Technical Assistance Consultant's Report

 
Technical Assistance Consultant's Report
Technical Assistance Consultant’s Report

Project Number: 7106
May 2011

India: Preparing the Bihar Urban Development
Project—Urban Sector Road Map

Prepared by:
GHK Consulting Limited, UKG, in association with STUP Consultants P. Ltd., IND, and
Castalia Strategic Advisors, USA

For Urban Development and Housing Department, Government of Bihar

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and
ADB and the Government cannot be held liable for its contents. (For project preparatory technical
assistance: All the views expressed herein may not be incorporated into the proposed project’s design.
Technical Assistance Consultant's Report
Bihar Urban Development Investment
            Program (BUDIP)

                      Urban Sector Road Map
                           Volume 1 of 4
                              FINAL

                               May 2011

                                           Urban Development & Housing
GHK, UK                                                    Department
                                                    Government of Bihar
in association with
Castalia
                                          Asian Development Bank (ADB)
STUP Consultants
DISCLAIMER
The contents of the reports are the recommendation of the consultants engaged under the project
preparatory technical assistance (PPTA) by the Asian Development Bank (ADB). ADB missions
subsequent to the PPTA will conduct due diligence and may modify the scope, implementation
arrangements, safeguard measures and analysis. Therefore, the subsequent ADB‘s official
documents (such as the legal documents, the framework financing agreement, the report and
recommendations of the president, the facility administration manual, the aide memoirs) will
supersede the contents of the reports, in case there are conflicts.
This submission is in 4 Volume.

Volume 1: A State-wide Urban Sector Development Roadmap - An ADB
MFF requires a road map (i.e., a sector strategy). Investments consistent with the
road map will be financed under the related MFF. The road map define (i) the
strategic directions for a sector, service, or industry; (ii) its importance to growth,
poverty reduction, gender and development, and inclusiveness (or the extent to
which it is a binding constraint); and (iii) the list of success factors for better
performance. The road map includes a detailed assessment of physical and non-
physical investments. These assessments highlight the main investment and non-
investment bottlenecks, risks, and mitigation measures. This Road Map
information then informs the strategic context, policy framework, and investment
programs as well as the interventions needed and their sequencing.

Volume 2: Investment Program - The ultimate objective of the investment
program is “sustainable economic growth through improved quality of urban life”.
The Investment Program seeks to improve the quality, coverage, and reliability of
water supply and wastewater management services for an estimated 1.6 million
residents in four participating towns in Bihar. Enhanced financial sustainability of
these services is essential. Under the Investment Program, service providers will
have clear roles and strengthened lines of accountability, be reoriented toward
cost recovery and sustainability, and be motivated to perform. The investment
program focuses on the sub-sectors, which promises maximizing the economic
potential of the state. The Investment Program covers (a) Identification of the
specific towns and sub-sectors for ADB financing,(b) urban local bodies regulatory
reforms required for making urban development efficient, (c) reforms required
improving financial governance, (d) shortlist of the subprojects in the selected
towns, with broad description and indicative cost, (e) feasibility and uncertainty
assessment to identify the implementation sequence of the short listed
subprojects, (f) sector-wide economic, financial, social analysis and safeguards
framework. The geographic coverage of the investment program is the four towns
with highest economic growth potential under four sub-sectors as prioritised by
the road map

Volume 3: Sector Reports - Volume 3A covering (i) Economic development,
(ii) Urban service delivery, and (iii) Cost of Road map implementation. Volume 3
B: include (i) Physical and non-physical investment in urban service delivery
namely, water supply, sewerage, solid waste management, and drainage, (ii)
Urban governance plan, (iii) Sector investment plan and (iv) Implementation
arrangements and (v) Financial management assessment.

Volume 4: Social and Environmental Safeguards – Covered in this
Volumes are: Social analysis, Poverty reduction and social strategy, Gender and
social action plans, Environment assessment, resettlement framework, Indigenous
peoples development framework and Consultation and participation planning
framework.
Acknowledgements

“Any city however small, is in fact divided into two, one the city of the poor, the other of the rich.
These are at war with one another.” Plato (BC 427-BC 347)

During the tenure of this assignment, help, co-operation and assistance have been obtained from
a large number of individuals, government departments, local bodies, para-statal agencies, social
workers, representatives of NGOs and CBOs. They have provided their valuable time and
suggestions to members of the PPTA team to assist in this study. It is rather difficult to thank them
individually. We express our sincere thanks to all those people collectively.

Their support, encouragement and insights into the social, economic, environmental and
infrastructure problems of the study area and the sector as a whole have provided an essential
input into the proposals in the report. More often than not, these suggestions triggered useful
discussions in shaping various projects in project tows of Bhagalpur, Darbhanga, Gaya and
Muzzaffarpur for infrastructure improvement.

In addition to the obviously critical technical support by the Asian Development Bank, preparation
of this Report was made possible through the enthusiastic support and guidance of Shri Girish
                              1
Shankar, Principal Secretary and Shri D K Shukla, Special Secretary of the Urban Development
and Housing Department, Government of Bihar and the Mayors, Municipal Commissioners and
their enthusiastic staff in the preparation of this PPTA report. At the very pragmatic level, Mr.
Hiroyuki Ikemoto, the ADB Urban Development Economist, continues the challenge of supporting
the consulting team and their enormous requests. Our thanks are also due to Shri Shashi Shekhar
Sharma who guided the completion of this final report upon taking over as Principal Secretary from
February 2011.

Unknown to them, but the daily observation of all residents, their situations and their needs
contributes the most to the exercise, and will be thanked by successfully contributing this project's
results to their future.

Consultants Team

S Bhattacharyya, Project Management Specialist /Team Leader
John R Block, Water Sector Specialist
John R Bowers, Urban Planer
Vijay Tandon, Project Economist / Project Director
Krishnan Padmanabhan, Financial Management & Accounting Specialist
Archana S Hinduja, Urban Planner
Parthajit Patra, Water Supply Specialist
Tapan Banerjee, Institutional Specialist
Sandeepan Choudhury, Sewerage Specialist
Ardhendu Mitra, Environment Specialist
Saswati Ghosh Belliappa, Social & Community Development Specialist
Naval Paswan, Economist
Rajeev Singh, Statistician
Suresh Gupta, Procurement Specialist
Sunil Kumar Goyal, Municipal Engineer
Arkaja Singh, PPP Specialist
P N Bhattacharya, Municipal Engineer
Bihar Urban Development Investment Program

Contents
1           Basic Assumptions .............................................................................................. 1
1.1         Population ................................................................................................................................ 1
1.2         Definition of Sub-sector in the Road Map ................................................................................ 5
2           Economic Development .................................................................................... 7
2.1         Existing Situation Assessment ................................................................................................. 7
2.2         Future Growth Assessment .................................................................................................... 15
3           Urban Service Delivery .................................................................................... 23
3.1         Current Coverage and Condition ........................................................................................... 23
3.2         Legal and Institutional Framework ......................................................................................... 30
3.3         Human Resources.................................................................................................................. 33
3.4         Finance for Urban Service Delivery ....................................................................................... 37
3.5         Binding Constraints on Efficient and Equitable Service Delivery ........................................... 41
4           National and State Policies .............................................................................. 45
4.1         Government Plans, Policies and Guidelines .......................................................................... 45
5           Bihar Urban Sector Road Map - Cost and Implementation ........................... 52
5.1         Physical Investments in Each Sub-Sector ............................................................................. 52
5.2         Non-Physical Investments – All Sub-Sectors ......................................................................... 53
5.3         Target Population Coverage .................................................................................................. 53
6           Sources of Financing ....................................................................................... 57
6.1         Details of Investment Planned / Ongoing- Centrally Sponsored Projects .............................. 57
6.2         Details of Planned / Ongoing Projects – State Plan............................................................... 61
6.3         Financing Sources for Roadmap Implementation .................................................................. 64

LIST OF TABLES
 Table 1.1  Population by Town (sex disaggregated) 1981-2001 ...................................................... 2
 Table 1.2  Population Projections by Town (sex disaggregated) 2010-2020 ................................... 4
 Table 2.1  Recent GSDP Growth Rates ........................................................................................... 8
 Table 2.2  Bihar and India Sector Employment (%) ....................................................................... 10
 Table 2.3  Value and Share of 20 Districts in Bihar GSDP ............................................................. 12
 Table 2.4  Impact of Sector Policies on Economic Growth of Bihar ............................................... 13
 Table 2.5  Major Economic Activities and Engines of Past Economic Growth of State ................. 16
 Table 2.6  Major Economic Activities and Engines of Future Economic Growth of Bihar State (as %
            share of GSDP of Bihar) ................................................................................................ 17
 Table 2.7  Change in Dominance of Economic Activities by District (2010-2020) ......................... 19
 Table 2.8  Ratios (%ages) of Towns with Growth Potential by Economic Profiles ......................... 20
 Table 2.9  Urban Services for Sector-based Economic Growth ..................................................... 21
 Table 2.10 Urban Services Required by 6 Towns Having Largest SGDP Contributions ................ 21
 Table 3.1  Level of Urban Service - Bihar in Comparison with National Standard, National Average
            and 24 Town Average .................................................................................................... 23
 Table 3.2  Index Value - Level of Criticality - Bihar Urban Services as Ratio of Existing Level of
            Service and National Standard of MOUD ...................................................................... 25
 Table 3.3  Level of Criticality of Bihar Urban Services ................................................................... 26
 Table 3.4  Demand and Availability of Power in Bihar (Mega Watts) ............................................. 29
 Table 3.5  Most Vulnerable Six Towns for Each Subsector in Bihar .............................................. 29
 Table 3.6  Status of Current Slum Upgrading Projects in Bihar ..................................................... 30
 Table 3.7  Proposed 64 Amendments to BMA by SPUR ............................................................... 31
 Table 3.8  Government Departments and Agencies Involved in Urban Development ................... 32
 Table 3.9  Cost of Solutions (Rs Million) ......................................................................................... 33
 Table 3.10 Comparison Asset Management and O&M Staff with National Average ..................... 34
 Table 3.11 General Qualifications of Asset Creation Staff .............................................................. 35
 Table 3.12 World-Class Norms for Comparable Unit ...................................................................... 35
 Table 3.13 Skilled Asset Management Staff Number Deficiencies in each Town ........................... 36
 Table 3.14 Annual Cost of Mitigating Deficiency (Rs. Million) ......................................................... 37
 Table 3.15 UD&HD Budget Allotment for Capital Works in ULBs (Rs. Million) ............................... 38
                                                                                                                                                        i
Bihar Urban Development Investment Program

 Table 3.16       UD&HD Budget Allotment for O&M (Non Plan) in ULBs ............................................... 39
 Table 3.17       Mobilizing More Revenue .............................................................................................. 40
 Table 3.18       Binding Constraints on Efficient and Equitable Delivery................................................ 41
 Table 3.19       Measures Proposed For Systemic Improvement Of Urban Service Delivery................ 44
 Table 4.1        Water Supply Policies From Central Government ......................................................... 45
 Table 4.2        Sewerage Policies From Central Government .............................................................. 46
 Table 4.3        Solid Waste Management Policies From Central Government ..................................... 47
 Table 4.4        Drainage Policies From Central Government ................................................................ 47
 Table 4.5        Urban Transport Policies From Central Government .................................................... 48
 Table 4.6        Urban Slum Policies From Central Government - On-Going and Planned Initiatives For
                  Slum Improvement In Bihar ........................................................................................... 49
 Table 4.7        Water Supply Policies .................................................................................................... 50
 Table 4.8        Sewerage Policies ......................................................................................................... 51
 Table 4.9        Solid Waste Management Policies ................................................................................ 51
 Table 4.10       Drainage Policies ........................................................................................................... 51
 Table 4.11       Urban Transport Policies ............................................................................................... 51
 Table 5.1        Physical Investment Cost - Roadmap Implementation (Rs. Million) .............................. 52
 Table 5.2        Physical Investment Cost - Roadmap Implementation ($ Million) ................................. 53
 Table 5.3        Non-Physical Investments for all Sub-Sectors (Rs Million) ........................................... 53
 Table 6.1        Water Supply Projects ................................................................................................... 57
 Table 6.2        Sewerage Projects ......................................................................................................... 58
 Table 6.3        Solid Waste Management Projects ................................................................................ 58
 Table 6.4        Drainage Projects .......................................................................................................... 59
 Table 6.5        Road Projects ................................................................................................................ 59
 Table 6.6        Slum Infrastructure and Housing Projects ..................................................................... 60
 Table 6.7        Ongoing - State's Own Financed Projects Water Supply Projects ................................ 61
 Table 6.8        Source of Financing – Total (Rs. Million) ....................................................................... 64
 Table 6.9        Source of Financing - All Towns ($ Million) ................................................................... 64
 Table 6.10       Source of Financing - 24 Towns (Rs Million) ................................................................. 64
 Table 6.11       Source of Financing - 24 Towns (US $ Million) ............................................................. 65
 Table 6.12       Source of Financing - 4 Towns (Rs Million) ................................................................... 65
 Table 6.13       Source of Financing - 4 Towns (US $ Million) ............................................................... 65

LIST OF FIGURES
 Figure 1.1 Road Map – 24 Towns ..................................................................................................... 3
 Figure 2.1 GDP India and GDP Bihar (Rs Billions) ........................................................................... 9
 Figure 2.2 Per Capita GSDP of Bihar and Per Capita NSDP of India (Rs) ..................................... 9
 Figure 2.3 Share of Sector Employment in Bihar............................................................................ 11
 Figure 2.4 Share of Sector Employment in India ............................................................................ 11
 Figure 2.5 Bihar GSDP (Rs Billion) and Bihar GSDP Per Capita (Rs) ........................................... 16
 Figure 2.6 Bihar Sector Growth Trends and Projections ................................................................ 18
 Figure 5.1 Target Population Coverage Water Supply ................................................................... 54
 Figure 5.2 Target Population Coverage Sewerage ........................................................................ 54
 Figure 5.3 Target Population Coverage - Solid Waste Management ............................................ 55
 Figure 5.4 Target Population Coverage- Drainage ......................................................................... 55
 Figure 5.5 Target Population Coverage- Urban Roads .................................................................. 56

                                                                                                                                                  ii
Bihar Urban Development Investment Program

                            Abbreviations and Acronyms

     ADB                     Asian Development Bank
     AIFC                    Average Incremental Financial Cost
     AIMS                    Asset Inventory Management System
     AMPs                    Asset Management Plans
     AP                      Affected Persons
     ARV                     Annual Rental Value
     ASI                     Archeological Survey of India
     BHB                     Bihar Housing Board
     BIS                     Bureau of Indian Standards
     BMA                     Bihar Municipal Act
     BMC                     Bhagalpur Municipal Corporation
     BME                     Benefit Monitoring Evaluation
     BOEC                    Bid Opening and Evaluation Committee
     BOT                     Build Operate Transfer
     BOOT                    Build Own Operate Transfer
     BPL                     Below Poverty Line
     BRCD                    Bihar Road Construction Division
     BRJP                    Bihar Rajya Jal Parshad
     BUDA                    Bihar Urban Development Agency
     BUDP                    Bihar Urban Development Project
     BUIDCO                  Bihar Urban Infrastructure Development Corporation
     BUDIP                   Bihar Urban Development Investment Program
     CAA                     Constitution Amendment Act
     CAG                     Comptroller and Auditor General
     CAGR                    Compounded Annual Growth Rate
     CAPEX                   Capital Expenditure
     CAPP                    Community Awareness and Participation Program
     CBO                     Community Based Organisation
     CC                      City Corporation
     CCF                     City Challenge Fund
     CDP                     City Development Plan
     CFE                     Consent for Establishment
     CFO                     Consent for Operation
     CLC                     City Level Committee
     CLIP                    City Level Infrastructure Plan
     CLIP                    City Level Investment Plan
     CMO                     Chief Municipal Officer
     CPCB                    Central Pollution Control Board
     CPHEEO                  Central Public Health and Environmental Engineering Organization
     CSC                     Consultant Selection Committee
     CSS                     Centrally Sponsored Schemes
     DBOT                    Design Build Operate Transfer
     DFID                    Department for International Development
     DLAO                    District Land Acquisition Officer
     DM                      District Magistrate
                                                                                                iii
Bihar Urban Development Investment Program

     DMA                     Directorate of Municipal Administration
     DMC                     Darbhanga Municipal Corporation
     DPR                     Detailed Project Report
     DSC                     Design Supervision Consultants
     EA                      Executing Agency
     EAP                     Externally Aided Projects
     EARF                    Environmental Assessment and Review Framework
     EARP                    Environmental Assessment and Review Procedures
     EC                      Empowered Committee
     EIA                     Environment Impact Assessment
     EIRR                    Economic Internal Rate of Return
     EMP                     Environmental Monitoring/ Management Plan
     EOIs                    Expression of Interest
     ERP                     Enterprise Resource Planning
     EU                      European Union
     FBAS                    Fund Based Accounting System
     FDI                     Foreign Direct Investment
     FFA                     Financing Framework Agreement
     FGD                     Focus Group Discussion
     FGIA                    First Generation Imprest Account
     FI                      Financial Institution
     FIRR                    Financial Internal Rate of Return
     FIS                     Financial Information System
     FMAQ                    Financial Management Assessment Questionnaire
     FOP                     Financial and Operating Plan
     FYP                     Five Year Plan
     GAP                     Gender Action Plan
     GDP                     Gross Domestic Product
     GEM                     Generators of Economic Momentum
     GIS                     Geographic Information System
     GMC                     Gaya Municipal Corporation
     GoB                     Government of Bihar
     GoI                     Government of India
     GSDP                    Gross State Domestic Product
     HH                      Household
     HUDCO                   Housing and Urban Development Corporation
     IA                      Implementing Agency
     IAS                     Indian Administrative Service
     ICB                     International Competitive Bidding
     ICT                     Information Communication Technology
     IEC                     Information, Education and Communication
     IEE                     Initial Environmental Examination
     IHSDP                   Integrated Housing and Slum Development Program
     IP                      Indigenous People
     IPDF                    Indigenous People‟s Development Framework
     IPDP                    Indigenous People‟s Development Plan
     IPT                     Intermediate Public Transport

                                                                               iv
Bihar Urban Development Investment Program

     JBIC                    Japanese Bank for International Cooperation
     JNNURM                  Jawaharlal Nehru Urban Renewal Mission
     KfW                     Kreditanstalt fur Wiederaufbau
     Km                      Kilometer
     LAA                     Land Acquisition Act
     LCC                     Life Cycle Cost
     M&E                     Monitoring and Evaluation
     MFF                     Multi-Tranche Financing Facility
     MFI                     Multilateral Financial Institutions
     MIS                     Management Information System
     MLD                     Million Litres per Day
     MMC                     Muzaffarpur Municipal Corporation
     MML                     Model Municipal Legislation
     MoEF                    Ministry of Environment and Forest
     MoUD                    Ministry of Urban Development
     MoUDPA                  Ministry of Urban Development and Poverty Alleviation
     MUDPA                   Ministry for Urban Development and Poverty Alleviation
     NCB                     National Competitive Bidding
     NCU                     National Commission on Urbanization
     NGO                     Non Governmental Organization
     NGRBA                   National Ganga River Basin Authority
     NH                      National Highway
     NHAI                    National Highway Authority of India
     NIC                     National Informatics Centre
     NIUA                    National Institute of Urban Affairs
     NMAM                    National Municipal Accounting Manual
     NMCP                    National Minimum Common Program
     NMT                     Non Motorized Transport
     NOC                     No Objection Certificate
     NPRR                    National Policy for Resettlement and Rehabilitation
     NSSO                    National Sample Statistics Organization
     NUIS                    National Urban Information System
     OHT                     Overhead Tank
     O&M                     Operation and Maintenance
     PAC                     Project Advisory Committee
     PAF                     Project Affected Families
     PAH                     Project Affected Households
     PFDS                    Pooled Finance Development Scheme
     PHED                    Public Health Engineering Department
     PIU                     Project Implementing Unit
     PMC                     Project Management Consultants /Patna Municipal Corporation
     PMU                     Project Management Unit
     PPMS                    Project Performance Monitoring System
     PPP                     Public Private Partnership
     PRDA                    Patna Regional Development Authority
     PS                      Pumping Station
     PSP                     Private Sector Participation

                                                                                           v
Bihar Urban Development Investment Program

     PUA                     Patna Urban Area
     PWB                     Patna Water Board
     PWD                     Public Works Department
     R&R                     Resettlement and Rehabilitation
     RBI                     Reserve Bank India
     RCC                     Reinforced Cement Concrete
     RCD                     Road Construction Department
     RFP                     Request for Proposal
     RP                      Resettlement Plan
     SBD                     Standard Bid Document
     SC                      Sub Committee
     SCADA                   Supervisory Control and Data Application
     SEIAA                   State Environment Impact Assessment Authority
     SFC                     State Finance Commission
     SGIA                    Second Generation Imprest Account
     SIA                     Social Impact Assessment
     SIEE                    Summary Initial Environmental Examination
     SJSRY                   Swarna Jayanti Sahari Rozgar Yojana
     SLS                     Sanitary Landfill Site
     SOE                     Statement of Expenditure
     SPRSS                   Summary Poverty Reduction and Social Strategy
     SPUR                    Support Program for Urban Reforms
     SPV                     Special Purpose Vehicle
     STP                     Sewage Treatment Plant
     SWM                     Solid Waste Management
     TAC                     Tender Approval Committee
     TAC                     Technical Assistance Cluster
     TEC                     Tender Evaluation Committee
     TBA                     To Be Agreed
     TC                      Town Committee
     TCPO                    Town and Country Planning Organization
     TP                      Town Panchayat
     TPD                     Ton per day
     UA                      Urban Agglomeration
     UDHD                    Urban Development and Housing Department
     UEPA                    Urban Employment and Poverty Alleviation
     UFW                     Unaccounted for Water
     UIDSSMT                 Urban Infrastructure Development Services in Small and Medium
                              Towns
     ULB                     Urban Local Body
     UNDP                    United Nations Development Program
     URIF                    Urban Reform Incentive Fund
     USAID                   United States Agency for International Development
     WTP                     Willingness to Pay
     WTP                     Water Treatment Plant

                                                                                             vi
Bihar Urban Development Investment Program

1       Basic Assumptions
1.1     Population
1.1.1   Historical
        Population of Bihar by town (sex disaggregated) between 1981-2001 is shown in Table
        1.1.

1.1.2   Methods of Projections
        Population projections have been estimated for Bihar state and the selected 24 towns
        (Figure 1.1) up to the year 2041. Growth trends of decadal population of the State and
        towns during 1961, 1971, 1981, 1991 and 2001, based on the available census data, have
        been estimated and plotted on a polynomial graph. This trend, depicted as a formula, has
        been applied to 2001 population for projecting 2010, 2011, 2015, 2020, 2021 and up to
        2041 population.
        Projected population has been disaggregated based on the sex ratio. This ratio has been
        ascertained by growth trends of male and female population based on available census
        data for 1981, 1991 and 2001.

1.1.3   Projections
        Table 1.2 shows the population projections by town (sex disaggregated) for the next 10
        years. For details refer Section 1 of Volume 3A - Sector Reports.

Volume 1: Urban Sector Road Map                                                              Page 1
Bihar Urban Development Investment Program

           Table 1.1    Population by Town (sex disaggregated) 1981-2001

                       Towns                              1981                               1991                              2001
                                            Total       Male        Female     Total       Male       Female     Total       Male       Female
                   1 Arrah                     125111       67516      57595      157082      84726      72356      203380     109867      93513
                   2 Bagaha                     32597       17327      15270       64627      34821      29806       91467      48526      42941
                   3 Begus arai                 56633       30503      26130       71424      38881      32543       93741      49971      43770
                   4 Bettiah                    72167       38460      33707       92653      49627      43026      116670      61753      54917
                   5 Bhagalpur                 225062     121544      103518      253225     136583     116642      340767     182806     157961
                   6 Bihar Sharif              151343       79950      71393      201323     106916      94407      232071     122019     110052
                   7 Chapra                    111564       59933      51631      136877      73948      62929      179190      95494      83696
                   8 Danapur Nizam at           58684       31250      27434       84616      45468      39148      131176      69419      61757
                   9 Darbhanga                 176301       94149      82152      218391     116912     101479      267348     142377     124971
                  10 Dehri                      90409       49209      41200       93594      50674      42920      119057      63540      55517
                  11 Gaya                      247075     132085      114990      291675     156899     134776      389192     206498     182694
                  12 Hajipur                    62520       33580      28940       87687      47093      40594      119412      63838      55574
                  13 Jam alpur                  78356       42364      35992       86112      47056      39056       96983      51620      45363
                  14 Katihar                   122005       66459      55546      154367      83986      70381      190873     102161      88712
                  15 Kis hanganj                51790       28221      23569       64568      34677      29891       85590      46253      39337
                  16 Motihari                   57911       31677      26234       77432      42522      34910      100683      54261      46422
                  17 Munger                    129260       69482      59778      150112      80662      69450      188050     101264      86786
                  18 Muzaffarpur               190416     103883       86533      241107     131537     109570      305525     164000     141525
                  19 Nawada                     38759       20573      18186       53174      28299      24875       81891      43560      38331
                  20 Patna                     813963     446394      367569      956417     524064     432353    1432209      781236     650973
                  21 Purnia                     91144       49701      41443      114912      62249      52663      171687      92826      78861
                  22 Sahars a                   57580       31734      25846       80149      44478      35671      125167      67718      57449
                  23 Sas aram                   73457       39008      34449       98122      51916      46206      131172      69682      61490
                  24 Siwan                      51284       27276      24008       83125      44168      38957      109919      58262      51657

       Source: Census of India

Volume 1: Urban Sector Road Map                                                                                                          Page 2
Bihar Urban Development Investment Program

        Figure 1.1   Road Map – 24 Towns

Volume 1: Urban Sector Road Map              Page 3
Bihar Urban Development Investment Program

                Table 1.2       Population Projections by Town (sex disaggregated) 2010-2020

                Towns                                         2010                                                2015                                           2020
                                          Total              Male            Female           Total             Male            Female       Total             Male            Female
              1 Arrah                               250983          135983        115000              280428           152144       128284           312023           169508       142515
              2 Bagaha                              105240           54606            50634           124840           63724         61116           146440           73351         73089
              3 Begusarai                           117246           61041            56205           130836           67017         63819           145226           73202         72024
              4 Bettiah                             110010           57141            52869           120160           61722         58438           130810           66415         64395
              5 Bhagalpur                           418742          223684        195058              468672           249786       218886           522702           278047       244655
              6 Bihar Sharif                        277632          143581        134051              301712           153700       148012           326392           162996       163396
              7 Chapra                              221647          116444        105203              249352           129729       119623           279407           144005       135402
              8 Danapur Nizamat                     170260           89139            81121           200160           103982        96178           233060           120232       112828
              9 Darbhanga                           314102          166075        148027              339332           178514       160818           365162           191080       174082
            10 Dehri                                146700           77628            69072           158200           83275         74925           169700           88944         80756
            11 Gaya                                 474882          247408        227474              530112           273623       256489           589442           301662       287780
            12 Hajipur                              134430           71130            63300           152880           80605         72275           172830           90809         82021
            13 Jamalpur                             100531           51269            49262           105396           52087         53309           110311           52646         57665
            14 Katihar                              230166          120881        109285              252156           130706       121450           274946           140569       134377
            15 Kishanganj                           104165           57067            47098           116140           64101         52039           128865           71640         57225
            16 Motihari                             107420           56307            51113           120720           62274         58446           135020           68513         66507
            17 Munger                               225963          122031        103932              248808           134601       114207           273303           148094       125209
            18 Muzaffarpur                          379488          199030        180458              423208           219184       204024           469828           240256       229572
            19 Nawada                               103730           55219            48511           120680           64204         56476           139130           73978         65152
            20 Patna                               1810381          984489        825892              2061096      1119198          941898           2330861      1264210         1066651
            21 Purnia                               221761          119687        102074              253976           137138       116838           288741           155996       132745
            22 Saharsa                              169024           88735            80289           196784           102080        94704           226744           116407       110337
            23 Sasaram                              157030           83375            73655           177480           94504         82976           199430           106504        92926
            24 Siwan                                151440           79888            71552           175040           92112         82928           200640           105299        95341
Source: Consultants estimates

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Bihar Urban Development Investment Program

1.2     Definition of Sub-sector in the Road Map
        The sub-sectors to be included in the Bihar Urban Development Project are (i) water
        supply (ii) drainage (iii) sewerage (iv) solid waste management (v) urban road and traffic
        management and (vi) slum improvement. Water supply, sewerage and drainage are three
        components of the water cycle. The water cycle describes the continuous movement of
        water on, above and below the surface of the Earth. The water moves from one location to
        another by the physical processes of evaporation, condensation, precipitation, infiltration,
        runoff, and subsurface flow.

1.2.1   Water Supply
        Water supply from groundwater or surface water is defined as the abstraction,
        conveyance, pumping, treatment, storage, distribution and delivery to households via
        piped connections or public stand posts of water needed for daily living or for fire fighting,
        industrial, agricultural or commercial purposes. Water supply in Bihar is heavily
        dependent upon direct ground extraction.

1.2.2   Drainage
        Drainage embraces the system of culverts, pipes, ditches, drains or canals needed to
        remove excess rain water from cities. In Bihar towns, drainage is generally provided by
        open ditches adjacent to major and some minor roads. These ditches are used not only for
        storm-water collection and disposal but also for the discharge of sewage effluent, as a
        public toilet and as a place where rubbish and garbage is dumped. The ditches are
        therefore often blocked and represent a serious public health issue.

1.2.3   Sewerage
        Sewerage refers to the infrastructure that conveys sewage and covers the system of
        sewer pipes, septic tanks, pump stations, sewage treatment plants and outfall
        arrangements necessary to safely remove water contaminated by faecal, household or
        industrial wastes and thereby preserving public health. Septic tanks are the predominant
        sewage treatment system in Bihar towns, (50-80% coverage) with septic tank effluent
        discharged to open drains adjacent to household dwellings. Nearly all sewerage in Bihar is
        therefore an 'open sewerage' system. In some towns such as Bhagalpur, 11 mld of open
        drain flow is channelled to a sewage treatment plant constructed under the Ganga Action
        Plan scheme where it is treated in aerated lagoons before discharge to river.

1.2.4   Solid Waste
        Solid waste management is the collection, transportation and disposal of refuse, garbage,
        household and industrial wastes normally to an engineered sanitary landfill. Hazardous
        waste requires special treatment and arrangements for safe disposal. In Bihar, many
        towns have contracted out the street sweeping, collection and transportation of solid waste
        to NGOs, but due to the non availability of landfill disposal sites, most of the waste is
        dumped along highways and in drains. This creates environmental degradation and
        consequently poses a risk to public health and a deterioration of living standards.

1.2.5   Urban Road and Traffic Management
        Urban road and traffic management relates to the planning, design, construction and
        management of roads between and within cities, and the management of the diverse
        range of vehicles which use the roads. Most Bihar towns are well connected to other parts
        of the State, although main roads are often narrow, single lane in each direction and
        crowded. Town‟s generally possess 5-15 km of National highway and 50-150 km of
        municipal roads. About 90% of the municipal roads have metal surface (cement concrete,
        brick or asphalt) and the remaining 10% have earthen surface. There are generally no
        adequate parking facility for vehicles in towns nor organized bus terminals. In the north of

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Bihar Urban Development Investment Program

        the State the East-West National Highway is under construction which will greatly improve
        travel between Muzaffarpur and Darbhanga and towns further east.

1.2.6   Slum Improvement
        Slum improvement consists of the physical, social, economic, organizational and
        environmental improvements to slums undertaken cooperatively and locally among
        citizens, community groups, businesses and local authorities. The main objective of slum
        upgrading is to alleviate the poor living standards of slum dwellers. In Bihar the proportion
        of slums in typical larger towns ranges from 2% in Bhagalpur, 5% in Gaya and
        Muzaffarpur to 20% in Darbhanga. The Municipal Commissioner of Gaya stated that slums
        are increasing in number as the population of the town grows. All the slums are deficient
        of basic infrastructure facilities like water supply, sanitation, drainage, SWM, approach
        roads and street lighting.There are many small-scale slum improvement initiatives in 28
        Bihar towns under the DFID funded SPUR programme. Bihar is defined as the state with
        the “highest poverty risk” among Indian states (NIPFP, 2009). Current policy outlook of
        GoI w.r.t urban poverty is embodied in its policies and programmes, chiefly the National
        Urban Poverty Reduction Strategy (2010-20), programmes such as Basic Services for
        Urban Poor (BSUP) under JnNURM, Integrated Housing and Urban Services
        Development Program (IHSDP) under UIDSSMT and Rajiv Awas Yojana – Slum Free City
        Planning.

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2         Economic Development
          The Indian Government‟s data for 1980 to 1990 showed that the GSDP of the undivided
          Bihar grew by 72%, which means that the economy was one of the fastest growing in the
                                        1
          country during the early 1980s .
          In striking contrast the state experienced zero growth between1990-94 and since 1994-95,
                                                                                            2
          when data for divided Bihar became available, annual growth averaged 3.8 per cent . As a
          result, income growth and consumption levels in Bihar lagged seriously, thereby widening
          the gap between Bihar and rest of India.
          In 2000, when the division of Bihar resulted in the industrially advanced and mineral-rich
          southern-half of the state been carved out to form the separate state of Jharkhand, this
          had a strong impact on development in the north mainly through a loss of revenue. The
                                            3
          new State of Bihar inherited 75% of the total population and was estimated to account for
          60% of the total output of the undivided Bihar.
          After the bifurcation, the State is left with cultivable land in the Indo-Gangetic Plain and
          abundant water, both surface and sub-surface, for irrigation. As a result of these natural
          resource endowments, agriculture became the dominant economic activity and remains so
                                                                                                     4
          today occupying between 75 to 80 per cent of the workforce and contributing 42% of GDP
                      5
          of the state .
          Since 2000 onwards the Government of Bihar has taken assertive policy reform and
          investment initiatives to revive the economy by improving the productivity and expanding
          the agro-based industries as well as strengthening and increasing the rate of economic
          diversification into other secondary and tertiary economic activities.

2.1       Existing Situation Assessment
          The economy of Bihar is now poised for steady growth as a result of a number of positive
          steps taken in the recent past by the state government, including:
                  Improvements in the quality of roads have
                   resulted in significant economic benefits.                          Getting anywhere in Bihar has
                   Compared to Rs 263.23 crore ($57.6 mill)                            always been an exercise in
                   spent on construction of roads in 2005-05,                          endurance. But that’s changing.
                   the expenditure has reached Rs 2489.15                              More than 6,800 km of roads have
                   crore ($544.6 mill) in 2008-09, implying                            been relaid and 1,600 bridges and
                                                                                       culverts constructed in the last four
                   almost a ten fold increase (Economic Survey
                                                                                       years. Journey time in India’s 12th
                   2009-2010 GoB, Finance Department).
                                                                                       largest state, sprawling over 94,163
                  Projects included the completion of the                             sq km, has been cut by half today
                   expressway from the Purvanchal border                               in many places. Now, most of the
                                                                                       state’s 38 districts - from
                   through Bihar to Jharkhand and it has also
                                                                                       northernmost West Champaran to
                   been decided to improve the Patna to
                                                                                       Kaimur on the western end - are a
                   Muzaffarpur highway from a one lane to a                            drive of six hours or less from
                   four lane expressway. Also the central                              Patna.
                   government funded north-east expressway
                                                                                       Source: The Economic Times
                   will run through the northern part of the Bihar
                                                                                       10.01.2011
                   state making the north better connected with
                   the rest of India.

1
    www.BiharDiary.com is the portal on the state of Bihar in India providing the latest information and the development of Bihar.
2   Bihar, Towards a Development Strategy, A World Bank Report, June 2005.
3   Census of India 1991 Bihar 82.88 mill and Jharkhand 26.96 mill.
4   Including forestry and fishing
5   Government of Bihar - Department of Agriculture,.

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Bihar Urban Development Investment Program

          
                                                                                           6
                   The creation a more business friendly environment. - including measures such as:
                   granting pre-production incentive of subsidy/exemption from stamp duty and
                   registration fee and post production incentive of grant/exemption for preparation of
                   project reports, purchase of land/shed, technical know-how, captive power
                   generation/diesel generating set, quality certificate, Vat, luxury tax, electricity duty,
                   conversion fee, market fee etc.
          As a result of these and other measures, in 2008-09 the total GSDP in Bihar at current
          prices was estimated to be in excess of Rs.1.3 million, yielding a per capita income of
          Rs.13,959 ($306). At constant prices, the GSDP for Bihar in 2008-09 was estimated to be
          Rs.983,936 yielding a per capita income of Rs.10,415 ($228). For total GSDP, this implied
                                                             7
          a growth in excess of 11 cent over the year 2008-09 (ref. Table 2.1).

                 Table 2.1        Recent GSDP Growth Rates
                      (Central Statistics Organisation and Bihar Economic Survey 2008-09).
                                                      Growth in % per annum

                                               Year                                               CSO

                        2004-05                                                                               12.17

                        2005-06                                                                                1.49
                        2006-07                                                                               22.00

                        2007-08                                                                                8.04
                        2008-09                                                                               11.44

                        Average growth                                                                        11.03

          This was a surprise to many that Bihar, generally considered to be economically
          backward, emerged as the fastest growing state recording a growth rate of 11.44 per cent
          during 2008-09. Among the 18 states and Union Territories of which data is available,
          Bihar recorded the highest State Gross Domestic Product (SGDP) in a year when the
          global financial meltdown pulled down country's economic growth rate to 6.7 per cent from
          9 per cent.
          Despite its relatively good economic performance compared to all India, as illustrated by
          GDP and Per Capita GSDP statistics (ref Figs 2.2 and 2.3), Bihar still has a per capita
          income of $ 304 a year , over 64% less than India's average of $ 8338 and 30.6% of the
          population live below the poverty line against India's average of 22.15%. For the per capita
          income in Bihar to reach the level of the national average, the present momentum of
          growth as displayed in the graphs below will need to be sustained for many years to come.

6   Industrial Incentives Policy 2006, Department of Industries: Incentive Policy for Accelerated Policy Growth of the State.
7   Central Statistics Organization and Bihar Economic Survey 2008-09
8   Economic Times 24.11.2010.

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Bihar Urban Development Investment Program

                      Figure 2.1         GDP India and GDP Bihar (Rs Billions)

                 1000.0

                                                                                                             416.3        449.4           487.9
                                                                325.4       356.6             389.9
                                                296.8
                                   186.4
                  100.0
   Rs Billions

                                                                                                                          17.2            20.2
                                                                                                             14.5
                     10.0                                                   10.2              11.8
                                                7.6             8.2
                                   5.8                                                                                       GDP-India
                                                                                                                             GSDP-Bihar

                      1.0
                            2000-01         2004-05       2005-06       2006-07           2007-08       2008-09       2009-10       2010-11
                                                                                  Years

                      Figure 2.2         Per Capita GSDP of Bihar and Per Capita NSDP of India (Rs)

 40000
                                                Bihar (Per Capita GSDP) : Rs.
 35000
                                                India (Per Capita NSDP) : Rs.                                                              33731
 30000                                                                                                                            31801
                                                                                                                     30354
                                                                                                      28083
 25000
                                                                                          26025
                                                                        24143
 20000

 15000                                                     16172

                                              11535
 10000                                                                                                                            11702 12883
                              8594                                                        8517        9929           10599
                                                                        8527
  5000                                                   7111
                              917             2655
                 0
                        1980-81       1990-91         2000-01    2004-05      2005-05          2006-07       2007-08      2008-09         2009-10
                                                                                                                            (P)             (Q)

                     Primary Sector
                     The sector composition of Bihar‟s economy reveals the important role of agriculture in
                     aggregate production. Despite this, investment in irrigation and other agriculture facilities
                     has been grossly inadequate in the past.

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       The unsatisfactory performance of agriculture, Bihar‟s most important sector was, to a
       large degree responsible for the state‟s historically low aggregate growth rate. Agriculture
       showed negative growth in the early 1990s, and since the mid-90s through 2001-02 it has
       grown by less than 1.0 per annum, implying a negative growth rate of agricultural output
       per capita.
       Furthermore, the Bihar State Economic Survey 2008-09 indicates that the average growth
       rate of the primary sector over the period 2005-06 to 2008-09 has been -0.77 percent, with
       agriculture in particular doing even worse at an average of -0.87 percent. As a result those
       employed in the sector will likely have witnessed an absolute fall in income over this period
       and, as agriculture employs nearly 80 percent of the work force, with 96 percent of the
       cultivators been small and marginal farmers; the impact will be particularly significant in
       the rural communities.
       Secondary and Tertiary Sectors
       State Economic Surveys over the period 2005-06 to 2008-09 indicate that overall,
       economic growth has been led by an increase of 21.75 percent in the performance of the
       manufacturing sector which employs only about 9 percent of the state‟s workforce. This
       secondary sector growth is primarily found to be led by growth in the construction sector,
       which currently constitutes about 71 percent of secondary sector income and whose
       annual growth rates for last four years yield an average of 41 percent, as is reflected by
       Bihar State Economic Survey 2008-09.
       The service sector has established itself as the leading driver of the Bihar economy by
       constituting a 64.30 per cent at current prices and 56.05 per cent at constant prices share
       of the total GSDP in 2008-09 and the tertiary trade, hotel & restaurants and banking and
       insurance sectors are the leading economic activities with CAGR 13.50 per cent and 7.31
       per cent recorded growth rates respectively over the past 5 years.
       Sector Shares and Employment.
       The secondary and tertiary sectors have been growing at much faster rates over the last
       decade and the GSDP share at constant prices of primary, secondary and tertiary sectors
       in 2008-09 were 26.24 per cent, 17.71 per cent and 56.05 per cent respectively.

            Table 2.2      Bihar and India Sector Employment (%)

                                                  Bihar                               India

                  Sector              1993-94             2006-07           1993-94           2006-07

        Primary Sector                  76.6               74.0               75.3             57.3

        Secondary Sector                 4.9               12.9               12.0             18.5

        Services Sector                 18.5               13.1               12.7             24.2

        All Sectors:                   100.00             100.00             100.00           100.00

        Source: Laveesh Bhandari and Sumita Kale (2009), Bihar : Performance, facts and Figures ( NSSO
                and Census of India), Indicus.

       In terms of work force, 74 per cent workers engaged in primary sector, 12.9 per cent in
       secondary sector and 13.1 per cent in tertiary sector while in all India shows that 57.3 per
       cent in primary sector, 18.5 per cent in secondary sector and 24.2 per cent in tertiary
       sector (NSSO). See figures 2,3 and 2.4 below.

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Bihar Urban Development Investment Program

                 Figure 2.3    Share of Sector Employment in Bihar

           90

           80                   76.6

           70             74
                                                                                   1993-94
           60
                                                                                   2006-07
 % share

           50

           40

           30

           20                                                                              18.5
                                                            12.9
                                                                                           13.1
           10
                                                             4.9
           0
                        Primary Sector              Secondary Sector              Services Sector

                 Figure 2.4    Share of Sector Employment in India

                 90

                 80
                                         75.3
                 70

                 60
                                         57.3                                            1993-94
                 50                                                                      2006-07

                 40

                 30
                                                                                                  24.2
                 20                                                18.5
                                                                   12                             12.7
                 10

                  0
                               Primary Sector            Secondary Sector              Services Sector

2.1.2           Main Activities and Locations
                Some of the major industrial activities in Bihar are Agro-based such as textiles, oil mills,
                etc. Industries that are dependent on agriculture are the edible oils mills located at Araria,
                rice mills located in Buxar, Forbesganj in Purnea district, spice industries, sugar mills
                located at Banmankhi in Purnea district, jute mills and other agro-based industries. One of
                the biggest oil refineries in the country is based at Barauni in Bihar. There are 13 sugar
                mills in private sector and 15 in the public sector located in South and North Bihar. Bihar is
                also the sixth largest producer of tobacco in the country.
                Since 2005, besides the major road infrastructure development initiatives, the State
                Government has created a more business friendly environment to enhance investment
                opportunities and the leveraging of resources into big as well as small and medium-sized

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Bihar Urban Development Investment Program

              industrial establishments. As a result the growth of small industries, improvements in IT
              infrastructure, the new software park in Patna, have taken place. Also the sugar Industry is
              another sector which has benefited and continued to grow with 25 new sugar factories
              committed in Bihar between 2006 and 2007 and likewise, the dairy Industry has become a
              high performing sector.
              Major Economic Activities of Bihar
              Government data on economic activity is available on a district-wide basis and not by town
              specific. Table 2.3 presents relevant data for the 20 districts which represent the selected
              24 towns with population over 100,000. In 2004 the 20 districts (24 towns) accounted for
                                          9
              over 74 per cent of GDDP (at constant price); Patna alone leading with just over 25 per
              cent followed by Muzaffarpur at 4.5 per cent and both Begusarai and East Champaran
              each having 3.5 per cent.

                     Table 2.3         Value and Share of 20 Districts in Bihar GSDP

      Ranking             Districts of Bihar                 Rs. Crore                                 % Share
                                                   1999-00               2004-05           1999-00               2004-05
              All Districts of Bihar (38)          5019994               6003183           100.00                100.00

         1.            Patna                       1035518               1507173               20.63               25.1
         2.            Muzaffarpur                 239542                272353                4.77                4.5
         3.            Begusarai                   174791                209898                3.48                3.5
         4.            E. Champaran                176431                207229                3.51                3.5
         5.            Gaya:                       186933                200394                3.72                3.3
         6.            Bhagalpur                   155167                188334                3.09                3.1
         7.            W. Champaran                165779                179958                3.30                3.0
         8.            Darbhanga                   151672                177254                3.02                3.0
         9.            Rohtas                      148602                167418                2.96                2.8
        10.            Saran                       145546                162728                2.90                2.7
        11.            Vaishali                    138259                156672                2.75                2.6
        12.            Katihar                     119106                155812                2.37                2.6
        13.            Purnea                      122558                140825                2.44                2.3
        14.            Siwan                       122712                130604                2.44                2.2
        15.            Nalanda                     126913                126467                2.53                2.1
        16.            Bhojpur                     123983                122479                2.47                2.0
        17.            Munger                       95873                102691                1.91                1.7
        18.            Saharsa                      82797                95891                 1.65                1.6
        19.            Nawada                       81040                82354                 1.61                1.4
        20.            Kisanganj                    60744                69074                 1.21                1.2
                        Total                      3653966               4455607               72.79              74.22
    Source: Derived from: Department of Statistics and Evaluation data, Government of Bihar.

9    Presently, Gross District Domestic Product (GDDP) data is available from 1999-00 to 2004-05 of 1999-00 base year at constant
     and currents prices. Government is in process to revise the base year from 1999-00 to 2004-05, and hence unable to procure the
     updated data from 2005-06 onwrds.

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Bihar Urban Development Investment Program

               The contribution of the top five economic activities by industry of origin in Bihar accounts
               72.35 per cent in 1999-00 of the total GSDP (at constant prices) which increased to 78.92
               per cent in 2008-09. Bihar is traditionally an agrarian economy and dominated by
                                                10
               agriculture and allied activities but their share in the GDP gradually decreased to 26 per
               cent in 2008-09 from 33.5 per cent in 1999-00.
               Among the 24 selected towns, primary sector is responsive for growth in 8 towns namely,
               Saharsa, Purnea, Kisanganj, Katihar, Rohtas, East Champaran, West Champaran and
               Vaishali and for remaining, service sector is the dominating.

  2.1.3        Impact of Plan and Policies on Economic Growth
               Different industries have performed differently during the period 2008 and 2009. Table 2.4
               captures the performance level of different industries on the basis of certain key
               parameters which reflect the impact of plan and policies on economic growth. The agro
               and agro-based industries and tourism industry in Bihar expressed mixed trends in its
               performance during 2008 and 2009 (CII, 2010).

                      Table 2.4        Impact of Sector Policies on Economic Growth of Bihar
                               Major initiatives taken under
          Policies                                                                      Impact on growth (2009 vs 2008)*
                                       policies/ plan
                            Major investment policy initiatives
                            underway :
                            Bihar Single Window Clearance
                            Act-2006                                      Production                       Increased (4-6 %)
                            Bihar Infrastructure Development              Level                            Increased (3-5%)
                            Enabling Act 2006.                            Exports                          Increased (1-2%)
                            New Industrial Policy -2006                   Capacity Utilization             Increased (up to 7%)
                            Price Preference Policy- 2006
                                                                          Value of Production              Increased (6-8%)
Industrial Policy           New      Policy     Initiatives  for
                                                                          Inventory                        Increased (2-3%)
(agro & agro                Entertainment, Tea Processing
                                                                          Pricing                          Increased (4-5%)
Based )                     and Sugar Sectors - 2006.
                                                                          Profit Margin                    Increased (up to 6%)
                            Amendment of Sugarcane Act
                            1985 to provide for other products            Employment Level                 No change (%)
                            from sugarcane apart from sugar               Impact of Monsoon                Major
                            Policy for establishing higher                Impact of currency fluctuation   Major
                            Technical Institutions in Private             Impact of cost of capital        Significant
                            Sector-2006
                            Simplification of VAT Regime -
                            2006.
                            Support programmes:                                                              Bihar's
                                                                                              Annual                       Marketable
                            National Horticulture Mission                Crop/                               Share
                                                                                            Production                      Surplus
                            State Horticulture Mission                   Enterprise                       In National
                                                                                           (Mn. Tonnes)                        (%)
                            Micro Irrigation                                                                Pool (%)
                            Macro Management Mode Of                     Vegetables           8.59             9.00          100.00
                            Agriculture                                  Fruits               3.35             8.00           80.00
                            Integrated Scheme Of Oilseeds,               Food Grain          11.90             5.60           75.00
                            Pulses and Maize                             Sugarcane           13.00             5.50          100.00
                            Recent initiatives:                          Fish                 0.27             8.30          100.00
                            Extension Reforms To Promote                 Milk                 4.06             4.40          100.00
Agriculture                 Public Private Partnership                              5% Growth rate for food grains, 6% for
policy**                    Establishment Of KvkIn Every                              vegetable & 10% for fruit production
                            District For Research Support At                                                % Share in       Targeted
                                                                                               Present
                            District Level                               Agri Products                        National      Production
                                                                                             Production
                            Horticulture College At Nalanda                                                 Production        (2015)
                            For Exclusive Research And                   Maize              1.5 Mn. MT            10        4.5 Mn MT
                            Education In Horticulture                    Sugarcane         13.00 Mn. MT                    46.72 Mn MT
                            Repeal of agriculture produce                Litchi             0.28 Mn MT            71        0.5 Mn. MT
                            market act (APMC) to enable                  Makhana           0.003 Mn MT            85       0.050 Mn MT
                            Direct purchase from farmers                 Mango               1.4 Mn MT            13        3.0 Mn MT
                            Private & Co-operative Markets               Rice Aromatic     0.015 Mn MT                     0.05 Mn MT
                            Contract farming                             Dairy              4.06 Mn MT                     8.46 Mn MT

  10   These activities include, live stock products, forestry, fishing, and mining & quarrying.

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Bihar Urban Development Investment Program

                           Speciality market                          Vegetables            8.60 Mn MT         9        12.4 Mn MT
                           For farmers:                                                    0.27 Mn Lakh
                                                                      Fishery                                           0.43 Mn MT
                           Prize of Rs1 lakh and title of Kisan-                                MT
                           Sri”for best farmer in all 534             Honey                   1300 MT         13          3900 MT
                           blocksPrize of Rs2 lakh and title of
                           “Kisan-Bhushan”at              district
                           levelPrize of Rs5 lakh and title of
                           “Kisan-Ratna”at state level every
                           year
                           Government to benefit from good
                           will of these 573 farmers every
                           year

                            As a catalyst, promoter, facilitator
                            and infrastructure provider
                                                                        Inflow of tourist11               Increased (3-5 %)
                            Maintenance of law and order                Industry revenue                  Increased (3-5%)
                            Deploying the tourist police force          Foreign Exchange earnings         Increased (2-4%)
                            Disposing grievance                         occupancy rate                    Increased (up to 5%)
                            Enacting suitable laws for the              Pricing                           No change
Tourism policy              development of tourism                      Profit margin                     Decreased (2-4 %)
                            Enabling        private       sector        Employment Level                  No change (%)
                            participation to develop important          Impact of Monsoon                 Significant
                            places whose tourism potential              Impact of currency fluctuation    Significant
                            has not yet been tapped. The                Impact of cost of capital         Significant
                            State Government would lay
                                                                        Terrorism issues                  Significant
                            down rules and regulations for
                                                                        Political environment             None
                            such as Joint ventures.
                           The Government has initiated
                           various programs to promote the
                           development of sectors like Power,
                           Roads and Highways.
                           Mission Statement in respect of
                           roads which is “Provision of a
                           Road Infrastructure Equal to the
                           Best in the Country by 2015”.
                           The      Bihar    State     Highway                  Improvement of Road by State Government
                           Development Project, an agency of                          Road Length                      Impact
                                                                          Year                        Growth Rate
                           the Government of Bihar with                                  (KM)
                           assistance     from     the    Asian          2005-06          364
Road network and           Development Bank (ADB) has                                                                Increased
transportation             commenced work on converting                  2006-07          773            212.36      accesabilit
programme                  State Highways into 2 – lane                                                                  y
                           roads; the Government has also                2007-08          701            90.69       Increased
                           undertaken to improve and widen               2008-09          580            82.74       Increased
                           Major District Roads.                        2009-1012         582            100.34      Increased
                           The Chief Minister‟s Bridge                    Total          3000
                           Construction      Program        was
                           launched in 2006 and it envisages
                           construction        of      bridges,
                           replacement of bridges wherever
                           required and the replacement of
                           narrow bridges with double lane
                           bridges

Note : * October 2008 to March 2009 vs April to September 2008 (summary of responses from selected companies within the
industry regarding performance during the period).** compiled from various sources including a presentation to the Investment
commission.
Source: Compiled from various Government Reports and Confederation of Indian Industry (CII), Industry Monitor-Bihar, 2010.

  11   Times of India, 5thJanuary 2011, ―Bihar more happening tourist spots than Goa? ―.
  12   Up to December.

  Volume 1: Urban Sector Road Map                                                                                                Page 14
Bihar Urban Development Investment Program

           Though, the national economic policy initiatives apply equally to all the Indian States, their
           effects can differ considerably across the States depending up on the nature of various
           institutional factors and policies in the States, which can be classified under the broad
           heading „investment climate‟. Thus, a market-oriented macro and trade policies at the
           national level needs in general to be complemented with policies that foster a market-
           friendly investment climate in the States.
           The main industrial centres are Patna, Magadh, Muzaffarpur, Barauni, Bhagalpur, Munger,
           Darbhanga and Tirhut. According to the Department of Industries, the number of large and
           medium industries in the state is only 259, of which the highest concentration (38.2 per
           cent) is in Patna division, followed by Tirhut (21.6 per cent) and Magadh (9.7 per cent).
           Out of 38 districts spread over in 9 divisions, 10 districts do not have any large/medium
           industrial unit.
           Probably as important , if not more so, than deficits in the coverage of public utility
           services, are other major infrastructure bottlenecks experienced by industries and
           businesses including poor transport infrastructure in rural areas, shortfalls in power supply
           and costs related high energy price for power generation and a poorly developed IT
           communication infrastructure including internet and telephone.

2.2        Future Growth Assessment
2.2.1      Growth Projection Methods
           Gross State Domestic Product (GSDP)
           In projecting state economic trends and State Gross Domestic Products (SGDP) by
                                13
           economic activities (industry origin) up to the year 2020-21 baseline scenario of the
           actual situation in the year 2008-09 and the trend growth rate of each activities (current
           and constant prices) during 1999-00 to 2008-09 were reviewed For simplifying projections,
           the growth of each economic activity during the period 2010-11 to 2020-21 were
           extrapolated by using a trend growth rate for each economic activity.
           District Gross Domestic Product (GDDP)
           As a proxy for „All Urban Bihar‟, 24 towns with above 100,000 populations (.representing
           57% of the population and over 74% of GDDP) were adopted as a basis for the economic
           appraisal. Furthermore, as the Government generates disaggregated data at a district and
                                                                                    14
           not town level, district data was utilised. Since 4 of the selected towns are not district
           headquarters, only the data from 20 districts was necessary as 4 districts represent 2
           towns.
           The latest district-wise data on economic activity (1999-00- 2004-05) was then used to
           establish the economic profiles of the 20 Districts as a base from which to extrapolate and
           project a trend growth for each economic activity over the period 2006-07 to 2020-21.

2.2.2      Future Economic Trends of Bihar
           The average annual growth rate of GSDP was 10.40 per cent at constant prices and 7.27
           per cent at current prices between 1999-00 to 2008-09. As the projected value is based on
           trend growth rate, projections to base year 2009-10 are carried forward exponentially.
           Under these unmodified trend line projection conditions, GSDP will approximately doubled
           from Rs.152,030 Rs. million in 1999-00 to Rs. 314,040 Rs. million in 2019-20 at constant
           prices.

13   Representing 24 selected towns in 20 Districts
14   1. Munger (Jamalpur and Munger), 2. Patna (Danapur and Patna), 3. West Champaran (Bagha and Bettiah) and 4. Rohtas (Dehri
     and Sasaram).

Volume 1: Urban Sector Road Map                                                                                          Page 15
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