholders and finally enter the third stage, where they would operate
along commercial principles and provide lending to only viable and revenue generating
investments.
Stage I Stage II Stage III
Funding Local Govt. Strengthen Local Lending on commercial

Investments Government’s principles to only viable
Creditworthiness investments
Source: El Daher, S., Specialized Financial Intermediaries for Local Governments: A Market-Based
Tool for Local Infrastructure, Washington, DC: World Bank,2000
6
See United State’s Environmental Protection Agency (US EPA), www.epa.gov

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